self employment is it hard to set up ?

baronsdale

My wife want to try going self employed she is a hairdresser please anyone can you give any tips on how or what to do ie tax invoices clain vat back and self assesments

Tremour-88

You only have to register for VAT if you have over £70,000 of income so that shouldn't be an issue, Self-Assements are once a year and are pretty strait forward, you cant claim any VAT back, you can however claim relief on expensives such as £0.40 per mile for travel and business equipment.

baronsdale

i think she will earn only about 8,000 k a year will she need an accountant ?

baronsdale

she will need to buy a few things to set up ie: new products and computer what will she be able to claim back and how does ni work ?

Notmyrealname

She won't need an accountant however it is advisable to find a tax accountant to go over her books before she submits a tax return to make sure she's claiming everything she can and not claiming what she can't.

She will be able to claim back all equipment purchased for the business at 100% as long as it is solely used for that however when its sold the money she gets is counted as income.

NI is paid in two ways. There is Class 2 NIC paid at £2.50 a week billed 6 monthly and Class 4 NIC is worked out on profit.

baronsdale

when you say she can claim back 100% of equipment her start up costs will be around £1200 will she get £1200 back ??

Notmyrealname

baronsdale wrote: »

when you say she can claim back 100% of equipment her start up costs will be around £1200 will she get £1200 back ??

No. It merely means she can class 100% of the equipment costs as an expense which will reduce the bill.
You don't ever get any money back. What it does is get applied to your profit so reduces your tax bill.

Example:

Income for the year is £10,000.

Your tax bill would normally be £505.

However you have £1200 in expenses. So your profit, which is what you pay tax on, is now £8800 therfore your tax bill is £265 so effectively you've got back £240.

baronsdale

She would need her car as a mobile hair dresser does her insurance bills and petrol cost include in expenses

charlie-chan

I would advise checking out Business Link and phoning 0845 6032691 (HRMC) to see if she can be booked onto any courses .

InsideInsurance

Accountants often offer a free initial consultation and they will give you the 101 of things but if your understanding really is nearly 0 then it is probably better to get yourself on a course to build up the basic knowledge.

Generally for £8k of income it is unlikely that an accountant would be cost effective, in my opinion, and as long as you are a sole trader you just need to do a self assessment form.

She will need to inform HMRC that she is going into self employment as a sole trader and they will help deal with her class 2 NI contributions and set her up to receive the self assessment form. All of which can be done on the telephone in about 10 minutes (after the queue to get through to them of cause).

There wouldnt be an advantage of voluntarily registering for VAT and you only have to register when your projected 12 month turnover is over the current limit (I believe it is £70k at the moment)

sittingtenantman

I would get the business off of the ground and keep all of your recepits. Then take them all to an accountant and tell them to sort the lot out. That's what I do and it works fine.