Going self employed - where to begin??

bananaisnotafruit

Hi all,

New here so not sure if this belongs here or has been done before, but basically wondering how to navigate the whole self employed thing as someone who has no experience whatsoever. I'm 24 and have been working regular jobs, no one I know is self-employed so would appreciate some advice from any who do. Also concerned as to whether I'm in trouble for not declaring before.

The career field I'm going into is as an artist manager in the music business. I have been receiving money from around 2 years ago every few months - I would estimate under £1000/year or even less from royalties. Is this taxable?

Also, would i need to register as self employed and also are there any steps i need to be aware of, what are the estimated costs etc. I expect to be making money from music in the next year so want to be prepared but I'm a COMPLETE newbie when it comes to all this so if you can be as basic as possible in you replies, that would help me so so much.

please no snidey/sarcastic responses please.

Thanks so much

00ec25

bananaisnotafruit wrote: »

Hi all,

New here so not sure if this belongs here or has been done before, but basically wondering how to navigate the whole self employed thing as someone who has no experience whatsoever. I'm 24 and have been working regular jobs, no one I know is self-employed so would appreciate some advice from any who do. Also concerned as to whether I'm in trouble for not declaring before.

The career field I'm going into is as an artist manager in the music business. I have been receiving money from around 2 years ago every few months - I would estimate under £1000/year or even less from royalties. Is this taxable?

it is and was declarable - whether you have to pay any tax on it depends if, when added to your other income, the combined total took you over the tax free allowance that year

on the assumption it did, then yes you should both have declared and paid tax on it. You can either come clean to HMRC or you can hope they never notice, your choice

bananaisnotafruit wrote: »

Also, would i need to register as self employed and also are there any steps i need to be aware of, what are the estimated costs etc. I expect to be making money from music in the next year so want to be prepared but I'm a COMPLETE newbie when it comes to all this so if you can be as basic as possible in you replies, that would help me so so much.

you must register as self employed since that is your stated intention. bearing in mind your previous position you should not delay doing so (although technically the deadline is a long way off), it involves 2 things:
a) you "register" with HMRC the fact you are self employed
and
b) you sign up for self assessment (ie submitting tax returns)
https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

you will need to learn how to keep your own financial records and also how to prepare a set of accounts from which you can then complete your tax return

if you set up "now" you are in tax year 17/18 (6/4/17 - 5/4/18) and therefore you will need to file your tax return no later than 31 January 2019

always remember the cardinal rule of self emplpyment - set aside enough money to pay the tax man !!!! Do not spend what is in your bank if that includes the tax money. Not having the cash to pay the tax is not accepted as an excuse

realistically you should set yourself up as a sole trader unless you immediately expect your profits (income - expenses) to be well into the higher rate tax bracket (ie >45k) at which point it may be worth considering setting up a Limited Company - but that entails a lot more admin and costs. Best to take advice from a proper accountant before doing a company route

https://www.gov.uk/set-up-sole-trader

here is a general summary you may find useful
https://www.gov.uk/working-for-yourself

also remember the second cardinal rule of self employment - do not forget that at a point in time you will have to start making payments on account for your tax, so your tax bill will be for an amount that equals all of last year's tax and half of this year's tax

many people really struggle to understand this and get caught short of cash complaining their tax is "too high"
https://www.gov.uk/understand-self-assessment-bill/payments-on-account

bananaisnotafruit wrote: »

please no snidey/sarcastic responses please.

D'oh, you've taken away all the fun of posting

Pennywise

Most accountants will give a free initial consultation to go over the basics with you (in the hope you'd become a client).