Starting a small self employed business

savvymum1

Hi,
I'm thinking of starting a small business from home. I've never been self employed before but have heard that many people get caught out with having to make a payment on account for tax. What is the best way to ensure I save enough for tax and nic assuming I make any money? Is it best to put aside a percentage of any income that's made? If so what percent? 

mumof2nanof2

I tell all my clients to save 20% of everything they earn.  This covers tax ni, tax in advance and sometimes a short break.

savvymum1

Thank you that's very helpful. I already have a personal Isa, it's empty at the moment can I put the 20% in there or do I need a business savings account? The Isa is flexible so I can withdraw at anytime. If I needed to is it ok to use Isa savings to pay any business related bills? 

JJC1956

Opening a business bank account might be a better option but only use it for the business, not for personal shopping etc

General_Grant

You could put the 20% into a savings account (and it doesn't have to be a business account).  
As a self-employed person, you would be paying tax and NI as an individual, not as a company and that 20% would be part of your "drawings" (that is your profit) from the business.

tacpot12

I put my savings that are to pay tax in the future into Premium Bonds so there is a chance of winning the jackpot, but also I know the money is safe and out of the way so it doesn't get used by the business.