Self employed cleaning lady

KittyBoo_2

I was made redundant from the local authority not long ago from a senior post and had to find work ASAP.
I worked as a cleaner for a local company from March 2008 but have now "gone it alone".
I don't invoice the people who I clean for and they pay me cash.
Do I need to set up a business account to put this money in?
I need to buy cleaning equipment and I travel around to their houses.
When I fill my tax return in, can I claim any of this for my business.
This is my only source of income and I am slowly building it up.
What do I need to do about paying National Insurance on this job?
Thanks.

Treading_Water

Hi There
You will need to register as self employed and keep accurate records of income. If you don't actually invoice you should at least keep a record in your diary or on a spreadsheet.
You don't need a separate bank account but it may keep things simpler. Particularly in the future when the Inland Revenue may have cause to access your books. If business income has gone into a personal account then they will be free to go through it all with a fine tooth comb.
All business linked expenses are claimable for tax purposes, you would normally claim travelling at 40p per mile, rather than actually vehicle costs, so make sure you keep a record.
When you register as self employed you will be sent a form to pay your class 2 National insuarnce which is currently £2.30 per week, unless your earnings are less than £4825 per year in which case you can claim a small earnings exemption.
On top of class 2 Ni's, you will be liable for class 4 Ni at 8% for Income (after expenses) between £5435 and £40040, and 1% on income over that.
You will also be liable for Income tax @ 20% for all profits up to £36000 and 40% over £36001.
All income is declarable on the Self assesment return which will be sent to you in the April after you have become self employed.
If you think the business is going to do well you would be well advised to take some advice from a local accountant.
TW

dunstonh

As you are self employed you will no longer qualify for the second state pension (which with a full record would pay you around £3900 a year in retirement (increasing annually). The Govt expects you to fund more for yourself as you are self employed but then you pay less NI as well. To replace the second state pension would need you to build up a fund of around £100,000 in a pension.

So, you do need to make sure that you are earning enough to make the decision to be self employed worthwhile as well as making sure you fund extra towards your retirement as you will be getting less from the state.

mrkbrrws

You need to register as self-employed within 3 months of the month you started, and either pay Class 2 NICs or claim exemption if you wish and profits are expected to be low.

Keep records of all business income and expenditure and retain them for six years after the end of the tax year they relate to.

You will receive a Tax Return to complete but not until next April. To complete it you will have to work out the profits of the business (or get an accountant to do so).

Remember to save an appropriate amount to pay your Income Tax (the first payment for you would be in January 2010).

KittyBoo_2

Thanks for your replies - they are really helpful.
I am going to use a bank account that has not been used for ages so that I can keep track of income and expenditure.
It's a bit of a nightmare being paid cash because I have to make sure I put it in and then take it out again.
If I don't do this, I'll end up using it for my shopping etc. and then having to make a special journey to sort it out.
I have now got 3 days worth of regular customers and they are recommending me to their friends so eventually will be full time.
Although it's hard work I get alot of satisfaction from it as the home owners are really grateful and appreciate coming home to a nice,clean house. The houses are all in the Peak District villages as well so, the drive to work is lovely.
Nice being my own boss too.

larmy16

I am doing exactly the same as you but all my clients pay me by cheque as I find it simpler and I can then prove on my paying in slips which are business cheques as opposed to the ones my son gives for his keep. Also it stops me spending it!

I have to say I am staggered at how much the IR want in tax on the small amount I earn. My business as a cleaning lady is very simple, money in, and I only claim for petrol and the odd cobweb brush for example.

For this reason I don't want to pay an accountant. I am however going to speak to someone at the tax office as soon as possible. Good luck with your business venture. I love working for myself - and all my clients are lovely. I have noticed though that there are more and more cleaners advertising these days, so word of mouth is always good.

Plus a lot of people resent paying an agency who skimp on the work and hours they are paid.

picklepick

KittyBoo wrote: »

I am going to use a bank account that has not been used for ages so that I can keep track of income and expenditure.
It's a bit of a nightmare being paid cash because I have to make sure I put it in and then take it out again..

Hi guys just stumbled across this thread

i too have just started working as a cleaner self employed. ive registered for tax and NI. All my customers pay me in cash and im keeping a record of what payments im receiving. Im a bit confused though, do you HAVE to pay this cash into a bank account though? At the minute im just writing down everything thats going in and out and giving receipts to my customers and a carbon copy for myself. is that ok?

many thanks for replies!

larmy16

I am not sure that you have to pay it into an account, as it is probably the money you have to live on??? Just be sure that you are putting away enough to cover the amount of tax you will need to pay on your earnings. There is a very helpful helpline 08459154515 which is for newly self employed. I am sure they can advise you.

I have always found the tax people to be quite nice!

As a rough estimate it seems to work out 20% tax + 8% towards NIC 4 contributions on any amount you earn above your tax allowance which is around £5475 but I may have that figure wrong??

Ring them up.

PS Get yourself a book beside your carbon recipts and keep a record of Ins and OUts eg petrol, brushes, cloths etc. If they do ever decide to investigate you they will expect to see an accounts book, receipts and invoices.

foreign_correspondent

where can i find all you lovely self employed cleaners? I am rubbish at cleaning so put an ad in the local shop - the onlu call I got was from the next door neighbours daughter who has a bit if a drink problem - which probably wouldnt bother me if she didnt have the shouting and yelling problem to go with it!
Having done agency work myself I am reluctant to give my money to an agency as I know how little the workers actually get paid!

picklepick

foreign_correspondent wrote: »

where can i find all you lovely self employed cleaners? I am rubbish at cleaning so put an ad in the local shop - the onlu call I got was from the next door neighbours daughter who has a bit if a drink problem - which probably wouldnt bother me if she didnt have the shouting and yelling problem to go with it!
Having done agency work myself I am reluctant to give my money to an agency as I know how little the workers actually get paid!

try placing an add on gumtree and specify that you dont want to hear from agencies. i look at the ads near me everyday and reply to anything i can do.
i get agencies trying to recruit me all the time, why would i go work for them and earn less than i can working alone?! :rolleyes:

picklepick

thanks larmy ive got a book and im keeping all my receipts etc, has anyone got a good idea on hows best to file them? at the minute theyre in a shoebox haha although they are sorted by date, is that enough?

thanks