Self employment. Tax issues (easy or hard?)

meljen50

Hi
i am considering self employed work from home?
i am lost by the idea of tax returns?
Is book keeping easy or does a self employed worker require an accountant?

Can anyone let me know how they have found self employment? the accounts keeping and tax sorting? is it easy/hard? is it scary then easy/hard?
:-(

I am considering running an 090 number. Opinions and ideas on anything noted here would be appreciated.
thanks.
mel.

Timmne

What business will you be running?

Setting up as S/E is easy but keeping the books will vary depending on your business and how much trade there is....

meljen50

a chat line type business. Where the person rings and thats how you make the money. so something like tarot, horse racing or adult chat..... Which would only have phone line start up costs!!! And i'd work at home!!! so don't know if there is certain amount of food and electric which are untaxed????

:-)

Timmne

Then your business will have very few genuine costs.

The only thing I can think of will be the phone line but then the costs for that would be taken off your income I expect....

The only other costs would be business insurance (if you need it) and possibly an element of using your home as an office, at say £10 per month.

MoneyMagnet

I've found that doing my own taxes a self-employed person is very easy, but then my accounts are pretty simple. Make sure you keep an ongoing record of your income and expenses throughout the year (I just keep it simple & use an Excel spreadsheet, although some people prefer bookkeeping/accounting programs) - don't do what I did in the first year and leave it all to sort out until just before the deadline for submitting the return!

They will calculate your tax liablity for you, so long as you submit your return before the deadline. I also recommend registering to file your return online, which is quick & easy.

You'll also need to pay Class 2 NI contributions, and Class 4 contributions if your profits are high enough - there's more info at http://www.hmrc.gov.uk/nic/background-nic.htm and
http://www.hmrc.gov.uk/sa/self-emp-part.htm#2

meljen50

How many forms do i have to fill in at the end of each year??? or quarter???? Do they need to see any documentation/bank statements etc?

money when you say they work out tax liability do you mean they work out tax say on your car travel etc! the whole concept is fairly daunting to me.

what does an accountant do different to what you can/could do yourself?

Timmne

They (we!) know what to suggest and look for to save you tax. There are schemes about which joe public won't know about which will help you out in certain circumstances.

Read my OP on this thread - it's about mystery shopping but the basis is the same with regards to doing your S/E stuff.

MoneyMagnet

meljen50 wrote: »

money when you say they work out tax liability do you mean they work out tax say on your car travel etc! the whole concept is fairly daunting to me.

I just meant that when you submit your return, you include details of your income and expenses, and they will tell you how much tax you need to pay in total. I've never had to include travel expenses, so don't know much about that, but Timmne's post linked to below explains it.

You should keep your bank statements and any receipts for purchases, expenses etc, and some other records, depending on the type of business you have - there's lots of info about record keeping on the HMRC site I linked to. They don't normally need to see these documents, but you need to keep them (I think it's for seven years - can't remember off the top of my head) in case of any inquiries.

As for forms, I just fill out my tax return once a year. I also get a quarterly bill for my class 2 NI contributions, which I pay by cheque. But you can pay by direct debit too, which is easier (must get around to setting that up!)


You might also find http://www.businesslink.gov.uk/ useful for more info.
I don't really want to try to give advice, because I only know what I need to do in my own case, which is very simple. It might be a good idea to speak with an accountant to start with, even if you don't decide to use one permanently - they'll be able to explain what's going on.