Self employment can be a liberating experience for many escaping their typical day job. A world of being your own boss comes with its own responsibilities and today we’ll be looking at a handful of things that you must do in order to keep things sweet.
1. Register as self employed with HMRC
When you setup as a Sole Trader, must let the HMRC know. This is because you will now be responsible for your tax and national insurance. You register as self employed at any time up to 5 October of your business’ second tax year (6th April to 5th April). If you start working in March 2017, you must register with HMRC by 5th October 2017. This is the business’ second tax year.
2. Register for VAT if you need to?
If your business has an annual turnover of £85,000 or more, you must register for VAT. You can register for VAT at any stage of the business, so long as it is before you reach the limit.
3. Get a business bank account
As a Sole Trader, your business income is taxed alongside your personal tax. However, it is much easier to keep a track of your finances by having a separate business bank account. It will make it much easier to see who has paid and what you have spent business money on. Shop around, though, as there are a lot of offers of free banking for certain periods. If you’re planning on using Xero, take a look at the banks which offer direct feeds, keeping Xero in sync with your bank statements automagically.
4. Get Insured
As a business, the law requires that you have certain insurance policies in place. The cover you need to take out depends on the type of business you are, and the industry you’re in. Some people take out other policies for peace of mind.
5. Keep accurate and up-to-date financial records
Get Xero and use it properly and regularly. From the start of your business, you are obliged to keep accurate records of all of your business transactions. Not only will this ensure that you keep HMRC happy, but it’ll be so much easier to run your business if you are organised and your paperwork is constantly updated.