When starting your own business there are different ways you can set up your new venture. Limited companies offer limited liability to the owner but require far more on the administration side, partnerships are great for two people looking to work together to make a profit, however for most of you a sole trader is the best set up as it offers little in the way of admin and gives you more flexibility with your business.
It is essential you keep accurate and complete records to ensure your self assessment tax return is properly filled out and the right amount of tax is paid. The video shows where and how to register for self assessment and how to build a simple spreadsheet to record your income and expenses. You will not need a specific accounting software package as this can be created using Excel, Numbers or Google Sheets.
Self assessment tax returns need to be completed by anyone who is self employed, this will then calculate how much tax and national insurance is owed to HMRC. The deadline for filing these returns is 31st January each year. The return submitted in January relates to the period ending 5th April of the prior year. (For example the tax return due on the 31st January 2022 relates to the period of the 6th April 2020 to the 5th April 2021)
To do list:
- Register for self assessment on the HMRC website
- Set up a bank account for clients to pay in to and expenses to be paid from
- Set up income and expenditure spreadsheet (detailed in the video)
- Check mortgage/tenancy agreement to confirm it allows you to work from home
- Get insurance to make sure you and your clients are covered
- Look at pension/retirement plans
https://www.gov.uk/register-for-self-assessment/self-employed
