Apr 1, 2014

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Self-Employment Facts & Advice

Self-EmploymentAs we approach the end of the UK financial year, I wanted to reflect on self-employment and offer some snippets of advice from lessons learned over the years.

Self-employment represents a dream for many, but the reality is not always as romantic.

Although it can be immensely fulfilling, it involves hard work and long hours, plus a comitment to a strong work ethic, particularly at the beginning. Of course, there is an element of luck involved with success, as in all things, but generally, your success is measured by your efforts, your investment of time and money and your expectations.

In the UK, self-employment involves firstly getting registered with the Inland Revenue. This is fairly easy to do, often online and is no more complicated than filling in a form with your personal details and simple details about your business – name, address and nature of work. Basic self-employment means that you are your business and your business is you.

Registering for self-employment brings a set of responsibilities:

  • Payment of National Insurance Contributions
  • Declaration of Income for the Tax Year – Self Assessment
  • Payment of Taxes

In order to ensure your tax responsibilities can be fulfiled, you must keep accurate accounts of all income and expenditure. In the UK there is a tax allowance, which means that you can generally earn up to around £10,000 without paying tax. If your earnings are less than £90 per week, or you work less than 16 hours, you may be eligible for exemption from National Insurance payments. Your local tax office can explain this to you, or you can visit a financial advisor or accountant who can point you in the right direction.

Basic self-employment is easy to deal with from a legal point of view.

You can either tackle your accounts yourself – there are many hundreds of different types of software that can help you, from basic, free packages, to expensive, all singing and dancing software that will even submit your tax return for you with a couple of clicks! Or you can employ an accountant and book-keeper to take care of all this for you. There will be a cost involved, but if you are not ‘au fait’ with accounts, the money you spend will be worth every penny. Accounts, depending upon the type of business you are in can be time-consuming. Sometimes it may be prudent to pay someone else to do them, while you focus upon the core of your business.