Self Employment

Being self employed means you run your own business or are in business with someone else i.e. a partnership but have not incorporated as a company.

Self employment is ideal for those with relatively straight forward affairs and moderately low income or for people who are employed and are looking to earn a secondary income outside of their normal jobs. A self employed individual only needs to file a self assessment tax return by the 31st of January following the end of each tax year. You may be familiar with the adverts that say tax is not taxing but the majority of our clients choose us to complete the self assessment returns on their behalf. This is because you will be taxed on your accounting profits determined under generally accepted accounting policies. As much as we don’t claim to be builders, plumbers or electricians, we don’t expect you to claim to be accountants.

If you are just starting out as a sole trader or partnership you need to register with HMRC straight away for self assessment and national insurance. If this is a burden to you we can handle the process in its entirety by registering ourselves as your agent giving us authority to deal direct with HMRC.

If you have been self employed or in a partnership for a number of years it is possible to incorporate your business i.e. go limited. There may be tax advantages to this as well as certain limited liability protection. There is also some key tax planning here where the goodwill of the unincorporated business is acquired by the incorporated business. The value of the goodwill can be written off against trading profits saving your company tax. As usually no money changes hands between the new business and the old business (because effectively it is the same business) a director’s loan will be created and the repayment of this is completely tax free.

If you would like to discuss self employment or incorporating as a limited company contact us today on 0845 345 7785.

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