For many, self employment as a sole trader can happen organically. A good idea becomes a business venture and before long your order book is up and running, creating a buzz and generating a ‘to do’ list that never seems to end.
But beware! Although the sole trader route is a great way of dipping a toe into self employment with little in the way of administration and expense, there ARE things you must do to avoid problems later.
Did you know that you must register yourself as self employed within 3 months of starting up? It’s easy to do using a CWF1 form but even easier to do online at www.hmrc.gov.uk/selfemployed. And you’ll save yourself a £100 penalty!
It’s also worth setting up a direct debit for your Class 2 National Insurance Contributions – it’s only £2.40/week and will entitle you to state benefits should you need them.
Take your business seriously. It’s more than a hobby so do the groundwork. A separate bank account can help you separate your business dealings from your household expenses. This in turn ensures you take account of all your expenses and keep on top of your credit control. A simple spreadsheet can help – a basic accounting package such as QuickBooks may be even better.
If you are already trading, you are probably thinking about completing your tax return for the year which ended in April. Getting this done soon means you can reduce your on account tax payment which will be due in July if your profits are lower. It’s straightforward to organise but you need to have completed your tax return. Conversely, if you find your profits are better than before ,you have plenty of time to save for the balancing payment which will be due in January 2011.
About Accounts can help you choose accounting software solutions and offer a comprehensive tax return service if you want support.