If an individual start working for themselves– whether it could be an extra income in addition to a job or trying to start a new business in UK or start working as a mortgage adviser (use Simply Academy for CeMAP® qualification) – registering as self-employed is necessary.
Those who are self-employed must register for National Insurance and income tax contributions with Customs & HM Revenue. Registering as a self-employed one is required technically. Considering to be as self-employed, helps in tax and Insurance purposes as they are not deducted from the income when a payslip is received. In some cases, it is required to pay tax when an individual has a job and also wanted to become self-employed.
There arises a question that when to register as self-employed? It is not possible to register before starting their self-employment. Within 28 days of joining there is no chance of registration. It is important to inform HMRC before the work is started. It’s worth noting that anyone can still register self-employed by phone or post.
Self-assessment should be started by 5 October in business’s 2nd tax year. For example, if the trade is started on 1 Jan 2019, the last date for self-assessment will be 5 October 2019.
In a business, it is difficult to stay on top of finances and keep track of books, and this would often make an individual stressful and confusing when there is no one to help. This is the situation where an individual feel difficult when starting as a freelancer in the UK.
Follow these tips and strategies that help in organizing a new business or planning to be a self-employed:
- Perform reality check
If there is an option to start a new business, leaving the old job thinking over next steps of life, start preparing for a shift in perspective. Start imagining about commitments, responsibilities, figure out the circumstances and lifestyle accordingly.
The important portions that include in becoming self-employed are financial responsibilities and commitments. With a regular paycheque, there will be a continuous income and as a result a secure income is initiated and that help in building liabilities like mortgage or rent, direct debits that go out each month.Some of these are more simple, for example, Netflix account or any type of memberships.
Check the following questionnaire before starting. Is there any control over the misuse of credit card? Check any building work is going on or any car payment is yet to be paid? If there is a continuous salary without break, all these activities will be an update and that could reduce the risk of missed payments.
Freelancer Association require secured help to protect the rights. visit HMRC website which is a vibrant resource that helps to replenish own personal company.
- Consider reasonable costs
Don’t unnecessarily waste money and become a Scrooge. If the business visiting cards are printed on shoddy cardboard, what does it mean about the quality of service that should be delivered? So consider to invest when needed. Check whether the clients pay back the expenses that incur on their projects like accommodation and train ticket reservations?
If a long-term project is planned, consider a permanent workplace where accommodation and travel should be taken care. If more than 40% of work is spent in the same place and it is expected to be there for more than 2 years, HMRC considers it as the “permanent workplace” and there is no chance to claim tax on travel, meals, and accommodation from then.
- Hold money for future tax
Plan accordingly and put a running total when paid in terms of VAT and income tax. Never forget that cash is yet an asset. Those with limited businesses should definitely consider savings account. That would be a great way to secure money until the due date for tax. A Sole trader can make use of these funds to reduce interest on the mortgage and pay loan amount if they have any offset contract account, which helps in becoming free from the mortgage.
- Get Disciplined
Converting into own boss exactly implies ‘being boss’. If it is generally based, there is no necessity for any manager to report, surely no dress code for work and no leave record. So concentrate on how to go as a freelancer and hold to maintain a rich daily routine.
For the people who are self-motivators definitely require freedom. For some people, it takes time to adjust. Before starting as a freelancer, start creating a new plan. Determine goals for profound time schedules, keep a target in terms of the invoice. Take a step and follow towards a straight and narrow way to reach the goal.
To add a bit of structure and expectation, set an alarm and have a good breakfast and get dressed in a decent way. So that the client feels that they are working in a similar office workplace.
- Protect Money on Childcare
Money spent on children through any type of vouchers or any savings will save thousands instead of paying in taxed earnings. Since rules change over a period of time, investing money for children future is pretty recommended.
Although these steps are considerably straightforward, still it may be worth addressing to an accountant to get help when planned to become a freelancer. Contact them provides a contact form that helps in contacting a free consultation with any local accountant.