FAQs for the Newly Self-Employed!
I get to meet lots of new start up businesses, and it is always exciting to hear their plans, ambitions, and dreams.
There are a few key questions that I am always asked when people are newly self employed:
WHEN DO I NEED TO TELL HMRC?
When you take the step to become self employed (either the full leap or setting up a business alongside the day job), you need to tell HMRC that you are self employed. This is actually relatively easy to do online and the deadline for telling them is 5 October in your second tax year .. so .. if you started on 1 September 2017 then 17/18 tax year is your first tax year, 18/19 is your second tax year so you would need to be registered by 5 October 2018 at the very latest.
I always advise to get on and tell them sooner rather than later, as it is one of those things that is easily forgotten further down the line.
If you are already registered for self assessment, you still need to tell them that you are self employed.
Here’s the link to register .. so now there is no excuse not to!
DO I NEED A SEPARATE BANK ACCOUNT?
Legally, no. When you are self employed there is no legal distinction between you and your business.
BUT (there’s always a but!), it is good practice to have a separate business account – it makes record keeping a lot easier if the business ins and outs are in one place and if HMRC wanted to do any checks then, in theory, you would only need to provide the business bank information to them (they can still ask for further information but keeping it separate makes this a harder ask).
HOW DO I PAY MYSELF?
When you are self employed, you take drawings out of the business and I covered this in a previous blog which you can read here
WHAT TAX DO I PAY AND WHEN
When you are self employed you pay income tax on earnings above the personal allowance and then Class 2 National Insurance (weekly) and Class 4 National Insurance on profits above the NI threshold.
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