Sole Traders: Registration is the name of the game!
You’ve decided to join the ever-growing ranks of the self-employed and strike out on your own in a bid to earn your fame and fortune.
Or perhaps you just want to enjoy some job satisfaction doing what you’ve always wanted to do at your own pace.
But if you are starting your own business and setting up as a sole trader, what is one of the first things you need to do to ensure a smooth start-up?
Well, one of the basic requirements is that you should register with the HMRC for Income Tax and National Insurance purposes within three months of starting your business.
If you don’t, you could face a fine of £100, plus find yourself landed with a bill for back-dated National Insurance contributions and find you also owe the Taxman.
There’s no registration fee to pay, not too much paperwork, although you might need a licence or permit from your local authority if you want to work as a childminder, taxi driver or street trader.
Other considerations include whether you need to pay business rates, if you need planning permission if you’re working from home and whether you need to review your insurance arrangements.
You can register either online, by phone or by post.
Then each year you’ll need to complete a self-assessment tax return for the HMRC – either online or through the post – outlining your income and itemising any claims you wish to make for tax allowances or reliefs.
Bear in mind that a tax year runs from 6 April to 5 April of the following year, and the final deadline for submitting self-assessment forms online for the previous tax period is January 31 each year.
The GOV.UK website says if you are a sole trader you can keep all your business’s profits after you’ve paid tax on them, but you’re personally responsible for any losses your business makes.
It says your responsibilities include:
- Keeping a record of your sales and expenses
- Sending a Self-Assessment tax return every year
- Pay Income Tax on your profits and National Insurance
If you have turnover over £85,000 a year, you should also register for VAT.
If this all sounds a bit daunting, don’t worry! Help is at hand if you consult a bookkeeper who can help you through the maze of Self-Assessment forms and what you can and cannot claim. Also, remember that you do not need the services of an accountant is you are not set up as a limited company.
Contact Kim Kelly on (01952) 402632 or 07814 690878 or email firstname.lastname@example.org for a no obligation discussion.