Self-employment allows you the freedom to build your own income, work on your terms and be your own boss, but while it does have many advantages, it also means that you don’t get a lot of the benefits that workers employed by companies and organisations receive. If you are new to self-employment or are still getting to grips with all the details then there might be a few things you aren’t aware of.
1. Self-employed people are entitled to tax rebates for their expenses
While you might not have the luxury of paid holidays, sickness pay and bonuses for working overtime, you are entitled to some pretty decent tax rebates as a self-employed person. What you can claim for depends on the industry you are in and what you need in order to conduct your business. If you are in the construction industry for example, you can claim for the cost of tools, running your van, phone bills and many other things needed for your work. Similarly, if you are self-employed and have to travel or work from home you can claim rebate for your mileage or ticket expenses, computer and stationary etc. If you haven’t claimed for your expenses before than you might be entitled to a tax refund. You can use an online tax rebate calculator to find out what you might be able to claim.
2. It is important to register
If you are self-employed, it is important that you register as such. If you are just starting up you might be entitled to help with funding and launching your business. However, if you are already established registering will ensure that you are paying the correct national insurance and tax. You can register online if you haven’t already. Once you have registered, it is important to keep business records and receipts to keep track of what work you have done and as proof of what your outgoings have been throughout the tax year. This should be recorded in line with the tax year which runs from April 6th-April 5th the following year. You will then have to fill in a self-assessment tax return based on your earnings for the previous financial year.
3. Find out if you need to register for VAT
If your business turnover is more than £83,000 than you must register for VAT. This can be done at any time throughout the financial year so if you approaching this amount then it is important to prepare to register. You must do this within 30 days of reaching the threshold or you can be fined.
4. You might need insurance?
If you have employees then employer’s liability insurance of at least £5million is a legal requirement and the certificate must be displayed where employees can read it. If you have premises you might also need public liability insurance, and depending on the nature of your business professional indemnity insurance might be necessary too. If in doubt, check before you buy.
Self-employment might seem like an overwhelming prospect but once you have the foundations in place, it can be very rewarding. Write yourself a to do list and work through it bit by bit and you will get there eventually.