[IanHoughton]

As there must be a few self-employed togs on here, I was wondering if anyone can give me some pointers to being self-employed.

I currently have a full time job as an employee, but will soon be working from home as well doing web design. I understand I need to register with the tax office but what are the implications towards tax / NI with my full time job.

If anyone has some links to easy to read info on being self employed / tax etc that would be great.

[silkstone]

I'm on my way out now (I mean to the pub - not throwing off this earthly coil) but I've been self-employed for the last 14 years and can make a few suggestions if nobody makes them first.

[silkstone]

Oh come on you guys and gals!

TBH I really don't know what the implications are of being both an employee and self-employed at the same time - I've never done that - either one thing or the other.

You'll need to declare your (non-PAYE) earned income on your tax return, and it would be a good idea to talk to HMRC so they can send you one if you don't get it anyway. You're paying NI through your employer, so you may not need to pay a Class 2 contribution as well - ask about that too.

Other than that, I don't think it's terribly complicated as long as the self-employment is not your main source of income. You should be able to pay the additional tax twice-yearly, or get HMRC to adjust your tax code so it's deducted from your salary. I'd go for the first option (if available).

Shock horror, but I've always found the tax people to be very helpful, especially if they think you're trying to play straight.

Another thing to consider is if you should be VAT registered, which depends on whether your customers are mainly (VAT registered) companies or Joe public.

[Dave]

About 8 years ago I was an IT contractor. Set myself up as Ltd company (about £200) & then find a decent accountant to advise any tax loopholes Back then you used to pay yourself about £3k pa then the rest in dividends , which meant you only paid lowest rate of income tax & no NI on it . My understanding is they have tightened up on this now.

From memory the advantage of Ltd company are related to if things go belly up, the company folds &y our house etc styas safe. Worth considering pros & cons.

[Dave]

Originally Posted by silkstone

Another thing to consider is if you should be VAT registered, which depends on whether your customers are mainly (VAT registered) companies or Joe public.

..if you hit the VAT ceiling on earnings, you have no choice ....8 years ago it was about £55K

[Gary Bagshawe]

Hi Ian, I am self employed and am also a part time out of hours GP driver for the NHS. (4 shifts a month).
I would suggest getting an accountant because if you get a good one they really are worth every penny.
I separate all my receipts into different groups, motoring, equipment, consumables etc and take them to the accountant once a month. My part time job is taxed at source then at the end of the financial year I take in my final pay slip and my accountant works out how much I have paid and offsets it against what I owe, depending on how much I have earned etc.
As long as you inform the IR and pay the extra NI contributions I do not think that you will have any issues.
Any other questions just ask away or PM me and ill give you a call etc.

[silkstone]

Re VAT, even if you don't hit the compulsory registration figure you can still choose to register. It depends mainly on whom you sell to. If your customers are mainly members of the public, it's probably best not to be VAT registered. If they are mainly companies who are themselves VAT registered, they can reclaim the VAT that you add to your invoices. The advantage to you is that you can reclaim VAT on all capital and revenue items relating to the business, including of course photographic equipment.

Forming a limited company offers you some protection if things go wrong, but also complicates your accounts and means that you are an employee. So, for example, your car may be set against tax by your company, but as an employee it will count as a taxable benefit.

As has been said, find a decent accountant and talk it through.

[Joseph McGarraghy]

Hi Ian,

You may find this helpful:

HM Revenue & Customs: IR56 - Employed or self-employed? A guide to employment status for tax and National Insurance contributions

I was self-employed for more than 15 years with my secondhand books shop.

Retired four years ago so advise recent information.

[Summerleft]

VAT ceiling is 60k now I think,


only ring up to register the new business with IR when its started and do it within 3 months, dont ring before or you get a woman telling you off!

to be honest I wouldnt bother with an accountant until you can feasibly pay for him/her out of your profit, I do both my own and used to do my OHs books and its not as daunting or scarey as people lead you to believe

Excel sheet, a back up and print out of receipts and invoices will do if you dont go VAT reg which you can convert to at anytime.

The packs from IR on starting a new business and the business forums are quite useful,

oh top tip keep a copy of your first self assesment sheet, its so easy to forget what you put in it, you can ring for a copy the year after but its better to have one to hand.

Hard copies and digital copies of everything lol

Depends on how much you are planning to earn but if its under around 4K in your first year you can apply for the lower NI earnings

HM Revenue & Customs: Home Page best link for downloading anything, they have templates for accounts, being self employed, earnings etc

I started by just registering a domain name for my business back in 2005, then getting a business bank account
Abbey is good, you only pay for it after your income goes over a certain amount
(thier not great for much else but thier business account is a good starter)
Then I set a date for the business to open, started to trade (it was an online shop before I converted it to photography)

then a week after rang tax office, registered it as part time and bobs your uncle

Then after you get going then you can take your time looking at VAT etc, thing I learnt is not to rush into it and miss something out, you can always add to it later.

Have some links on my other PC let me know if you want them.

HTH a bit

[Dave]

Re Accountant, Summer, although yes it is true you can do most yourself, I think the other point is an Accountant can advise ways to minimise tax etc, so best to get that advice asap.

[Joseph McGarraghy]

Originally Posted by Summerleft

VAT ceiling is 60k now I think,

to be honest I wouldnt bother with an accountant until you can feasibly pay for him/her out of your profit, I do both my own and used to do my OHs books and its not as daunting or scarey as people lead you to believe


HTH a bit

These are the important words that I agree with:' ...until you can feasibly pay for him/her out of your profit, ...'

[Summerleft]

Originally Posted by Dave

Re Accountant, Summer, although yes it is true you can do most yourself, I think the other point is an Accountant can advise ways to minimise tax etc, so best to get that advice asap.

You can also do that by researching it yourself ya lazy broomhandle


Also everyone has a relative or friend whos an accountant, Ian I bet theres one somewhere you know, the odd question they will be happy to answer


In the finacial climate we are experiencing at the moment it really pays to hold on to your cash where you can.

[Gary Bagshawe]

Originally Posted by Summerleft

You can also do that by researching it yourself ya lazy broomhandle


Also everyone has a relative or friend whos an accountant, Ian I bet theres one somewhere you know, the odd question they will be happy to answer


In the finacial climate we are experiencing at the moment it really pays to hold on to your cash where you can.

Sorry ill have to disagree with that, a good accountant will not cost you much and will probably save you more than they cost you, as long as you don't go in 2 days before your return is due with 3 carrier bags full of stuff they won't charge the earth. These people study for years to do what they do so I don't really think that a quick google will get you the same results. I have tried before to cut out the cost of an accountant with disastrous results. You have been warned

[silkstone]

As Gary says, it's all about value for money. A good accountant will pay for him/herself by minimising your tax liability and advising on the financial management of your business. I've also found that the tax and VAT people - now combined into Her Majesty's Revenue and Customs - are far less likely to give you any hassle if your accounts are prepared/audited by a qualified accountant, and that in itself is worth a lot.