Going self-employed...

Vonhelmet · 25 Sep 2011 at 12:02

Freakbro said:
Here's a link to get you going.

http://www.hmrc.gov.uk/selfemployed/register-selfemp.htm

Then set up a 2nd Bank A/c just for "the business" - then take your drawings out of that. It's not essential, but it does make record keeping easier and keeps your business records separate from your personal accounts.

Make sure your serious about this though, as you will have to start paying class 2 NI straight away (unless you claim for exemption due to low profits ~5k iirc)

The link should explain a lot.

Yep, definitely start there and do the 2nd account thing.

Blackhawk47 · 25 Sep 2011 at 12:22

Vonhelmet said:
Yep, definitely start there and do the 2nd account thing.

Thanks for info everyone. Do you pay charges when opening a business account and do I have to set up as a limited company straight away?

Also whats the deal with the Princes Trust fund thing. Anyone done or used it?

Moorron · 25 Sep 2011 at 12:29

Most banks will have a year free on charges but it doesnt have to be a business account, just a second one under your name. My missus went self employed about 5 years ago as a mobile hairdresser after spending 10 horrible years working for a salon. We didnt do it for money reasons as im the bills payer but for conditions and its the best thing she ever did.

Open a second account at your current bank but dont tell them its for a business, just say it to help your spending (so a spending account!). Just make sure it does what you require it too, card? cheque book? and so on as most accounts dont have this now.

Good luck

Freakbro · 25 Sep 2011 at 12:41

You don't have to go Ltd no, and if you did you wouldn't be "self-employed" in the technical sense, you would be an employee/director of the business.

There would be a lot more set up costs with going Ltd, plus accountants fees for auditing and filing. It is a lot simpler to start as a sole trader (self employed) as it will cost nothing. But dependant on your turnover/profit expectations there is a difference between Ltd and self employed on your tax liabilities.

Basically, if it's small amounts to start with, just go as a sole trader, as soon as it picks up and gets serious then I would go Ltd.

Blackhawk47 · 25 Sep 2011 at 13:07

Freakbro said:
You don't have to go Ltd no, and if you did you wouldn't be "self-employed" in the technical sense, you would be an employee/director of the business.

There would be a lot more set up costs with going Ltd, plus accountants fees for auditing and filing. It is a lot simpler to start as a sole trader (self employed) as it will cost nothing. But dependant on your turnover/profit expectations there is a difference between Ltd and self employed on your tax liabilities.

Basically, if it's small amounts to start with, just go as a sole trader, as soon as it picks up and gets serious then I would go Ltd.

That's how I was looking at it but just wanted confirmation.

Thanks all and I'll look into the additional bank account, I am with HSBC so is it possible to just set up a extra account on internet banking? Or do I have to go into the branch and sort it out there?

Mr-Xoc · 25 Sep 2011 at 13:33

You mentioned you are unemployed, if you have been signing on for six months or more you may be entitled to the New Enterprise Allowance

A little extra funding couldn't hurt in getting you started

franco_22 · 25 Sep 2011 at 13:38

Hi guys, I've been self employed for almost 2 months now. It's going great.

The end

Blackhawk47 · 25 Sep 2011 at 13:58

Mr-Xoc said:
You mentioned you are unemployed, if you have been signing on for six months or more you may be entitled to the New Enterprise Allowance

A little extra funding couldn't hurt in getting you started

I haven't signed since the end of my last job.

~>Dg<~ · 25 Sep 2011 at 14:55

if you not good or not sure you can ask the inland revenue to help they will even do all your returns and stuff for free

they are quite helpful in helping you go self employed and tell you the ins and outs of it

mattyprice4004 · 25 Sep 2011 at 14:56

That Rover guy...

Good luck mate, if you need a hand my email is in trust, and I'm on BookFace and MSN which I can ping back to you if wanted. Keep us updated, fingers crossed for you.

bitslice · 25 Sep 2011 at 15:16

Do you have to pay tax if your turnover is low?

Freakbro · 25 Sep 2011 at 15:23

bitslice said:
Do you have to pay tax if your turnover is low?

You pay tax on your profits, not turnover.

So depends how much profit you make to how much tax you pay, if any.

Vonhelmet · 25 Sep 2011 at 15:25

Freakbro said:
You pay tax on your profits, not turnover.

So depends how much profit you make to how much tax you pay, if any.

Yep.

bitslice · 25 Sep 2011 at 15:32

Thanks guys, but how do you work out profit, if say I get paid £10 to chop logs or whatever?

Freakbro · 25 Sep 2011 at 15:37

bitslice said:
Thanks guys, but how do you work out profit, if say I get paid £10 to chop logs or whatever?

Basically your profit is your income (turnover) less any expenses (costs incurred in achieving that income)

Skidder · 25 Sep 2011 at 15:38

Well you would have to buy an axe and depreciate that over time. If the axe has a useful life of 5 years, a fifth of the value of that axe would be removed from your revenues when calculating profit. Do people bring the trees to you or do you go to them, suggesting a transport cost etc. etc.

LordSplodge · 25 Sep 2011 at 15:41

bitslice said:
Thanks guys, but how do you work out profit, if say I get paid £10 to chop logs or whatever?

Profit is whatever is left after expenses. So if you made £10 chopping logs and your axe cost £5 you'd make £5 profit.

Gross profit, of course!

That's a very simplified version of events.

Skidder · 25 Sep 2011 at 15:44

LordSplodge said:
Profit is whatever is left after expenses. So if you made £10 chopping logs and your axe cost £5 you'd make £5 profit.

Gross profit, of course!

That's a very simplified version of events.

also wrong

as pointed out above, you would have to depreciate the axe

LordSplodge · 25 Sep 2011 at 15:48

Skidder said:
also wrong as pointed out above, you would have to depreciate the axe

Profit is whatever is left after expenses, thus my simplified example is correct. Sure in real life you have to deal with such complexities as depreciation but why confuse the poster with such things? He asked what profit was.

You're just trying to be clever.

bitslice · 25 Sep 2011 at 15:48

meh, I've started mine (I'm completely clueless though on what's involved tax wise) but by the time I've paid the mortgage and utility bills I'm still having to dip into savings to survive. If it turns out I have to pay tax on a negative income then I'd be better off on the dole it seems.
I've no outgoings other than petrol to site and a few materials, it's all labour. (The chopping logs was just an example, I'd be dangerous with an axe

)

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