Self Employment Advice

raptormonkey

raptormonkey

raptormonkey

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My Sister-In-law is thinking of going self employed. She has been going around doing peoples hair, nails, etc for a couple of months now.

She has to register with the tax people and needs to do it soon. If she doesn't tell them she has already been working for the last few months, how can they fine her if they don't know she has been working for the last couple of months? (All cash jobs)

She wants to do her own accounts. Any free software she can use?

Also, she has just openend a business account. If she does 6 cash jobs a week and only puts 4 of the money from them away into the business account how are the tax people going to know about the 'other' 2 she earned from and didn't decalre? I ask as her friend told her to give some to the tax man and keep some for herself!! lol
 
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In the grand scheme of things its unlikely the tax man will find out about the odd cash job.

The problem lies with people who cannot just do the "odd" cash job and try to do the odd "real" job instead.

When she files her end of year assesment, and shes hardly earned enough to pay bills let alone live its going to be fairly obvious that shes upto something. If they get suspicious they can go through EVERYTHING of hers to find evidence. A common way people get caught out is by using cash jobs to buy food and petrol, which sounds good but when someone delves into your bank accounts and finances and finds that you have apparently spent nothing at all on food and petrol for 3 years its pretty clear cut that you must be using cash thats not been acccounted for.

The risk is hers of course, but ive known someone who was self employed and did 50% of his jobs cash in hand and didnt declare them get taken to the cleaners by HMRC. It wasnt pretty at all and he only just avoided losing his house, lost his marriage and barely kept his liberty. The wife was quite happy to spend it all when the going was good, but soon after she went off with another bloke ( also self employed and on the fiddle by all accounts ). :p

He now has his finances checked by HMRC every 6 months and will do for quite a few years yet. Hes also paying a large tax bill and fines.

Im self employed and i do things by the book, its simply not worth the few extra quid to try and fiddle things. If you get caught its going to cost you far more in the end.
 
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Thing is, her husband works full time anyway and she doesn't expect to earn more than £500 - £800 a month. She loves her job but is not 'Career minded'. It is more of a love for the job as her husband earns a good wage. You might ask why not tell the tax man everything? Well, don't most self-employed keep a little for themselves?

What about an easy program to collate all her accounts? She said she would like to do it all on the pc. I have shown her some accounting books like Collins essential Accounts book but she said it looked complicated!! lol

Are they likely to find out about the couple of months or so that she has already been working? Can't see how myself but i am no tax collector!!
 
its a very small chance she will get caught although if she has bought anything for the business in those 2 months she wont be able to claim them on tax relief, nor petrol or any other business expense, legally she has 3 months to tell the tax office she has been self employed.

for a business with the projected earnings she's given i would think there is no point using accounting software, just keep a book or excel sheet with the usual incoming and expenses and such as self asessment is a very simple process online.

not sure this thread will be locked as your asking for advice on breaking the law .
 
Best thing is to employ an accountant straight away and leave all your bookwork to him/her. Fees are quite reasonable for a small business and they will save you far more than you/she can fiddle simply by knowing what can and can't be claimed for legitimately. Tools of trade, car expenses, not just fuel but all running expenses and depreciation. Phone bills, set amount of your fuel bills, electric, gas, water even rates and taxes for your living premises if some of the work is carried out from there.

I assure you that the last thing you or your friend will want to do after a hard days work is sit down and start doing the books and once you leave them for a while it all seems to much to catch up and they tend to get left till the very last minute before they should be presented to the Tax-man. :(
 
She does not want to break the law! She has registered now as self employed but obviously the only thing that is concerning her is that she has not declared that she started a couple of months previously.

Accountant fees can be very high and as said above, the amount of money she is expecting to earn is not astronomical.
 
Well tbh i work for a small sign company although takes in a lot.
There's a lot of cash done on the side, if the client wish's to pay by cash, no one will ever know, well a small percentage tbh.

and how do they know you havn't done these as a favour etc?

Although i would sign up to it asap to avoid this :)
 
Thanks for advice guys. I will point her in the right direction. Anymore advice would be great. Is there an easy program she could use to do her accounts on? She is not very computer literate but knows how to turn it on! lol
 
Any spreadsheet software will do, however I would persudae her to use one of those accounts books. I prefer working from those when preparing accounts/tax returns than when they have used their own spreadsheets and complicate matters :)
 
A simple spreadsheet like this would be easy to update and make things a lot easier when it comes to doing her tax return, all she has to do is keep a record of takings and each business reciept/invoice and keep them in a seperate plastic wallet for each week for example, and then update this spreadsheet with the total weekly amounts. The tax return would take an accountant about 10 minutes then :)


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Waw! Thanks for that. What about cross referencing an invoice with stock bought or sale? No room for that on the above spreadsheet?

Also, would she need to put down her Nation insurance on the sheet?
 
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Thanks for your help ste99. Like your spreadsheet. Have passed it on to her. Thing is, she wants me to set it up for her now!! Cheek!

Looking at your spreadsheet, she just adds up the figures and applies them to the self assesment form? No need to write down 'Daily' expenses / takings?

If she buys a new PC, can she put that on as Capital expenses?

She is going on a course next month by Inland Rev about self employment and self assesment.

Does she need to put down invoice numbers for items bought / sold or just the total figures. I presume the paperwork (Invoices) are there as proof of sales / purchases just in case the tax people want to check?

Another point, sorry for questions, does she 'Have' to tell them about 'all' her savings / investments? She has a few savings accounts, bonds etc. What about her husbands accounts? Does she have to declare them?

Thanks
 
if i were setting up my own business the first thing i would do is ask my Brother in Law to ask some of his internet friends on a computer forum for advice. That should see me right.

www.businesslink.co.uk

Phone them, go see them. Job done.
 
spoonz said:
if i were setting up my own business the first thing i would do is ask my Brother in Law to ask some of his internet friends on a computer forum for advice. That should see me right.

www.businesslink.co.uk

Phone them, go see them. Job done.
Click to expand...

I offered to find out some basic stuff for her. She has already booked herself on a couple of courses!! No need to get uptight about it mate. Lots of friendly guys on here who can give some good advice.
 
raptormonkey said:
Thing is, her husband works full time anyway and she doesn't expect to earn more than £500 - £800 a month. She loves her job but is not 'Career minded'. It is more of a love for the job as her husband earns a good wage. You might ask why not tell the tax man everything? Well, don't most self-employed keep a little for themselves?
Click to expand...

She'll only be taxed on earnings over ~£5k a year anyway, so may as well do things by the book - no point trying to fiddle things for the sake of a couple hundred quid.
 
I got a small business spreadsheet from my advisor on the go for it programme.
I can email you it if you want to have a look?
you can change the product descriptions etc and tailor it to your purposes.
 
muzzler said:
I got a small business spreadsheet from my advisor on the go for it programme.
I can email you it if you want to have a look?
you can change the product descriptions etc and tailor it to your purposes.
Click to expand...

also emailed you mate, wouldn't mind seeing this spreadsheet
 
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