Self-Employment

LiE

LiE

LiE

Caporegime
Joined
2 Aug 2005
Posts
26,013
Location
Milton Keynes
Need some advice regarding self-employment. My girlfriend runs her own business as a mobile hairdresser and has recently registered as self-employed.

I've read over http://www.hmrc.gov.uk/sa/self-emp-part.htm

My questions are:
1. Any advice on creating a profit/loss account? The way she pays herself is income - expense = wages.
2. What needs to be done to claim tax relief on fuel?

Thanks
 
Advice...

Get professional help.

Have a one off meeting with an accountant to get advice on setting up the business and find out what issues are likely to arise. Try to get one with experience in the area of your business. I doubt it would be worth retaining the services of an accountant long term - they are expensive and their advice isn't always that good.

Get a book-keeper onboard early. This should be fairly cheap and will only be an hour or less per month.

I assume when you say wages you will be making allowances for paying taxes. I have heard of people who forgot to do this.
 
Im an accountant and I cant agree with the above statement - what you would pay a chartered acountant to do the job will save you more in tax as we know exactly what can go through and what cant, also how to deal with the revenue etc.

As for the "wages", being self employed means she cant deduct the moeny she takes from the business as she is entitled to all the profits basically.
 
I was joking! I could write a detailed manual on how to evade tax but sadly my ethical guidlines prevent me from doing this....

@ osc89er, you could set up a limited company and take her personal allowance as salary and the rest as divis but when you way up the cost for such a small business you wont be saving much.

@msm722, My firm is based up north where the prices are probably cheaper but we would be charging in the region of £400-500 for accounts and tax return providing the records were in good condition.
 
Accountants vary, we pay around £500 per year for a relatively straight forward set for a Ltd, its hairdressing but not mobile. The savings they can get you kind of pay for themselves and more really. I have another very basic Ltd setup that really just pays a few dividends a year and thats £250 + VAT which is quite cheap.

You also have less chance of getting investigated if you have a proper accountant assigned to your business. Self employed accountant rates were a tad cheaper and we used to pay around 350-400 per year for those.
 
I was self-employed for many years. I used a simple book keeping programme called Money Manager and presented my accountant with the information in the way he wanted it and he did my final accounts and tax returns etc.
I know he saved me money over the years. Oh, and don't stick up two fingers to HMRC. They may be busy but they're not stupid.
They WILL get you in the end so don't claim you earn £1.45 per week!
 
I wouldn't go down the limited company route I don't think for the business you describe. It is altogether too much hassle. It is also conceptually different. The company is a legal entity in it's own right and the money in it belongs to the company. There are strict rules about getting money out of the company for use of the directors/owners. Just pocketing company money for peronal use is a big no-no, you ned detailed records, and you need an accountant to make everything look legal once per year.

Accountants in this thread please feel free to correct this if it is incorrect - I would hate to mislead.

Incidentally I have always found the Tax people to be most reasonable assuming honesty and good intent in dealings with them. The VAT people are another kettle of fish.
 
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For my little sole trader business, I just use some free book keeping software I got from Natwest to record sales, purchases etc, then at the end of the financial year I get one of my two accountant friends to do my tax return for me which (very fortunately) costs me either nothing, or a beer or two! :o)
 
Im self employed and have been for 4 years now.

You can make things overly complicated or you can do things the easy way, it depends on how you conduct your business.

I simply keep a record of all the invoices i give out and how each gets paid.

I then hand this to my accountant at the end of the year, with all the reciepts for the things i can claim tax back on ( the accountant will tell you ) and she does my tax return. She charges me £75 for this.

I dont have a business account i just pay any cheques into our joint account and any cash likewise. I dont have a large amount of business clients so i simply dont need to make a massive job out of using accounting software and so on.. its simply not needed.

If you only do cash jobs, with cheques sometimes, then just keep a record of all invoices and how they are paid to you. Keep your bank statements and make notes of payments in of cash ( should you ever be asked questions by the tax man ) and pay an accountant to do your end of year tax return.
 
AtreuS said:
Im self employed and have been for 4 years now.

You can make things overly complicated or you can do things the easy way, it depends on how you conduct your business.

I simply keep a record of all the invoices i give out and how each gets paid.

I then hand this to my accountant at the end of the year, with all the reciepts for the things i can claim tax back on ( the accountant will tell you ) and she does my tax return. She charges me £75 for this.

I dont have a business account i just pay any cheques into our joint account and any cash likewise. I dont have a large amount of business clients so i simply dont need to make a massive job out of using accounting software and so on.. its simply not needed.

If you only do cash jobs, with cheques sometimes, then just keep a record of all invoices and how they are paid to you. Keep your bank statements and make notes of payments in of cash ( should you ever be asked questions by the tax man ) and pay an accountant to do your end of year tax return.
Click to expand...

This sounds like a good option. So do you have a spreadsheet with sales and expenses? Keep all your receipts and hand them over to the accountant to do tax return?

Also, how is income tax/N.I calculated, or is that included in the tax return?
 
msm722 said:
This sounds like a good option. So do you have a spreadsheet with sales and expenses? Keep all your receipts and hand them over to the accountant to do tax return?

Also, how is income tax/N.I calculated, or is that included in the tax return?
Click to expand...


I just keep a copy of all my invoices ( done in word ) and a copy of my bank statements. The accountant just adds up all the invoices and uses my bank statements and receipts to deduct anything i can claim. NI is paid quaterly, she will get a letter from them in the post each quater, and your accountant works out all the tax in the tax return.
 
Doing a tax return really isn't that difficult. You could do it all yourself, and not have to bother with the expense of an accountant.

Just keep a record of all the money you receive in the year, and all the money you spend in the year, and all the business miles done in your car for the year.

At the end of the year, complete the tax return. If turnover for the year is less than £30k then you don't need ot break down your expenses.

Expenses will be anything that cost the business, and is used by the business. Things like advertising, the cost of business phone calls, scissors and other hairdressing stuff, and mileage.

Usually the most beneficial mileage method is to claim 40p per mile.

Shove your total expenses in the right box, and then take this from your turnover to get profit. That is what you pay tax on. HMRC will calculate it for you, or you can calculate it yourself.

Assuming turnover of less than £64k, then this is the self employment part of the tax return to fill in http://www.hmrc.gov.uk/forms/sa103s.pdf

You would then need to complete the rest of the return, which is all quite simple. I can't see that any of that would require an accountant, or how paying an accountant could save you money.
 
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