A guide to going self-employed

Going self-employed can be both an exciting and lucrative move, with some of the benefits including setting your own work schedule and being able to scale your business. You can create what the perfect job looks like to you.
However, it’s also a challenge that comes with responsibilities – you will be in charge of your own destiny and that takes courage, determination and a particular mindset. You’ll have to take on multiple roles to ensure you are adhering with self-employment regulations and you may find this overwhelming at times.

It is your responsibility to ensure you research your options to make sure you are making the right decision for you.

We have put together a handy guide of things you will need to consider before going self-employed.

It’s on you.
Until you scale your business, (if that is the intention) then everything is on you and you will be working alone. From customer service to finances, there will be a lot to keep on top of.
Joining local networking groups for business owners is a good way to connect with likeminded individuals and gain that support you may feel is lacking. It’s also a great way to market yourself.

It may not be flexible in the short term.
Being self-employed is a great way to create a better work life balance as you can pick and choose what you do. However, with the loss of a regular pay day, it may be that you need to take on as much work as possible at first to establish the business in order to give you a flexible future. You may also find yourself tackling admin and customer service in between your working hours.

There are financial responsibilities.
Registering as self-employed means you will have an obligation to complete a self assessment tax return each year. This is to declare your income and pay the correct amount of tax owed. When you are self-employed, you are able to claim for certain expenditures which will alter your tax bill, so always get some advice from an accountant about how that works. Remember, an accountant is your business partner and will want to help you pay less tax.

You’ll have to keep accurate and up to date records of receipts and invoices too. Your accountant can advise you on what the best software to use for this is – HMRC will be implementing Making Tax Digital soon which means you will have to use approved software such as Xero to complete your assessments.

As your tax doesn’t get paid as you earn, you must also remember to put money aside so you are prepared for the tax bill!

Depending on your earnings threshold, you may also need to consider being VAT registered.

You’ll need to broaden your skills.
When you are self-employed you will have to undertake admin, market yourself, pitch for work and more.
Linked in offer some brilliant training videos across lots of different topics, including communication skills, which can be helpful for business owners.

You will have different rights.
Being self-employed means you wont have the same rights as employees. That includes no sick or holiday pay, and losing employer pension contributions.

Don’t forget insurance!
You’ll need to get business insurance for added protection. Whether someone injures themselves at your workplace, or you flood a customers property – you need to get covered.

Use professionals.
Setting up solo can be daunting and there is a lot to remember. By hiring a professional accountant or bookkeeper, you can relax in the knowledge that all of your finances are being looked after, and you can concentrate on growing your business.

Does this article resonate? Are you thinking of going self employed? Did you find this blog helpful? We would love to hear from you.

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Autumn Statement 2022 – Lowdown for Small Business

The much-anticipated Autumn Statement – announced by Chancellor Jeremy Hunt yesterday – included a number of measures that will have an impact on small businesses and landlords in the UK. Here’s a roundup of the key takeaways.

Business tax and National Insurance changes
Rate of Class 2 National Insurance to increase
From 6th April 2023, the rate of Class 2 National Insurance for self-employed people will increase to £3.45 per week.

VAT registration threshold to remain at £85,000
The Chancellor confirmed that the threshold for VAT registration will remain at £85,000 worth of VATable sales until 1st April 2026.

Employment Allowance to remain at £5,000
The Employment Allowance – which reduces or cancels out employer’s National Insurance for certain employers – will remain at £5,000.

Corporation Tax rate to remain at 19% for smallest companies
From 1st April 2023:

companies that make a taxable profit of £50,000 or less per year will continue to pay Corporation Tax at the ‘small profits rate’ of 19%
companies with taxable profits between £50,001 and £250,000 a year will pay Corporation Tax at a rate of 25% with a ‘marginal rate relief’ deduction
companies with taxable profits of £250,001 or more a year will pay Corporation Tax at a rate of 25%
National Minimum Wage thresholds increased
From April 2023, all thresholds for the National Minimum Wage will increase. Meanwhile, the National Living Wage will increase by 9.7% to £10.42 an hour for those aged 23 and over.

Increase in bills capped for the smallest businesses affected by reductions in rate relief
For the smallest businesses affected by reductions or changes in eligibility to small business rate relief or rural rate relief, the increase to their bills will be capped at £600 per year from 1st April 2023.

Research and Development (R&D) changes to be implemented
For expenditure on or after 1st April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%. The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.

Personal tax and National Insurance changes
Additional rate of tax threshold reduced
The threshold for the additional rate of tax will be reduced from £150,000 to £125,140 from April 2023.

Changes to this and other Income Tax thresholds for non-savings and non-dividend income currently apply to England and Northern Ireland only. The Scottish government has yet to announce changes to Income Tax rates or thresholds. The Welsh government has the power to vary Income Tax rates but has never yet done so.

All other changes, including changes to the thresholds where they apply to savings or dividend income, apply UK-wide.

All other Income Tax and National Insurance thresholds frozen until April 2028
The existing thresholds for all rates of Income Tax and National Insurance will be frozen until April 2028, including the Personal Allowance.

Dividend allowance cut
In April 2023 the dividend 0% tax allowance will be cut from £2,000 to £1,000. In April 2024, it will be reduced further to £500.

Changes to the Annual Exempt Amount for Capital Gains Tax
The Annual Exempt Amount for Capital Gains Tax will be reduced from £12,300 to £6,000 from April 2023. In April 2024, it will be reduced further to £3,000.

Electric cars will no longer be exempt from Vehicle Excise Duty
From April 2025, electric cars will cease to be exempt from Vehicle Excise Duty.

To learn more about the changes announced in the Autumn Statement, you can read the full report on the government’s website.

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How can my business survive a recession?

The UK seems to be officially heading for a recession and in this blog we will be discussing how you can prepare your business for the coming months.

Before we evaluate the steps you can take to protect your business in a recession, it’s important to highlight that a recession is part of a normal economic cycle, and there will be easier and better times ahead.

A recession can in fact, focus your attention on cost control and have a long-term positive impact on your financial processes and disciplines. (We like to focus on the positives where we can!) So let’s take the perspective of a challenge that we are ready to complete with the following tips and advice from our expert panel of accountants.

 

1: Cash flow is King. Cash flow is the number one priority in surviving a downturn in the economy and this requires stringent financial management. Remember, if you don’t often speak with your accountant, now is the time to take a look at the business accounts together.

2: Manage your debt. Companies with higher debt are more vulnerable in a recession as your outgoing commitments are higher. Can you consolidate your debt into one payment? It may require a longer term at a higher interest rate but could that be less impactful on your business and retain more cash In the business? Whatever you do don’t bury your head in the sand – more that likely something can be arranged to help manage this better.

3: Credit control needs to be tighter than ever. It is likely that your customers are facing the same financial issues, therefore it’s more important than ever to get a tight control on credit. This is something your accountant can help you with if you prefer to outsource invoicing so as to keep your professional relationships stress-free.

4: Overheads. Can you cut back on any overheads? If sales are down, can you cut back on staff or staff hours? Business owners are often reluctant to do this, but it could be essential to your business surviving or not.

Maybe now is the time to invest in automation and IT systems for your business to ensure a smoother running and less staffing overheads.

Can you outsource more jobs so you don’t have to employ an in house staff member? For example HR, Payroll or bookkeeping?  This can be higher in cost yet more cost effective as they will be experts, likely more efficient and you won’t need to absorb employer obligations such as holiday and sickness pay.

Are you on the best deals for your utility bills? Take some time to look at all of your expenses and ensure that you aren’t overpaying in places.

Do you still need that big premises? Can you move to remote working? Can you make better use of space and downsize?

 

5: Re assess your marketing strategies. A recession is not the time to cut back on your marketing spend. In fact, your voice needs to be louder than ever and your customers need to know why they need to choose you over your competitors when they are having to tighten their belts.

Take time to assess your marketing strategies and ensure you are really talking effectively to your consumer – focus on them. Offer meaningful deals and promotions, but don’t compromise on quality.

 

6: Prioritise networking events.

Post pandemic networking is on the up – not surprising! And it’s more important than ever to make those all important business connections and lasting business relationships. These connections can likely offer business opportunities, offer collaborative ideas and usually you can gain advice and support from other like minded business owners. Collaboration is key.

 

This list is not exhaustive and as always, please do give Soldi Partners a call if you’d like a chat. It’s always jargon free – and its always no obligation.

www.soldipartners.co.uk 

Theresa x

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6 Ways to keep your business healthy

2022 is proving to be yet another exhausting year for many – and it’s taking it’s toll on businesses too. Many of us get wrapped up in the day to day running of our businesses, that we neglect key ways to keep ourselves, and our businesses healthy.

 

Here’s our take on some top tips to implement to do just that.

Personal Wellness.

This industry makes millions and it’s a hot topic again in 2022 thanks to a post covid change in the way we live and value wellness. There is an abundance of paid and free information, ideas and guidance ranging from nutrition to exercise and meditation. With the cost-of-living crisis upon us, and business owners working harder than ever to survive, it’s never been a better time to invest in your personal wellness.

Connect.

Never underestimate the value of connection in business. Whether it’s a phone call, personalised email or private chat on social media, use every opportunity to connect with your audience to ensure you are a contactable, personable business.

Never stop learning.

A mistake easy to make is complacency in your skillset. The business world is ever evolving and keeping yourself educated and in the know in your industry is an important part of keeping your business and yourself relevant. Invest in yourself and your staff by regularly updating your education and knowledge to keep your business healthy.

Invest in people.

As the ever so wise and successful businessman Steven Bartlett says, when you are a business owner you are essentially a recruitment company. As a business owner you can’t be everything your business needs. Investing in the right people to do the right jobs within your business is one of the most important things you can do to grow.

 

Laugh more.

This had to be included – there must be a culture of hard work, dedication AND laughter in your business to keep you, your staff, and ultimately your business, healthy.

 

Don’t ignore the numbers.

We wouldn’t be doing our job if we didn’t shine a light on the importance of bookkeeping and analysing the numbers in your business. Don’t ignore them – healthy businesses are ones with accurate figures and action plans for ensuring those numbers are working for you!

I hope you find these tips helpful. Get in touch if you think of other ways to keep your business healthy!

Until next time,

Theresa

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Five things to know if you are considering employing someone

You’re thinking of employing someone? Great news! This is a positive sign that your business is thriving.

Taking on employees can be a lucrative move – whether you are hiring for someone’s particular expertise to grow your business, expanding your services, or making use of an extra pair of hands so you can dedicate your precious time to scaling the business.

Employing someone isn’t straightforward (nothing ever is in business, right?) and you’ll need to take on new responsibilities, so we have put together some handy tips to bear in mind when taking this exciting step.

 

1 – Know your facts.

There are numerous responsibilities you will take on when employing someone, so it’s important to have knowledge of employees’ basic statutory rights, employment law, and your PAYE obligations. It might be worth hiring an expert to help you navigate new company policies and contracts to ensure you are compliant as necessary.

 

2 – Get insured.

You’ll need to get Employment Liability Insurance when taking someone on – this is a legal requirement and is there to protect your staff if they get injured or become ill as a result of working for your business. It’s a relatively small monthly cost to ensure you aren’t liable if something goes wrong.

 

3- Be careful not to discriminate.

When recruiting you’ll need to ensure you are not discriminating against anyone in the process. Ensure you have a thorough job advert, which clearly states the skills you require for the job.

Don’t ask questions or make decisions based on a candidate’s ‘protected characteristics’  – which include gender and gender reassignment, race, age, disability, religious belief, sexual orientation, pregnancy and marriage, and civil partnership.

 

4- Can you afford it?

There will be costs involved when hiring someone. You’ll need to check:

  • What the National Minimum wage is
  • How much National Insurance you’ll have to pay
  • How much sick pay your employee is entitled to
  • How much you’ll need to pay towards their pension
  • Maternity / Paternity leave costs (this will include direct payments to your employee along with taking on someone to cover their absence, should you need to)

 

5- Register as an Employer.

Once you’ve done all of the above checks and you are prepared to take on an employee, you’ll need to register as an employer with HMRC. You’ll find all of the information you need on the GOV.UK website along with the online forms to submit. Click here for more info.

 

Soldi Partners is able to offer friendly, reliable, and simplified support for your business at all stages.

If you’d like to discuss anything covered in this article, get in touch.

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Why should I hire an accountant?

Hiring an accountant to look after your business finances can be a savvy move. DIY finances aren’t for everyone, especially when your accounts start looking rather complicated. Whether you’re just starting out, or if you’re up and running but looking to expand, here are some ideas why you need an accountant helping your business develop.

 

Saves you time

The majority of people start businesses doing what they love, and what they’ve always dreamt of doing. For most people, this unbridled enthusiasm generally doesn’t extend to spending hours on financial records and paying taxes.

Accountants can help you focus your business efforts on the really important (money-making) stuff, whilst they take care of the other important (tax paying) stuff. It’s a win-win; you don’t get to waste time crunching numbers, and you get to spend time making more money.

 

They’re up-to-speed

Tax deadlines, limits, and amounts due have an annoying habit of changing on a semi-regular basis. Overlook one critical change, and you could end up massively underestimating your next tax bill.

Using an accountant guarantees that deadlines are met, and that you’ll be paying the correct proportion of tax at the right time (and to the right people). Understanding how the system works can be a bit of a minefield; an accountant will help you tread carefully.

 

 

 

You could save money

Think hiring an accountant is expensive? Think again. A good accountant will be able to highlight any areas where you could be saving money (such as claiming for all of the expenses you’re entitled to), which means that not only could they drastically cut your tax bill, but they could even end up paying for themselves.

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Business support and advice

It might be that being a sole trader isn’t very financially efficient any more, and that you’d be better off running as a Limited Company of operating through an Umbrella company.

Accountants aren’t there just to help with finances; their support can improve your whole business setup. If you’re just starting out, they can cast a beady eye over your projections and financial plans. As your business grows, they’ll be able to run you through the various options available and point you in the right direction if you decide to change the structure of your business.

 

Full account management

Although you’ll still be legally responsible for their accuracy, you can handover full management of your accounts to your accountant. This means they’ll be able to do everything on your behalf, from completing your tax return, managing PAYE to filing your accounts with Companies House. You could even nominate them to manage your communication with HMRC. No more wasted hours listening to dreary hold music? Yes, please.

 

You might need investment

At some point, most businesses will need investment. Whether it comes in the form of a bank loan, business angels, or investors, you’ll need a solid plan detailing both your forecasts and your accounts to-date.

An accountant will be able to offer guidance and ensure you’ve thought of everything, and provide reassurance to those looking to invest that your figures are accurate and realistic.

 

It makes life easy

Spreadsheets, invoices, and tax returns aren’t for everyone. If the thought of just opening up your accounts gives you a spreadsheet-induced migraine, hiring an accountant would be a good shout – and some may even give you access to software so you get a hands-on picture of your finances.

 

Not only will an accountant keep your accounts in order, but you’ll also have the added assurance that you won’t be penalized for late payments. Plus, you’ll get to spend January feeling smug about having a hassle-free tax return; now, who said you can’t buy happiness?

 

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