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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Government Announces phased mandation of Making Tax Digital for ITSA

Self-employed individuals and landlords will have more time to prepare for Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), following a government announcement today (19 December 2022).

Understanding that self-employed individuals and landlords are currently facing a challenging economic environment, and the transition to Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) represents a significant change to taxpayers and HMRC for how self-employment and property income is reported, the government is giving a longer period to prepare for MTD. The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.
From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.
The government has also announced a review into the needs of smaller businesses, and particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further roll out of MTD for ITSA after April 2027.
Mandation of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced. The government remains committed to introducing MTD for ITSA to partnerships in line with its vision set out in the government’s tax administration strategy.
Victoria Atkins, Financial Secretary to the Treasury, said:
It is right to take the time to work together to maximise the benefits of Making Tax Digital for small businesses by implementing the change gradually. It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC.
Smaller businesses in particular should be able to experience the benefits of increased digitalisation of Income Tax in a way which meets their needs. That is why we are also today announcing a review to establish the best way to achieve this.
Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue and Customs, said:
HMRC remains committed to the delivery of Making Tax Digital as a critical part of our strategy for digitalising and modernising the tax system, but we want to make sure we get this right and deliver it effectively.
A phased approach to mandating MTD for Income Tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring.
The announcement relates to MTD for ITSA only. Making Tax Digital for VAT has already been implemented and is demonstrating the benefits to businesses and the tax system of digital ways of working.
Further information
A copy of the Written Ministerial Statement made by Victoria Atkins, Financial Secretary to the Treasury, on 19 December 2022 is available on UK Parliament: Written questions, answers and statements.
Under MTD for ITSA, businesses, self-employed individuals and landlords will keep digital records, and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. In response they will receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs using MTD-compatible software. This will replace the need for a Self Assessment tax return.
GOV.UK guidance on Making Tax Digital for Income Tax will be updated shortly.
Before today’s announcement, MTD for ITSA was mandated from April 2024 for customers with a total gross income over £10,000 from self-employment and property in a tax year, with partnerships mandated from 2025.

(This article is taken from Gov.uk for your information)

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