[Closed] how to go about becoming self-employed

Tell HMRC, get insurance sorted, crack on.
Other optional things to consider are:
Business bank account
Someone to do books / tax returns, although you can do them yourself.

She can either start a Ltd company or work as self employed - make sure you keep "your money" and "business money" separate, or be prepared to account for every penny you spend.

gov.uk is pretty handy

https://www.gov.uk/working-for-yourself/overview

https://www.gov.uk/set-up-sole-trader

The money you spend on an accountant is not wasted...

geoffj - Member

Tell HMRC, get insurance sorted, crack on.

HAving recently done it with Mrs Weeksy it really is that simple at this stage. You go on the Giv site, register as Sole Trader and give them passport/NI info etc... the rest is click click... done.

I'm sure it gets more complex as she then has to do tax forms, deductions etc... but the initial part is simple enough.

Do some work, take cash, put it in pocket! 😆

+1 for using an accountant. Try to keep good records, receipts, outgoings etc. Remember you don't get paid for holidays or being sick, so this has to be built in to prices. Important to be self disciplined around time and separate from home if you can. Worth looking at Federation of Small Business, they offer a helpline and cover in case of revenue problems. Also have a deal with the COOP for free business banking

I thought all cleaners worked for cash - I've never met one that had an accountant! 😉

Her accounts should be straightforward - income minus the odd tin of Pledge or duster = taxable profit.

Accountants will usually offer a free introductory chat to outline costs and what they could do for you.

As above register with HMRC and you are good to go. If the accounts will be simple then there is no need for an accountant. keep a record of all business costs (Materials, travel, advertising, etc) and record of all monies received in a spreadsheet and fill out a self assessment at the end of the year. Only tricky bit is knowing what is an allowable expense but there are plenty of online guides and a few good books. Get some public liability insurance too, should be pretty cheap.

As above it's very easy to do, the HMRC site is also pretty good for info regarding allowable expenses etc.
Liability insurance is not only good for that added protection but for commercial work it is often a requirement, i am often asked for mine, looks more professional to have it anyway.

Wave accounting is really good for your accounts and invoicing and it's free!

Her accounts should be straightforward - income minus the odd tin of Pledge or duster = taxable profit.

+travel expenses, phone, home office allowance/expenses, light and heat, etc , etc...
A couple of hundred quid spent on an accountant is money well spent!

You've got three months to register as self employed from the date you first start earning money.

Hmrc also do some good online courses about self assessment, records keeping and business expenses

https://www.gov.uk/government/news/webinars-emails-and-videos-if-youre-self-employed

I'd also get liability insurance, just in case she ends up flooding someones house or knocking over a Ming vase

Finally the local council or growth hub might have some start up courses or training that could help with writing a business plan, survival budget etc

plus its also a better hourly rate than the pharmacy (that doesnt seem right to me but there you go).

Keep all the receipts, a chat with an accountant up front will point you in the direction of what is and isn't claimable

home office allowance/expenses, light and heat, etc , etc...

thanks a lot for the advice, much appreciated.

Home office allowance is a flat rate claimable depending on the number of hours worked from home. Easier (but possibly less money) thank calculating proportion of floor space x time used x (rent + allowable bills)

In short it's real and worth claiming.

Everything else had been covered above. +1 that accounts are simple enough for straight forward sole trading not to need an accountant, keep good records and check what you can expense online - remember the phrase "wholly and necessarily"!

i was self employed for a year. if i did it again i'd go limited co. it won't cost much more than being self employed and if it all goes really wrong then you get to keep your house...
get an accountant as mentioned.
public liability insurance is a must - note that shopping for this is not like looking for car insurance. go to a broker with a good rep.
as mentioned hourly rate may be higher but so are the expenses and there is no sick, holidays, pension etc.
good luck!

+travel expenses, phone, home office allowance/expenses, light and heat, etc , etc...
A couple of hundred quid spent on an accountant is money well spent!

And she's already spent on publicity materials.

I agree on using an accountant, I was suggesting that it shouldn't be too expensive a job for one.

Home office allowance is a flat rate claimable depending on the number of hours worked from home.

i'd go limited co. it won't cost much more than being self employed and if it all goes really wrong then you get to keep your house...

public liability a must for a cleaner?

hourly rate may be higher but so are the expenses and there is no sick, holidays, pension etc.

bit divided on the accountant front then. if it should just be a simple case of keeping good books we could maybe look into doing it ourselves, have to ask round see how much they charge and see if its worth it to us. ive always thought they save you as much as they cost.

thanks

the essence of her job will be cleaning other peoples homes, so dont think any part of her work would be 'from home'.

not sure what the difference between self-employed and limited co are tho.

public liability a must for a cleaner?

but she'd still prefer picking and choosing her own hours, no horrible rush hour commutes etc. just a better quality of 'work life', her present (previous now) job was making her ill.

bit divided on the accountant front then. if it should just be a simple case of keeping good books we could maybe look into doing it ourselves, have to ask round see how much they charge and see if its worth it to us. ive always thought they save you as much as they cost.

well shes got a few customers now, nothing earth shattering but she just registered as self employed yesterday, telling the tax office that shes been going for 5 weeks. some of the customers paid by bank transfer anyway, so this seems the sensible way to keep out of trouble.

i looked at the suggestion for 'wave accounting' ^^^ but seems to be an app with ads. yes its free, hence the ads, but can it be as simple as just creating your own spreadsheet with columns for wages in and expenses out per month? or does it really need to be a bit more involved than that.

thinking at the moment of a spreadsheet, with an exact copy in a physical expenses book should the spreadsheet get accidentally deleted or somethings.
we're talking around 6 different customers per week at around 2 or 3hrs per customer at present, expenses being whatever fuel she uses and cleaning products. (should be we logging journey distances?)

no insurance as yet, we'll look into its viability over the weekend methinks.

thanks a lot chaps

Worth logging mileage. You can claim 45p per mile against your tax liability. The other way is to note all actual costs such as fuel and claim that. You can't do both. I find mileage is much easier to work out.

Save your spreadsheet in a folder that is backed up to the cloud and keep saving copies of it and archiving them. I really don't think you need anything more complicated than a spreadsheet for what you are doing at the moment. Worth setting up your spreadsheet to match the categories on the self assessment form. Makes doing your return a breeze

I'm self employed via a limited company and there's not much to it tbh.

Claim mileage at 45p/mile (goes down to 20p after 10000 miles). I just use a spreadsheet to keep track of income and expenditure than share via Dropbox to laptop & PC and keep extra backups.

If you're a sole trader then self assessment is easy - but I need to use an accountant to file the official return & for corporation tax. Keep up-to-date with National Insurance payments.

You should definitely get Public Liability Insurance - this won't be expensive - should be less than £100/year.

the expenses we'd be logging, fuel, products etc...... i assume theyre not really needed if she stays under the threshold for paying tax?

theyd only be considered if she paid some tax and then she'd get some relief because of them?

You might also want to have a look on here if you find book keeping side of things complicated - https://www.bookkeepers.org.uk/Find-a-Bookkeeper/

Accountants can be expensive and may not be necessary for a relatively simple business.

the expenses we'd be logging, fuel, products etc...... i assume theyre not really needed if she stays under the threshold for paying tax?

theyd only be considered if she paid some tax and then she'd get some relief because of them?

If you know her income is below her tax threshold then correct, the expenses won't make any difference. But it's just a good idea to keep track on what's coming in/going out in case she starts to earn more.

But basically what she earns minus the costs of running the business = profit - and that's what the taxman will want to know.

And depending on income she might not have to pay Class 2 NIC - but it's worthwhile to keep paying as gaps in this will affect state pension.

i think the taxman told her she didnt have to, its her choice, but shes said she wants to for as you say, pension reasons. how will she do this? will it be a one-off payment after her records have been totted up at the end of financial year?
is it a set amount, or would it depend on her income?
and what exactly are the implications of not paying it? a reduced pension? by much?

thanks

Sadexpunk..wave is not just an app for accounting it's an online accounting software system that connects to your bank account so that all income and outgoings for the business are automatically logged a few clicks on the mouse categorizes the transactions. You can also use it to create professional looking invoices which send automatically every month if you have regular customers. Ive been using it for years and it's saved me heaps of time and makes sure I never lose track of payments as they get attached to the relevant invoice as they come in. Still can't believe it's free and any ads are more low key than on this site.

I only operated as a sole trader for a brief time and I'm struggling to remember - but it's a set amount (not much) per week which, I think, is paid quarterly.

[url= https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions#class-2-and-class-4-national-insurance-self-employed ]https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions#class-2-and-class-4-national-insurance-self-employed[/url]

You will need to contact HMRC to arrange this.

And correct, the implications of not paying is a reduced pension (unsure of the amount). But you can "fill" any gaps that are missing and HMRC online lets you see your payment history.

Don't forget she might want to see what pension provision she might want to make - some of which is offset in tax iirc

But basically what she earns minus the costs of running the business = profit - and that's what the taxman will want to know.

ok.. look at this from above.. Mrs is doing cleaning and expects to earn less than the minimum tax threshold in the year.

you do not need an accountant not even a tidy mind.. be sensible.

this is what I do..

have a personal bank account which i use soley and exclusively for the business.. it ll be significantly cheaper than a business account..

get the 'regulars' to pay online directly into this account weekly.. put all your income in the account.. keep a little cash box.. tupperware will do ..at home, for cash payments and cheques, bank when convenient.

buy all your business stuff from mr sheen to fuel on one dedicated personal credit card, whether its 50p or 5k buy everything on the card..pay it off in full every .. keep the reciepts each week in an envelope at the end of the week seal envelope and file in a biscuit tin.

hmrc has some really useful stuff on its site get in there and fill your boots..

dont use an accoutant.. self assesment on line is fool proof. i do mine for about an hour each month.. i take my current account statement and add that to the income column.. i take the credit card bill and add that to the expenses column.. it aint rocket science.. calculate how much the running total is ( hmrc does it automatically) so you have a running total of income and expenditure with reciepts so no unexpected bills come jan 31st as the mrs is likely torning over less than 70 odd k she doesnt even need to break down her expeces into items just one combined total..

it really isnt much more complicated than that.

Find a good accountant, a good one will be a fountain of useful info, saved me a bundle on printing/electrical/book keeping, all his clients of course, can be a gateway to useful contacts and potential customers.
Mine is ex HMRC, after 20 years now on his own and keen to get established.
D.

With digital tax coming...supposed to be 2017...eventually 2018??? maybe?...it makes sense to use wave or something similar linked to your bank account. Wave also stores receipts and shows you how well or badly you are performing. Don't need a business account.

Claim everything relevant.

well its all coming along nicely. shes picking up a few more jobs and we've got an excel spreadsheet up and running with everything in and out, plus fuel costs.

gonna look at insurance over the next couple of days. as well as liability, i got to thinking is it worth looking at anything to protect her for illness, breaking a bone, anything in fact that would mitigate any lack of earning?

thanks

had a quick look at that insurance and it implies that insurers only pay out around 40% of pay, and it may only come into play once 7 days is up and theres a doctors note.
so, a week off here and there with a heavy cold probs wouldnt get re-imbursed, and even broken bones etc wouldnt pay out what shes earning, which was kinda the idea.

does this sound about right for this type of insurance? any of you self-employed peeps out there take this out for themselves?

thanks

No, I see it as a poor deal. I just intend to use savings if anything unfortunate should happen.

Loss of earnings insurance is usually expensive and tricky to claim on so not really worth it. Better to self insure with savings IMO. You can combine this with pension savings eg S&S isa. If you really need the money its there and if you don't then you have a pension pot. Worth looking at liability insurance though. Shouldn't be expensive.

thanks a lot, pretty much as i thought then.

cheers

Having been self-employed, the best piece of advice I can give you is get an accountant. My initial visit was free and he gave me a lot of very good advice. I didn't know that I could claim for my car insurance (on that subject check with your insurer that your wife is covered for business use assuming she is using a car to get to jobs). Being home-based I was also able to claim a percentage of household bills against tax. Heck, I was even able to claim the accountant's bill against tax.

good point on the business use, not sure what cover shes got, id guess its not business as she was unemployed when we were searching for quotes. bizarrely the premiums actually went up for being unemployed, id have thought less driving would be cheaper but no.

on the matter of claiming stuff back, i think im right in saying its a moot point isnt it if she doesnt earn enough to start paying tax in the first place?
is it £11,000 you can earn without being taxed and having to offset costs?

thanks

[i]is it £11,000 you can earn without being taxed and having to offset costs?[/i]

Her tax code will indicate how much she can earn before she starts paying tax but it's probably 1100L which means tax free up to £11,000.

I find loss of earning insurance almost worthless. I just keep a pot to use if required. it hasn't been so far, it's amazing how less ill you become when self employed!

wifes happy, shes keeping her spreadsheet going, shes not earning enough to bother keeping receipts but its all working out fine thanks.

however, im just asking a quick question for my lad now as im struggling to find out his best option right now.

he was made redundant from his apprenticeship, found some local work painting and decorating, but this source of work has dried up now. hes been back in touch with the 'apprenticeship place' asking if they had any work yet. theyve led him to believe theyd be able to give him some if he was a subcontractor, but they wouldnt take him on and was told if he signed up as self-employed they could maybe do something for him.

dont really understand this so have been trawling the gov.uk site for info but not found anything i understand.

can he/should he register a painting and decorating business in his own name say, even if he never actually got a subsequent offer of work? but itd be there if he ever needed to prove he was SE for subbing work?

would this work against him if he found someone wanting to take him on properly?

thanks