Self employed help!!

There are varying types of 'self-employed' so it'd be worth putting her status past an Accountant to confirm.
They'll probably also be able to supply a spreadsheet/app that'll be appropriate.

Spreadsheet does the job. I've been doing that for years. The key for me is to have one column that matches the HMRC categories for expenses. You can then just add everything up for each category and stick it on the online self assessment. Takes less than an hour to do. She needs to register for self assessment too, pretty painless but does take a little while to get set up with a user ID.

HMRC for her UTR (unique tax-payer reference) would be the first stop followed by an accounting type to sort out how basic her accounts need to be.

Register at gov.uk website for self-employment and go from there. (Lots of helpful advice there too).

On a practical note take pictures/scans of thermally printed receipts as they fade over time and blank receipts are unlikely to be allowed by your friendly tax official.

Thanks for those tips.
I am hoping to do it myself to keep her costs down (and I have the time)

Spreadhseet is fine

Scan / file all receipts on demand - to save the stress of doing it all in one go and having to go back over a years worth of emails etc

+ as above register for self employment at HMRC now because they have to post something to you etc to complete it, can take a week or so total. You can of course start working before that's all done - it's just a gateway login / UTR

If its going to go on for quite a while, take up a bank's offer to open a business account for free for a year. Have all invoices pay into there and set up a salary DD out of it. Absolutely not necessary though. But nice separation if it's going to be a long-term thing.

They have been cracking down on what self employed actually is in recent years, have a good read of the IR35 rules and check that that is what she is.

My biggest tip would be for her to save her tax as she goes along, this helps me out massively as I don't have to scrabble around twice a year to find the money to pay it. It also means I get to give myself a nice little bonus each year if I've saved too much. So many of my SE friends don't do this and then have a panic in January when they realise they have a big tax bill to pay. Apart from that a simple spreadsheet is all I use to keep track of money in and costs out which makes filing a tax return pretty simple.

She could of course set herself up on Xero or Quickbooks, and then use that system to create recurring invoices and expenses on a monthly basis, and they also have a great app that allows her to take pics of receipts that are automatically filed.
It isn't horridly expensive when you take into account that it effectively automates creation of accounts as you go.

Good point from mrwhippy. Its easy to get part way though the year thinking you are doing ok with money in the bank, then you have to pay your tax and it feels like the money you had is gone. In reality it was never really yours but it still feels like a loss. Stick some money in another account to pay the tax bill and don't touch it until the year end.

My biggest tip is get a decent accountant who can sort it all out for you

Then you can get on with the important stuff and let them sort all the tedious, complicated tax stuff out.

Ask around locally for someone decent. What they cost you, they’ll usually save you in stuff they know about tax that you dont, and it means you know exactly where you are with your tax at all times, so no surprises.

Putting that money aside is a no-brainer. It isn’t yours

Life really is too short for tax returns. Get somebody else to do it, who knows what they’re doing. At the end of each financial year I always end up with a decent tax rebate as I’ve overpaid. Better that than the other way around. Think of it as a savings account

As she’s performing a “role” (dental therapist) rather than providing a business to business service she will be “inside” ir35. There is a threshold on turnover which may determine if she or the hirer are responsible for determining the correct ir35 status.

Trying to operate as it “outside” IR35 would be a clear slam dunk for HMRC as there would be very limited grounds for claiming your daughter is anything other than a disguised employee.

That means the hirer should pay her via PAYE and pay employers national insurance. If they are not paying her through their own payroll e.g. via an intermediary, the employers national insurance must be paid to the intermediary or she will be potentially liable for paying it herself.

My advice is that your daughter engages as PAYE for both hirers and then completes a self assessment every year to ensure income tax and employee NI hasn’t been underpaid / overpaid. This also ensures the hirer is fully responsible for employers NI and that they pay for things like the minimum pension contribution.

My wife has been self employedfor about 4 years now. Her recommendation is good record keeping and an accountant to do the taxes. I think she pays about 100 quid yearly.

She uses Google Sheets as her general spreadsheet.

My biggest tip would be for her to save her tax as she goes along

Yep, already mentioned to me this morning holding it in Premium Bonds 🙂

As she’s performing a “role” (dental therapist) rather than providing a business to business service she will be “inside” ir35. There is a threshold on turnover which may determine if she or the hirer are responsible for determining the correct ir35 status.

Need to check this but I am assuming outside so she will be responsible for NI/Tax etc. If she is a business in her own right then it will business to business I assume.

Then you can get on with the important stuff and let them sort all the tedious, complicated tax stuff out.

She wont be doing it I will and I have completed self assessment many times, its not arduous if you keep on top of it. I would recommend an accountant if she didnt have me to do it for free...

Xero or Quickbooks, and then use that system to create recurring invoices and expenses on a monthly basis

Might look into this but if I can do it on a spreadsheet and it doesnt become to onerous (assuming I can manage all of the tax advantages) then I may not need the software.

Thanks All!

Keeping track of the numbers is easy - use a spreadsheet or one of the online tools.
@cheddarchallenged has identified the key issue though.

Being paid PAYE through both employers is the simplest for her and she wouldn't need to keep any records, because she wouldn't be self employed. She may want to keep records and complete self assessment to cover things that might fall through the cracks e.g. laundering uniform etc.

If she chose to run it as self employed she would come inside IR35 which in practical terms means she would be liable for employers and employees NI and have to pay the relevant rates of income tax vs maximising dividends for an outside IR35 situation.

I'm guessing that operating as a sole trader might also be an option here so that needs to be considered too.

You say the situation is pretty typical - I'd be finding out what others who have been in the same position for several years do.

edit

Need to check this but I am assuming outside so she will be responsible for NI/Tax etc. If she is a business in her own right then it will business to business I assume.

You'll need to get the contracts checked, but on the information provided (2 customers on a long term basis, carrying out work when and how they determine) I doubt very much it would fall outside IR35.

Good luck.

I’m guessing that operating as a sole trader might also be an option

Some companies will not deal with sole traders at all. I would check that out carefully with those that are buying the service.

IR35 only applies if there is an intermediary (ie if she would own a Ltd company) - even then, if she has two clients (practices?) and a degree of autonomy then I suspect outside ir35. It’s on the engager to decide that these days anyway.

Doesn’t apply to true self employed / sole trader- but double check what the dentist expects.

I suspect they require this to minimise the practices employers NI contributions.

Another thing to consider is if liability (or professional indemnity) insurance is required - this might influence her decision on SE or ltdCo

Also, be wary of tax payments on account at the beginning of tax year two, you need to pay last years tax and half the current year. It can come as a shock…

What's the going rate for a self assessment these days? I'm sure I'm paying well over the odds.

What’s the going rate for a self assessment these days? I’m sure I’m paying well over the odds

I guess that depends how complicated your tax affairs are. Mine aren't straightforward, but I've always done it myself - but then I also do my own VAT and Corp tax returns. I can't justify £100 a month for an accountant when I still have to do most of the reconciliation myself.

I'll happily pay for tax advice, but not for book keeping.