Self-employment: Three things you must do from the outset
There’s a lot to consider when going self-employed. Not only are you your boss, you’re responsible for all business decisions, as well as making sure your company is operating correctly.
With so much to think about, especially within the first few weeks of setting up your business, it can be difficult to know which responsibilities to prioritise first. Where possible, always make sure you do these three things as early on in your self-employment journey as you can:
- Make your self-employment official
You’re now responsible for paying your own income tax and National Insurance, which means you must register your self-employed status with HMRC. While you have up until October 5 of your business’ second tax year to do this, it’s important you do it sooner, rather than later.
Tax years run from 6 April to 5 April of the following year. If you became self-employed in January 2019, you must register your new status by October 5, 2019. January 2019 is the 2018/19 tax year, meaning October 5, 2019 is your business’ second tax year (2019/20). (If you are unsure of anything, we can help, simply get in touch with us via the contact details below).
- Apply for a business banking account
While this may seem like an obvious point, it’s one that’s often overlooked.
If you’re a sole trader, your business income will be taxed alongside your personal tax however, it’s still important to keep your business and personal banking affairs totally separate.
There are all sorts of different business banking accounts out there, many of which do come with a minimal monthly charge, as standard. Shop around for the best option for you and, if you need some advice, feel free to get in touch with us.
- Think about VAT
As of April 2018, HMRC stipulated that all businesses with a taxable turnover of more than £85,000 must pay VAT.
Your VAT taxable turnover is the total of everything sold that isn’t VAT exempt. Businesses can also register to pay VAT voluntarily. (You’ll find more details about calculating your VAT taxable turnover, right here – https://www.gov.uk/vat-registration/calculate-turnover)
There’s a lot to take into consideration when you go self-employed and the three points listed above are just the starting point. For instance, there’s registering with Companies House, self assessment tax returns and insurance to think about too.
For more advice on going self-employed and making sure you follow the correct steps to make sure your company and business finances are all in order, contact us on 01905 777600 or firstname.lastname@example.org.