When you become self-employed there are few things you need to make sure you do in order to become compliant with HMRC.

[x_accordion_item title=”1. Register with HMRC”]You must notify HMRC that you have become a sole trader within 3 months of starting trading.

Registration with HMRC can be done online or by phoning HMRC on 0300 200 3504.

Once you have registered as self-employed you shall need to complete an annual tax return and will be responsible for paying your personal tax and national insurance contributions.

The current rate for Class 2 National Insurance Contributions is £2.80 per week provided your profits exceed £5,965.

Class 4 National Insurance is also payable on profits greater than £8,060 at a rate of 9% and 2% on any profits above £42,385.[/x_accordion_item]

[x_accordion_item title=”2. Determine whether you need to register for VAT”]The UK VAT registration threshold for 15/16 is £82,000. You must register for VAT within 30 days if your VAT taxable turnover exceeds £82,000 in a 12-month rolling period.

There are various goods and services that are exempt or able to charge VAT at a lower rate, broadly speaking these include:

• Education and training
• Charitable activities
• Sports and leisure
• Health and welfare

There are also various VAT schemes that your business may qualify for including flat rate or cash basis depending upon the circumstances.[/x_accordion_item]

[x_accordion_item title=”3. Set up a business bank account”]Cash flow has a major impact upon the success of a business or company. It is, therefore, vital to set up a separate bank account so that you can actively monitor the businesses performance.

Having a separate bank account also physically separates your business and personal affairs. By shopping around it is possible to deals specifically for business banking. It may be beneficial to open a deposit account too if the business holds cash for some time so that you can gain higher rates of interest.[/x_accordion_item]

[x_accordion_item title=”4. Keep records”]In order to be successful, you need to be aware of how the business is performing, to do this it is necessary to keep accurate business records.

Apart from being a requirement by HMRC, it assists you in monitoring your cash flow and enables your accounts and VAT returns (if VAT registered) to be completed quickly and efficiently.[/x_accordion_item]

[x_accordion_item title=”5. Find an accountant”]A good accountant can save you time and money. By finding an accountant that understands your business and your overall personal goals you should be able to achieve substantial long-term tax savings.

Take the time to consider both your businesses and personal immediate and long-time goals before researching accountants that are able to offer advice and support in achieving this.[/x_accordion_item]

If you need any help with your tax return or any aspect of your self employment please call us on 01872300232 or email 01872 300232 or email us at hello@hivebusiness.co.uk.