Starting Up On Your Own? Read On!
IF you are starting out on your own with a new business venture, it’s likely you’ll have plenty on your plate. Whether it’s admin work, marketing or actually plying your trade, chances are you’re pretty busy right now. With that in mind, we thought it would be a good idea to give you some details on what you need to do in relation to HMRC and Self-Assessment. And, if you need us, we’re here to guide you with the process. So, please feel free to get in touch. We’d love to help.
Registering as self-employed (sole trader)
If you currently run or are about to start trading through your own business then you are probably self-employed and as such, you need to register with the HMRC as a sole trader. If you are in any doubt as to your employment status, you must register as being self-employed if any of the following criteria apply:
- You earned more than £1,000.00 from self-employment between April 6, 2020 and April 5, 2021
- You need to prove you’re self-employed, for example to claim Tax-Free Childcare
- You want to make voluntary Class 2 NIC payments to help you qualify for benefits.
To set up as a sole trader you need to tell HMRC that you intend to pay tax through Self-Assessment, which means you will need to file an annual tax return. Once registered as self-employed you will need to keep full records of your businesses sales and expenses. You will pay income tax, Class 4 and Class 2 NIC on your net trading profit (after all allowable business expenses have been deducted from your gross turnover).
You can trade under your own name, or you can choose another name for your business. You do not need to register that name; however, you must include your name and business name (if you have one) on all official paperwork, including invoices, credit notes and letters. Sole trader business names cannot include the words ‘Limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, or ‘plc’. Neither can your business name contain offensive words, registered trademarks, sensitive words or expressions, or anything else which is likely to cause offense.
More help for self-assessment taxpayers
Self-Assessment taxpayers will not be charged the 5% late payment penalty if they pay their tax or set up a payment plan by April 1, 2021. The payment deadline for Self-Assessment was January 31 and interest is charged from February 1 on any outstanding amounts. Normally, a 5% late payment penalty is also charged on any unpaid tax that is still outstanding on March 3. But this year, because of the impact of Covid-19 pandemic, HMRC is giving taxpayers more time to set up a payment plan. Taxpayers can set up a payment plan to spread the cost the cost into monthly instalments, until January 2022.
The HMRC can be contacted on 0300 200 3822 for help in setting up a payment plan. But why not contact us first on 01638 666281 and we’ll give you our full support as you take those first exciting steps with your new business venture.
