Recently news was broadcast declaring that within twenty years over fifty per cent of the population will choose freelancing as their employment method of choice. There’s no denying that working for yourself is a thoroughly rewarding route to take however as self-employed people know there’s a lot more to consider than the service or product provided.
Starting up in business is an exciting time in anyone’s adult life, as enthusiasm spills over making every morning a happy one. Yet this feeling of being free can have consequences for some as they forget they are now responsible for following HMRC law.
It may be inconvenient, and it may be time consuming, however, ignoring the paperwork can lead to failure before the business is even off the ground. If you are about to set out on your own make sure you know the importance of the HMRC as they will be involved from the very beginning starting with..
Funding Your Business Idea
Not all businesses require funds as you can start an online business with £10, just as I did. However, funds do make life a lot easier as you still need to pay your rent. If you are starting a non profit, consider fundraising with the help of an organisation like Cash4Coins, who will supply all the materials, boxes and posters you need to collect money for your venture. Otherwise, you can look into crowdfunding, a bank loan, investment and partnerships. You can also see if you’re due a PAYE tax rebate, for leaving full time employment, which could give you a lovely little nest egg.
The Business Plan
Without a good business plan it’s difficult to secure funding. Even if you have saved considerably, a business plan is a good tool for you to use to measure your progress against. As you compile forecasts and expected profits, you’ll be able to determine if your idea will make you money in the long term as well as the immediate future.
Registering Your Business
Penalties can be brought against you if you fail to register your business with the HMRC within 3 months. For some this seems like plenty of time and this is why this step is often overlooked. Self-assessment tax returns can be daunting at first, so even if you do wait three months to register you should make sure your accounts are in order.
Daily Book Keeping
After a hard day on the road, at the shop or in an office it’s easy to put off the book keeping. However, this can lead to mountains of paperwork that takes an age to sort out when your year-end accounts are due. Many start-up businesses don’t have the funds to pay a designated accountant, however keeping on top of the numbers is essential for success. Not only will you satisfy the needs of the HMRC you’ll also be able to explore areas where you can save money on your tax bills. Without daily book keeping you’ll have no idea how to fill in your self-assessment tax returns, however with it, you should find it simple as long as the numbers add up!
Year End Accounts
The year-end accounts send many new business owners in a spin, as this is the time of year when the numbers must add up before sending the forms to the HMRC. Many put this arduous task off until the last minute number crunching through the night as the deadline grows closer.
Self-Assessment Tax returns are an inevitable part of any business, no matter how big or small. Even if no profit is made the HMRC still need your information for their own records. Submitting them late or incomplete can incur penalties any business can do without.
There is so much legislation regarding payroll that some try to clone themselves hoping they’ll never have to employ at all. Even employing a freelancer on a regular basis can have consequences some are unaware of.
When the business hits the £70,000 threshold there’s obviously a reason to celebrate as it’s a good indication that your brainchild is working. However along with this comes more paperwork, where you must record every transaction. Added to this the extra charges, and tracking of VAT, there seems little time left over to actually enjoy this new found freedom. You may find too that no longer do you qualify for self-assessment as with higher turnover comes higher scrutiny into your business brand.
Whether you’re starting a business as a freelance marketing consultant or selling products such as crafts, eCigarettes, or beauty products, you need some support with the paperwork. Try not to let it all pile up until it’s a daunting tax, discover online book keeping APPs or talk to a small business accountant.
Martina Mercer is a freelance marketing consultant, editor and copywriter. Her clients include big brands such as Tax Rebate Services andSunday Woman Magazine. Martina writes for a variety of publications such as Huff Post, Forbes and Moz. She has over 15 years experience in marketing, SEO and copywriting.