Tax and Record keeping with Steve Aicheler

26/04/17: Workshop by Steve Aicheler the Centre of Enterpreneurship

-Legal requirements for registration for sole traders Company structures – Record keeping – NI and Income Tax – 

-Company structutes-

  • Briefly: 2 main : Sole trader/ Limited Company
  • Limited company: Company holds all the liabilities; if the company signs a contract on any premises it has to fulfill that contract – not individuals (directors)
  • Sole trader: Freelancing, Self employed, Unregistered company. You can call yourself as a company with a trading name (ex: Funky Theatre Lighting). As an individual: you as an individual are responsible of paying any debts/etc
  • Sole trader: Legal requirement to register with HMRC

2 forms: Self-Assesment Tax return + Self-employment (short)

-Record keeping-

You must keep record of all of your income and expenses (what you sold it for, not just profit)

  • £83,000 is the treshold. If you have above you must register for VAT and complete a more complicated form
  • Bank accounts : it is good to set up a bank account for your business. It is important to keep your personal and your business separate.
  • Excel income table: Date; Description; Reference(where can you find a confirmation/proof/invoice?); Amount; Received (yes/no)
  •  Accural or cash basis: You must declare income even if you haven’t received the money (accural)
  • Keep records to allow you to fill out the next bit of the Self-Employment (short) form: Allowable business expenses.
  •  Excel expenses table again and record expenses! Date-Reference(A001;A002…)-Description-Cost of Goods-Travel-Wages-Rent,Rates-Repairs and Renewals-Accountancy-Interest and Bank Charges-Phone and Office-Other.
  • Have an actual folder – organised and easy!
  • Could use accounting software: WaveApp: Free: Back up always; you never know !
  • Receipts (dates) of all expenses related to the business ; Invoices from ; Be careful with recepts that don’t say what you bought (credit cards usually)-ask for proper receipts-all shops have it and they are legally obliged to have it; You can claim your food; hotel (there are limits though) as legitimate business expenses if you worked away from your normal place of work; Petrol – you can claim travel expenses, but when it comes to petrol you must have a vehicle used only for business; or alternatively you can keep track of all journeys – Excel table:  Date Reference(to go into expences table) Start End Purpose Miles Cost – that’s a legitimate expense. Phone: you can claim a proportion of the cost if you also use it for personal; in this case use estimates. If you’re working from home: allowance; info online
  • Total for your receipts is important because : revenue – expenditure = what you pay tax on; more declared expenses, less tax

 

  • – You pay National Insurance and Income Tax –

  • National Insurance : Two classes: Class 2 and Class 4

  • Class 2: amount you would pay for week, now part of self assessment
  • Class 4: rate of 9% but only on profits between £8,164 ans £45,000 – Self-assessment does that for you and 2% on profits over £45,000
  • Income tax: Personal allowance £11,500 (incl. all income: job+self-employed) –  then you don’t pay tax; then 20% on earnings between £11,500 and £45,000
  • Tax year starts on 6th of April 2017 ; from the 5th of April 2018 then you have 9 months to submit your income tax forms; etc.
  • One payment in January; one payment in June; but of course that depends on what happens with the elections! Look out for changes
  • If you work with an accountant; make sure you check their qualification – anyone in the UK can call themself an accountant. Look for a charted accountant; work with someone who already has an expertise in your field (e.g worked with photographers). Get personal reccomendations, do you get along with them? That personal feeling is important. They must be able to make suggestions and help you

 

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