So, you’ve decided to become your own boss, want to take more control of your life and head in a new direction. So where do you start?
Becoming self- employed
Working for yourself
Firstly, Congratulations on making the exciting decision to become self-employed. The first step is contacting HMRC and setting up as self-employed. If you are going to be working with the Public Sector, following the IR35 changes in 2017, it is worth checking if the work you will do is considered self-employment.
You’re most likely self-employed if you:
- run your business for yourself and take responsibility for its success or failure
- have more than one customer at the same time
- can decide how, where and when you do your work
- can hire other people at your own expense to help you or to do the work for you
- provide the main items of equipment to do your work
- are responsible for finishing any unsatisfactory work in your own time
- charge an agreed fixed price for your work
- sell goods or services to make a profit
Can I be employed and self- employed?
Maybe you want to do a bit of self-employed work to start with and still work as an employee.
Yes, you can be both employed and self-employed at the same time, for example, if you run your own business on some days and work for an employer on other days. You can check whether you’re self-employed at https://www.gov.uk/guidance/check-employment-status-for-tax Or call HMRC on 0300 123 2326
You’ll need to register for self-assessment if you
- earned more than £1,000 from self-employment in the tax year between 6 April 17 to 5 April 18
- you need to prove you’re self-employed, for example, to claim certain benefits
- you want to make voluntary Class 2 National Insurance payments to help you qualify for benefits
Sole Trader or Limited company?
A sole trader runs their own business as an individual and is self-employed. They are the sole owner of the business. After paying tax on all the business’s profits, the remaining profits from the business is kept. A sole trader is personally responsible for any losses the business makes. This means you are personally liable for any debts that your business runs up. You must also notify HMRC within 3 months of becoming self-employed and register.
Limited CompanyAs a Limited company your personal assets are protected against company debts. However, there are more rules and regulations, with being set up as a Limited Company, this may increase your accountancy fees. There is also corporation tax to pay and withdrawing money from the business must be formally recorded as a salary, dividend or loan.
We recommend a telephone call with a recommended Accountant to discuss both options and what is right for you. Consider your potential clients and the work you will be undertaking.
Responsibilities: You will also need to
- keep records of all the business’s sales and all its expenses,
- pay tax on your profits and Class 2 and Class 4 National Insurance. You can access a calculator online to work this out if you google national insurance calculator or contact HMRC
- Submit a Self-Assessment tax return every year
- Consider if you will need an accountant
- Set up a business account
- Sort out your insurance. Professional indemnity and public liability insurance are the main types of business insurance to consider
Good luck and most of all, have fun and welcome to becoming your own boss!
To find out more about our service for self-employed carers; connecting self-employers carers with those in need of care, please contact us at https://www.chooseyourcarer.co.uk/