Registering as Self-Employed
I have already registered as self-employed with HMRC as a sole trader and have recently completed my first tax return. At the moment I am able to do my own accounts, I have set up a spreadsheet on my computer and I have an old ice cream tub to keep receipts in. Once my turnover starts to increase I will look at getting an accountant to deal with all of my accounts.
What you need to do to start a business: choose a legal structure, see if you need licences and insurance, learn about…www.gov.uk
In the UK any earnings over £11,200 will incure a tax, this is paid at different rates dependent on the level of income.
This is a tax that has to be paid by limited companies on any profits that the company makes. Sole traders and partnerships do not pay corporation tax.
There are different classes of national insurance.
Class 1 — Is paid by both the employer and employee the amount is dependent on the gross pay.
Class 2 — This is a flat rate of £2.85 a week that is paid by all self-employed people. If earnings are below £6,025 a year then you may be exempt from paying class 2 NI.
Class 3 — These are voluntary contributions and are aimed at those who wish to protect their rights to contributory benefits if they have not paid enough contributions in the past.
Class 4 — These are paid by people who are self employed and earning £8,164 or more a year. The amount paid is 9% on profits between £8,164 and £45,000 and 2% on profits over £45,000.
Value Added Tax (VAT)
If a business’ yearly turnover is over £85,000 then it must register with HM Revenue and Customs for VAT.