Tax For the Self Employed

By: Livia Konstandaras

Being self employed or owning your own business has many advantages, it allows you to be your own boss and work around your own schedule, it means you can work in your pyjamas with your music on, and it means that you get to reap the benefits of your own initiatives and smart business. However it also means that youíll have to spend a lot more time working out your exact profit and expenses yourself, will have to fill out regular tax returns and organise your own national insurance. Furthermore it can cause difficulty in acquiring a loan or mortgage and can be difficult if you become too ill to work. There are no convenient P60 or wage forms and so everything you earn and pay need to be accounted for yourself Ė and if you follow these guidelines you should be able to steer clear of trouble.

If youíre setting up a business or going self-employed you first need to find out what category you fall under. If you donít have staff then youíre probably a Ďsole traderí, which describes most kinds of freelance work. However if all of your work is for one client and company, then it may still turn out that youíre technically an employee. Guidelines on the HM Revenue and Customs website will help you determine exactly which category you and your business fall into.

Once youíve decided on this you then need to register with HM Revenue which can be done online on the same site. This is a fairly quick process and must be completed as soon as you begin working for yourself in order to avoid being charged for previous earnings (likewise however you should not register until you have begun work). Those quitting a previous job need to ensure they are given a P45 and payslips for their records. If these have been lost, or are damaged, then replacement payslips can be ordered through many websites.

From here you will receive confirmation that your registration has been successful and you wonít have to do anything else regarding tax until you are issued a tax return. This can happen randomly but generally it will be at the end of the tax year (the tax year starts and ends in April). Once you receive this form you need to fill it in as accurately as possible including all incomings and outgoings to ensure you arenít over or under taxed. If you donít pay enough you will likely have to pay it back at a later date and may also risk incurring a fine. This is where previous payslips and P60 can come in useful. Once you have filled in your tax return you need to send it back to HM Revenue and Customs by the 31st of October, or if youíre filling it out online, the 31st of January.

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If you are self employed and want help with payslip p60; author's business can help. You should make sure you collect wage slips from your previous employers.

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