Another one for Eric Mc
Discussion
Debated about whether to ask another favour of Eric, as he already seems to spend enough time on here, but I need advice so...
I'm about to be made redundant and have decided to take my experience working for someone else and start up on my own.
I have the technical knowledge to make it work, there are no huge startup costs (so no finance is required) and I've sorted all the simple things like a business name, cards, website etc.
Where I fall down is on my requirements regarding tax / registering the business / needing an accountant etc.
I've spent much of the last week reading everything I can find on the net regarding this, and I'm almost as confused now as I was before I started!!
I'm assuming that sole trader is the way to go.... or would ltd co be better?
So Eric... as a new startup, what do I need to do and when
I'm about to be made redundant and have decided to take my experience working for someone else and start up on my own.
I have the technical knowledge to make it work, there are no huge startup costs (so no finance is required) and I've sorted all the simple things like a business name, cards, website etc.
Where I fall down is on my requirements regarding tax / registering the business / needing an accountant etc.
I've spent much of the last week reading everything I can find on the net regarding this, and I'm almost as confused now as I was before I started!!
I'm assuming that sole trader is the way to go.... or would ltd co be better?
So Eric... as a new startup, what do I need to do and when
As a Sole Trader, the 1st thing to do is to notify the Revenue within three months of commencement of trading. This can be done over the phone (the number is in the telephone directory) or by filling in a form (CWF1).
This will set you up with the Revenue and they will issue you with a Self Assessment tax return eventually. As you are starting now, the first Self Assessment return you will complete will be for 2007/08. Yoiu will receive this return from the Revenue in April 2008.
You will also be required to pay your Self Employed National Insurance contributions i.e. Class 2 NI. When you notify the Revenue of your Sole Trading activity, they will send out a form for you to enable these payments to be made. They are usually paid monthly by Direct Debit but are quite low (£2.20 per week).
This will set you up with the Revenue and they will issue you with a Self Assessment tax return eventually. As you are starting now, the first Self Assessment return you will complete will be for 2007/08. Yoiu will receive this return from the Revenue in April 2008.
You will also be required to pay your Self Employed National Insurance contributions i.e. Class 2 NI. When you notify the Revenue of your Sole Trading activity, they will send out a form for you to enable these payments to be made. They are usually paid monthly by Direct Debit but are quite low (£2.20 per week).
Eric Mc said:
As a Sole Trader, the 1st thing to do is to notify the Revenue within three months of commencement of trading. This can be done over the phone (the number is in the telephone directory) or by filling in a form (CWF1).
This will set you up with the Revenue and they will issue you with a Self Assessment tax return eventually. As you are starting now, the first Self Assessment return you will complete will be for 2007/08. Yoiu will receive this return from the Revenue in April 2008.
You will also be required to pay your Self Employed National Insurance contributions i.e. Class 2 NI. When you notify the Revenue of your Sole Trading activity, they will send out a form for you to enable these payments to be made. They are usually paid monthly by Direct Debit but are quite low (£2.20 per week).
This will set you up with the Revenue and they will issue you with a Self Assessment tax return eventually. As you are starting now, the first Self Assessment return you will complete will be for 2007/08. Yoiu will receive this return from the Revenue in April 2008.
You will also be required to pay your Self Employed National Insurance contributions i.e. Class 2 NI. When you notify the Revenue of your Sole Trading activity, they will send out a form for you to enable these payments to be made. They are usually paid monthly by Direct Debit but are quite low (£2.20 per week).
Thanks Eric, am I right in thinking that registering my sole trading activity and registering the company name are 2 different things?
Also, I presume that I need to keep receipts for everything I spend for the business in order to be able to offset them against tax liability???
Eric Mc said:
Sole traders do NOT have to have a separate trade name. I don't, for example.
It is a matter of choice - some do, some don't.
Trade names are not registered at any central database.
It is a matter of choice - some do, some don't.
Trade names are not registered at any central database.
Fantastic, so I can be a sole trader and call myself (for example) delta IT and I don't need to register this anywhere?
To recap then, as long as I notify the revenue on a CWF1 within 3 months of starting, I'm free to start advertising and trading immediately.
I assume I'll need an accountant as well? (this is where you reap the reward for helping me out initially!!!)
"To recap then, as long as I notify the revenue on a CWF1 within 3 months of starting, I'm free to start advertising and trading immediately".
That's all you have to do - initially at least.
Things may get more complicated later if you
a) decide to or have to register for VAT
b) take on staff
That's all you have to do - initially at least.
Things may get more complicated later if you
a) decide to or have to register for VAT
b) take on staff
k50 del said:
I assume I'll need an accountant as well?
Nope - not initially anyway. See this link for some free, half-day Inland Revenue/Business Support Team training courses.
www.hmrc.gov.uk/bst/
The courses you want are:
Starting up in Self Employment: Becoming Self Employed
Self Assessment (SA) for the Self Employed
The Self Assessment one gets to the nitty gritty but I think you have to do the other one first.
Although I am biased, I would strongly advise getting an accountant on board at as early a stage as possible.
The Revenue can be very helpful but:
they can often be wrong
they will never stand by the advice they give
most of their staff are not qualified in any way
many of them have no formal training in tax matters, especially those on help-desks or help-lines
you cannot rely in court (or in any legal situation) on advice received from a Revenue official - especially if it was given verbally.
they will not offer you much advice on tax saving techniques
they will not be in a position to offer you much advice on accounting or business issues
The Revenue can be very helpful but:
they can often be wrong
they will never stand by the advice they give
most of their staff are not qualified in any way
many of them have no formal training in tax matters, especially those on help-desks or help-lines
you cannot rely in court (or in any legal situation) on advice received from a Revenue official - especially if it was given verbally.
they will not offer you much advice on tax saving techniques
they will not be in a position to offer you much advice on accounting or business issues
Eric Mc said:
Although I am biased, I would strongly advise getting an accountant on board at as early a stage as possible.
The Revenue can be very helpful but:
they can often be wrong
they will never stand by the advice they give
most of their staff are not qualified in any way
many of them have no formal training in tax matters, especially those on help-desks or help-lines
you cannot rely in court (or in any legal situation) on advice received from a Revenue official - especially if it was given verbally.
they will not offer you much advice on tax saving techniques
they will not be in a position to offer you much advice on accounting or business issues
The Revenue can be very helpful but:
they can often be wrong
they will never stand by the advice they give
most of their staff are not qualified in any way
many of them have no formal training in tax matters, especially those on help-desks or help-lines
you cannot rely in court (or in any legal situation) on advice received from a Revenue official - especially if it was given verbally.
they will not offer you much advice on tax saving techniques
they will not be in a position to offer you much advice on accounting or business issues
What he said 
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