Going self employed
Discussion
My partner has agreed to do some cleaning weekly for family members. It will properly be £100+ a week.
As its over the £1,000 allowance she'll need to register as a sole trader and do self assessment.
Keep any receipts for anything purchased.
Separate bank account.
Keep 20% back for tax (she has a PAYE job as well (I realise that it maybe lower with bits claimed back etc)).
Complete the self assessment yearly.
Insurance.
Is there anything we're missing?
Very early stages. Its been a while since I did GCSE business studies.
Its possible that she'll take on more than just family.
As its over the £1,000 allowance she'll need to register as a sole trader and do self assessment.
Keep any receipts for anything purchased.
Separate bank account.
Keep 20% back for tax (she has a PAYE job as well (I realise that it maybe lower with bits claimed back etc)).
Complete the self assessment yearly.
Insurance.
Is there anything we're missing?
Very early stages. Its been a while since I did GCSE business studies.
Its possible that she'll take on more than just family.
Keep more than 20% back as there is also Class 4 National Insurance that needs to be budgeted for. Also, HMRC operates a Payment on Account system for the next tax year which can have a big impact on cash flow in the first year of trading.
In fact, I would suggest at least 30% would be a more prudent amount to put aside, especially for that first series of tax payments.
The Payments on Account tend to sort themselves out by about year 2 or 3 so have a less detrimental impact on cash flow.
Also, the dreaded Making Tax Digital system is already in place for people with Gross Self Employed income of £50,000 and over. For 2027/28 this is reducing to £30,000 and for 2028/29 only £20,000 - so most Sole Traders will need to cope with it eventually.
In fact, I would suggest at least 30% would be a more prudent amount to put aside, especially for that first series of tax payments.
The Payments on Account tend to sort themselves out by about year 2 or 3 so have a less detrimental impact on cash flow.
Also, the dreaded Making Tax Digital system is already in place for people with Gross Self Employed income of £50,000 and over. For 2027/28 this is reducing to £30,000 and for 2028/29 only £20,000 - so most Sole Traders will need to cope with it eventually.
Eric Mc said:
Keep more than 20% back as there is also Class 4 National Insurance that needs to be budgeted for. Also, HMRC operates a Payment on Account system for the next tax year which can have a big impact on cash flow in the first year of trading.
In fact, I would suggest at least 30% would be a more prudent amount to put aside, especially for that first series of tax payments.
The Payments on Account tend to sort themselves out by about year 2 or 3 so have a less detrimental impact on cash flow.
Also, the dreaded Making Tax Digital system is already in place for people with Gross Self Employed income of £50,000 and over. For 2027/28 this is reducing to £30,000 and for 2028/29 only £20,000 - so most Sole Traders will need to cope with it eventually.
Thanks In fact, I would suggest at least 30% would be a more prudent amount to put aside, especially for that first series of tax payments.
The Payments on Account tend to sort themselves out by about year 2 or 3 so have a less detrimental impact on cash flow.
Also, the dreaded Making Tax Digital system is already in place for people with Gross Self Employed income of £50,000 and over. For 2027/28 this is reducing to £30,000 and for 2028/29 only £20,000 - so most Sole Traders will need to cope with it eventually.
. NI would only be for profits above £12,570 so OK for the time being. Unless ive read it wrong? AndyC_123 said:
You're missing the part where she should just do it for cash in hand and keep it quiet. In my humble opinion.
We're quite risk adverse as it is. But also I work for the police and she is applying to be a Special. We are also looking at moving and would help with a mortgage (I realise being self employed is another hurdle for a mortgage). She needs to factor in consumables and travel. Are the clients paying for the cleaning materials? And how far will se be travelling? Even small amounts can eat into earnings if not kept in check.
And I'm sorry to sound like a bore but even though her clients will be family members, I would suggest insurance is still required.
HMRC states that you can earn up to £1,000 in cash in a single financial year before you need to declare anything. At £100 a week that gives her 10 weeks grace and £1k she can keep so if the cleaning is a temporary thing, it's not really worth notifying anyone and there's no legal need to do so.
And I'm sorry to sound like a bore but even though her clients will be family members, I would suggest insurance is still required.
LosingGrip said:
AndyC_123 said:
You're missing the part where she should just do it for cash in hand and keep it quiet. In my humble opinion.
We're quite risk adverse as it is. But also I work for the police and she is applying to be a Special. We are also looking at moving and would help with a mortgage (I realise being self employed is another hurdle for a mortgage). StevieBee said:
She needs to factor in consumables and travel. Are the clients paying for the cleaning materials? And how far will se be travelling? Even small amounts can eat into earnings if not kept in check.
And I'm sorry to sound like a bore but even though her clients will be family members, I would suggest insurance is still required.
HMRC states that you can earn up to £1,000 in cash in a single financial year before you need to declare anything. At £100 a week that gives her 10 weeks grace and £1k she can keep so if the cleaning is a temporary thing, it's not really worth notifying anyone and there's no legal need to do so.
Probably 50 miles a week (we are rural sadly). And I'm sorry to sound like a bore but even though her clients will be family members, I would suggest insurance is still required.
LosingGrip said:
AndyC_123 said:
You're missing the part where she should just do it for cash in hand and keep it quiet. In my humble opinion.
We're quite risk adverse as it is. But also I work for the police and she is applying to be a Special. We are also looking at moving and would help with a mortgage (I realise being self employed is another hurdle for a mortgage). Oh definitely will get insurance (its in my OP). For the sake of £15 a month.
I'd think it would be for more than ten weeks. Cant see any reason why it wouldnt be.
dave123456 said:
I don t think you need a separate bank account.
It's good practice but if transactions are few and identifiable then yes, you don't need a separate bank account. In this case I think it would just be more admin faff.Get into the habit of recording all transactions in/out on the day they happen; that way you stay up to date automatically. Also if you use a private car for business then you can include a percentage of motoring costs. If you want to charge customers separately for mileage (as opposed to including it in the main price) you can, and it can be whatever you wish.
I've been self-emplyed for nearly 30 years now, around 13 years alongside a full time PAYE job, then 10 years part time PAYE, now while getting pensions.
I've never had a business bank account. I just keep all invoices and receipts, and paper "books".
I keep a log of daily business miles, and just claim the 45p (now 55p?) HMRC mileage allowance for my car.
Obviously I pay a small amount extra for business use on my car insurance, and some proper business insurance for stock etc, and public liability.
I put £200 a month into a regular saver account which covers tax due.
I've never had a business bank account. I just keep all invoices and receipts, and paper "books".
I keep a log of daily business miles, and just claim the 45p (now 55p?) HMRC mileage allowance for my car.
Obviously I pay a small amount extra for business use on my car insurance, and some proper business insurance for stock etc, and public liability.
I put £200 a month into a regular saver account which covers tax due.
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