Tips for the Self Employed or Entrepreneur

The UK tax system is commonly referred to as "the most complex tax system in the world" however with the right advice it needn't be!

 

Entrepreneurs have enough to think about without worrying about the tax system. After all, all they want to know is, will there be enough cash coming in at the end of the month to pay their bills?

That's where a good accountant can help. The last thing you want is to be investigated and receive penalties because your naivety let you down.

Some simple pointers to familiarise yourself with are:

Cash Basis Accounting

This is a simple way to work out your income and expenses for your self assessment tax return if you're a sole trader or partner.  Cash basis accounting is easier for sole traders rather than traditional accounting.

You can use cash basis accounting if your turnover is £150k or less per annum.

If your business grows during the year and increases your turnover to £300k then you can stay on cash basis until your year end, at which point you will need to transfer to the traditional accounting method.

Limited Companies and Limited Liabilitiy Partnerships can't use cash basis accounting.

There are some circumstances and business types that can't use cash basis, you can find out those excluded here.

Keeping Records

Keeping a clear and accurate record of all your invoices and expenses is key for submitting your year end tax return.  All your self-employed records should be kept for at least 5 years following submission on 31st January for that relevant tax year.

The records include all business expenses, PAYE, VAT, Personal income as well as any SEIS (Self Employed Income Support) that you received.

Trade Marks

You can register your trademark if you wish to trade under this name, it's a good idea to.  Otherwise, anyone can use your trademark to sell their goods and piggy back off your brand and marketing.  This is essential expecially if you have designed your own product or service that could be copied or replicated easily.  But be aware, this is costly so you should consider if the loss of being copied is greater than the trademark process cost! 

You can find all about trademarks here

Being a sole trader in a business doesn't need to be stressful, if you cover all the basics and protect yourself.

For more info on starting or managing your business, why not read some of our other blogs to help simplify things.

If you have any questions, do feel free to get in touch with us!

Have a great week,

Ben & The BR Team.