Read on for a handy overview of some of the tax and expenses information you need to know when you’re self employed or thinking of starting up your own business.
Sole Trader or Limited Company?
If you’re a sole trader, you’ll be pleased to know that you’re allowed to earn up to £1,000 a year without paying any tax on it. However as a sole trader – which is often considered an easier way to proceed at the start, what you do have to consider is that any business debt is on your head. With limited companies on the other hand, the business is treated as a separate legal entity to its owners. You’ll need to consider what’s right for you.
The Business of VAT
If your taxable turnover (as opposed to your profit) is likely to exceed £85,000 then you need to get yourself VAT registered. This also comes with a fair amount of administration such as filing VAT returns and keeping hold of important paperwork. In terms of taking the first steps, there is an online form where you can find out more and register
Record, File and Save
Make sure you also get accustomed to keeping a handle on business related expenses such as travel costs, work related mobile phone bills, marketing costs etc. Records and adequate documentation for this is a must.
Working From Home?
You can recoup expenses that come with running a business from home such as utility bills plus wifi and phone costs. You may not even have considered this but it is worth checking the terms of your mortgage to see if running a business from your property is permitted.
Driving Down Expenses
If you’re driving for work purposes then be sure to keep a check on business mileage because you can reclaim this. The flat rate is 45p per mile for the first 10,000 miles with 25p per mile following that.
More than enough to keep up with?
Cloud Accounting Specialists is a friendly team of Glasgow-based accountants here to help all types of small to medium sized businesses with their business accounting.
As you can see, there’s a lot to keep on top of so you might find that outsourcing the management of your business finances is right for you, in which case get in touch with us so we can find out more about your needs.