If you have recently become self-employed, one of the aspects of your work that you will now need to consider is accounting. This can feel daunting, and so it is worth breaking it down into the steps you will need to follow.
Bank Account
While a dedicated business bank account is not essential for a sole trader, it is easier to keep records of expenses and income if you have one.
Bookkeeping
How much bookkeeping you will need will depend on whether you are operating as a sole trader or a limited company, with the latter requiring more work. Sole traders should keep records of expenditure and income, making sure to keep receipts and invoices. Make sure you are clear on what can be considered a business expense to ensure your records are accurate.
Tax
You will need to complete a self-assessment tax return each year. You should be automatically enrolled in this when you register as self-employed. The government website will guide you through the tax return, but you may feel more comfortable with an accountant completing it. You can find an accountant in your area with an internet search like business accountants Worcester to get results such as https://www.hazlewoods.co.uk/expertise/business-accountants/worcester/.
Make sure your records are up-to-date before completing the return. You will need to pay tax and Class 4 NICs by 31st January after the end of the tax year. Other amounts you may need to pay include payments on account, which are advances on future tax years, and VAT if your turnover is more than £85,000.
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