There are so many benefits of being a self-employed worker and more people than ever are choosing to run their own business! You get to choose your working hours, take on the jobs you want to and be your own boss. If you’ve recently set up your own self-employed business or you simply don’t know where to start, the guide below features some of the best money tips for self-employed workers.
1. Register as self-employed with HMRC.
When you’re self-employed you will need to let HMRC know as you will now be responsible for paying your own National Insurance and Income Tax. You can register as self-employed at any time but as long as it is before 5th October in your second tax year! You can do this by visiting the HMRC website for more details.
2. Increase your credit score.
Your credit score is really important to your financial life and can affect your ability to borrow money. If you’re looking to get a loan for your business, a used van on finance or open a bank account, you will usually have to undergo a credit check first to see which type of borrower you are. Having a low credit score can make it harder to get approved for loans and also can affect the rate you are offered.
3. Open a business bank account.
The easiest way to keep your personal and business money separate is to open a dedicated business bank account. Your business income will be taxed alongside your personal tax, but it also needs to be separated so you can make easier tax returns and self-assessments. There are a number of banks who can offer your business account for free or some that only charge a small fee of around £5 a month to use them.
4. Keep accurate financial records.
Once you’re set up with a business bank account, you should make sure all your finances are in order. To be successful in your self-employed trade you will need to keep on top of your accounts. Keeping accurate records aren’t just to keep the tax man happy or saving money but it also means that it can make it easier for you to forecast your business and how much you’re actually earning.
5. Get business insurance.
Business insurance for self-employed workers isn’t a legal require but it can be very beneficial. There are different types of insurance you may need so it can be worth checking out. For example, you will need to have public liability insurance if you are in a trade which means you come into contact with the public. Costs for insurance can vary so it’s worth taking some time to shop around for the most suitable package for you.
6. Set up a self-employed pension.
When you’re self-employed, you don’t benefit from an employer-based pension and won’t receive any employer contributions. However, having a self-employed pension can be really beneficial. You can still benefit from tax relief from the government too which can go into your pension. You can then pay into your own personal pension and also combine any previous pensions you’ve had too. This can help save for your future and make sure you’ve got enough to live on.
7. Claim any allowable expenses.
When it comes to working out how much tax you need to pay each year, you should always deduct any allowable expenses. There are a number of allowable expenses you can claim for, and it can be a good idea to find out what you’re eligible for. Allowable expenses can include things such as travel costs such as fuel, office costs such as stationary or phone bills and clothing expenses for uniforms.
8. DIY self-assessment
Learning how to do your self assessment at home can be key to running a successful business. And whilst it doesn’t cots much to get an accountant to do it for you, learning to do it yourself can be insightful and even quicker. There are plenty of free software available which can help you to enter the right figures in the right places and explains everything for you.
