Starting your business endeavour is not just a revitalising experience; being your own boss, it also allows you to be responsible for your personal growth as a person. Trying your hand in the market is a brave move to make, and it can make for exciting rags-to-riches fairy tales that are often featured in entrepreneurship success stories online. But real life is never as simple as going from the bottom to the top. The harsh reality is that there are ups and downs to a business, and most importantly – being your boss means you have to do your accounting.
Dealing with the HRMC
Being self-employed means that you have to deal with HMRC(Her Majesty’s Revenue & Customs). All In all, you’ll have to make use of the Employment Status Indicator, the creation of a Gateway account, and completing your company registration. Once you’re officially registered, you’ll be in for a world of papers and numbers as you’ll have your yearly legal obligations set out for you.
Being your boss
There are provisions to being categorised as self-employed. If it sounds silly to need to classify yourself if you’re independent or not, then the official guidelines might paint a pretty solid picture to deal with your Self-Assessment Assessment Tax return.
The general guidelines of being ‘self-employed’ are as follows:
- If you’re in charge of business operations
- If you are allowed to hire staff to work for you
- If you have a staff that you pay inwages
- If you contribute services or if you work collaboratively to provide services
After you’ve confirmed that you’re self-employed, you will have to get yourself a Government Gateway Account. Getting a Government Gateway account allows you to access HRMC’s portal and register yourself as a business owner officially. You should usually get registered as soon as your business lifts off. If you haven’t had the opportunity to register yourself, you have until the 5th of October in your business’s second year to catch up on your taxes. Registering late will incur penalties and a significantly massive tax bill to pay.
Keeping records while your business is active
Besides your responsibility to pay Value Added Tax and Corporation Tax among other legal fees, you will also have to deal with filing your Self-Assessment Tax return.
It’s best to deal with your financial records with an accountant to help with the process of filing your business expenses. Professional accountants in Central London are open for hire if you ever need that extra pair of reliable hands for handling your paperwork. Keeping a record of your company operations early on can help save you the trouble of needing to dig them up when the deadline is nearing. You have to file your Self-Assessment Tax return by the 31st of January every year, so it’s best to have your records ready a few months earlier. HRMC may give you leeway on this deadline, but it depends on your appeal.