OT advice sought re going self employed

upthealbion1970 · Sep 28, 2014

After a drastic change in my personal life I'm going back to "proper work" after 5 years as a carer.

I've been offered 3 jobs in the last week, one of which means going self employed.

The 2 jobs on paye are back in the motor trade and back to what I know, the other one is oven and white goods cleaning which might sound a bit odd to go for something completely different but it's out and about meeting people earning £13-£20 per hour and am only expected to work Monday-Friday.

The deal I've been offered is that for 6 months I take 40% of each job, they are mad busy and turning work away and the mrs of the couple wants to work much less so I'm pretty confident that amount if work isn't a problem at all, they've got glowing references on check a trade who's also helps put my mind at rest.

My only investment is that for 2-3 weeks training I am unpaid, and my only expenses are to put fuel in the 2 year old van they supply as part of their %.

The last person who did this for them only wanted 2 jobs a day and turned over £17k last year, they can supply me 4 jobs a day if I want them.

I invoice them for week 1 in week 2 and they pay me week 3 so will be getting money in every week.

I think this could be a really good opportunity for me to earn reasonable money but I'm a little cautious regarding the self employed bit.

I've got someone qualified who is prepared to do my books for a nominal fee, and I'm planning on keeping 20% to one side for tax and stuff.

Is it just a case of keeping all my invoices, payments and fuel receipts, or is it much more complicated than that?

Yes I know I can google it bit I'm after some advice from anyone who's got experience of going self employed for the first time

Thanks in advance

Garage_Doors · Sep 28, 2014

It is that simple yes, i went self employed 3 years ago and never looked back.
You will only pay tax on anything over 10k that you earn but it a good idea to set aside 20% as this will easily cover your liability and you will be giving yourself a bonus with what's left over.

I'm a bit more fastidious in that i number all my receipts and keep a running total on a spread sheet so i can cross reference them to each job if necessary and also the invoices so i know at any one time what my in's and out are. but your not required to to that, technically its the accountants job but i like to know.

Weststander · Sep 28, 2014

I have no connection with the following, but you should get a good deal from:
Carden & Co Accountants, of Hove - you'll find them on Google; or
Crunch Accountants, also of Hove.
Perhaps compare, then go by your gut feeling and lower price. They can also do bookkeeping for you, as well as the professional accountancy/tax side of things, and their clients seem happy with their low bills. But if you do the bookkeeping, you will save cash.

Always get a fixed quote in advance for all the elements of work you want them to carry out.

There will be some one-off work for them to do at the beginning, but they will take the stress and form filling away from you.

What's your year one turnover likely to be?

upthealbion1970 · Sep 28, 2014

About £25-£30k

Sir Nigel of Eagleshire · Sep 28, 2014

upthealbion1970 said:
After a drastic change in my personal life I'm going back to "proper work" after 5 years as a carer.

I've been offered 3 jobs in the last week, one of which means going self employed.

The 2 jobs on paye are back in the motor trade and back to what I know, the other one is oven and white goods cleaning which might sound a bit odd to go for something completely different but it's out and about meeting people earning £13-£20 per hour and am only expected to work Monday-Friday.

The deal I've been offered is that for 6 months I take 40% of each job, they are mad busy and turning work away and the mrs of the couple wants to work much less so I'm pretty confident that amount if work isn't a problem at all, they've got glowing references on check a trade who's also helps put my mind at rest.

My only investment is that for 2-3 weeks training I am unpaid, and my only expenses are to put fuel in the 2 year old van they supply as part of their %.

The last person who did this for them only wanted 2 jobs a day and turned over £17k last year, they can supply me 4 jobs a day if I want them.

I invoice them for week 1 in week 2 and they pay me week 3 so will be getting money in every week.

I think this could be a really good opportunity for me to earn reasonable money but I'm a little cautious regarding the self employed bit.

I've got someone qualified who is prepared to do my books for a nominal fee, and I'm planning on keeping 20% to one side for tax and stuff.

Is it just a case of keeping all my invoices, payments and fuel receipts, or is it much more complicated than that?

Yes I know I can google it bit I'm after some advice from anyone who's got experience of going self employed for the first time

Thanks in advance

Yes its that simple, save your receipts (and your tax money) do a return online (its very straightforward) No real need for an accountant unless the cost is reasonable.
If you have any capital equipment you can make an allowance separately. Worth registering your home address as business address so you can claim legitimate business travel and also claim a portion of house expenses as home office. don't forget that you will have to pay 50% towards the following years tax when you make your first return and make sure you register within 3 months of the first self- employed day or you will get an automatic fine, good luck with it (don't give away 60% of your income for too long

BN9 BHA · Sep 28, 2014

Feel free to ask me any questions but I have been self employed since 2002 and also from 1996-1999, I'm lucky as my wife does my bookkeeping, but what you have said about keeping all invoices etc and putting away money for tax is a good idea, I do a monthly direct debit into an Isa to save for my tax bill, and I keep every receipt.

TBH I just got on with it from day one and have never looked back, I do pay an accountant to do my Tax Return.

Sounds like a good job without the hassle of estimating and advertising for work, I find the estimating and arranging jobs the hardest part.

upthealbion1970 · Sep 28, 2014

Thanks for the speedy replies chaps, some good advice received. Certainly putting my mind at rest somewhat.

upthealbion1970 · Sep 28, 2014

bn9 bha said:
Feel free to ask me any questions but I have been self employed since 2002 and also from 1996-1999, I'm lucky as my wife does my bookkeeping, but what you have said about keeping all invoices etc and putting away money for tax is a good idea, I do a monthly direct debit into an Isa to save for my tax bill, and I keep every receipt.

TBH I just got on with it from day one and have never looked back, I do pay an accountant to do my Tax Return.

Sounds like a good job without the hassle of estimating and advertising for work, I find the estimating and arranging jobs the hardest part.

They stopped advertising apart from being on checkatrade a while back, got lots of repeat custom from private, landlords and estate agents and some commercial kitchens.

Best thing for me is I will be able to have my boy stay over (once I've got somewhere to live lol) every weekend and can keep my season ticket.

drew · Sep 28, 2014

Sounds like the business is relatively straight forward so if you can run a spreadsheet then you might even do your own tax submission on line. Means you don't have to pay any tax for the current tax year until Jan 2016. You will have to register for national insurance contributions so look online to see what they should be or ring the tax office for advice.

Good luck.

Cold Gettin Dumb · Sep 28, 2014

Just to add to what others have said...
Phone hmrc to let them know you wish to go self emp, then ask if they have any courses they could put you on.
I did this, and they put me on a half day thing which explains in simple terms, how to go about things, what to claim for etc.
All the best, you'll never look back!

upthealbion1970 · Sep 28, 2014

drew said:
Sounds like the business is relatively straight forward so if you can run a spreadsheet then you might even do your own tax submission on line. Means you don't have to pay any tax for the current tax year until Jan 2016. You will have to register for national insurance contributions so look online to see what they should be or ring the tax office for advice.

Good luck.

Cold Gettin Dumb said:
Just to add to what others have said...
Phone hmrc to let them know you wish to go self emp, then ask if they have any courses they could put you on.
I did this, and they put me on a half day thing which explains in simple terms, how to go about things, what to claim for etc.
All the best, you'll never look back!

Thanks, I may well ring up about the course.

Weststander · Sep 28, 2014

Keep an eye on profit levels.

Profits above £7,956 (so with your personal tax allowance of £10k, say £17,956), are taxed at 29%, not 20%, due to a little known stealth tax of Class 4 National insurance. At 9%, this has really crept up over years. There's no way out of it and it is paid in addition to the small amount of Class 2 National Insurance paid by DD every 4 weeks.

When profits get to say £25,000, but it's up to you, due to the tax saving it may then be worthwhile operating instead as a limited company where corporation tax will only ever be 20% for a one man band like yourself. A bit more complex to run, but good accountants will explain all.

Good luck with the business.

Questions · Sep 28, 2014

I've been self- employed since 1983 but I don't understand this word TAX you keep on about.

upthealbion1970 · Sep 28, 2014

Weststander said:
Keep an eye on profit levels.

Profits above £7,956 (so with your personal tax allowance of £10k, say £17,956), are taxed at 29%, not 20%, due to a little known stealth tax of Class 4 National insurance. At 9%, this has really crept up over years. There's no way out of it and it is paid in addition to the small amount of Class 2 National Insurance paid by DD every 4 weeks.

When profits get to say £25,000, but it's up to you, due to the tax saving it may then be worthwhile operating instead as a limited company where corporation tax will only ever be 20% for a one man band like yourself. A bit more complex to run, but good accountants will explain all.

Good luck with the business.

Questions said:
I've been self- employed since 1983 but I don't understand this word TAX you keep on about.

I think I know where you're coming from

BN9 BHA · Sep 28, 2014

upthealbion1970 said:
They stopped advertising apart from being on checkatrade a while back, got lots of repeat custom from private, landlords and estate agents and some commercial kitchens.

Best thing for me is I will be able to have my boy stay over (once I've got somewhere to live lol) every weekend and can keep my season ticket.

I hope everything is ok, obviously something has happened in your life from what I'm reading here.
Feel free to ask for any help.

upthealbion1970 · Sep 28, 2014

bn9 bha said:
I hope everything is ok, obviously something has happened in your life from what I'm reading here.
Feel free to ask for any help.

Pm'd you mate

Shropshire Seagull · Sep 28, 2014

There is another decision to consider - operate as a sole trader or a limited company?

There are pros and cons to both and a decent accountant should give you 20 minutes of their time to give you the details to help you make up your mind.

I operate under a ltd co and I'm also on the VAT flat rate scheme [which means I always gain] - accountant charges me circa £800 p/a but then I know I have peace of mind. She recommends how much to PAYE myself to ensure I'm as tax efficient as possible whilst remaining IR35 compliant.

I keep all receipts which fall under the "wholly and completely business attributable" as these are deducted against profit to further reduce corp tax [20%] liability. Any remaining profit in the business is mine to withdraw as dividend [tax free].

Steve351 · Sep 28, 2014

I was self-employed for over 45 years and loved ever year of it! nobody to answer to except myself. I had a good income, made money and lost money, paid for the house early, cars, and three holidays a year, took time off when wanted. Biggest advice is to buy accountancy software, fill in all your details, receipt's, costs etc. press button at end of year and its all worked out for you, great! No accountant needed waste of money. By the way my turnover was between 750,000 to 800,000.

Dolph Ins · Sep 28, 2014

Do get an accountant (mine costs £300 a year). Sounds like you should be able to do your own books. Buy 1 of those red books with lot's of columns from a stationers and fill in outgoings 1 side and incomings the other. Bloody simple then the accountant does the rest. Don't believe HMRC that they are there to help you. My 1st year they tried to get me to pay £8000 on £20000 turnover. Ob couldn't pay it accountant got it down to £2000. Get pub liab insurance, should be less than £100. Don't pay bank charges. Remember you are not paid for holidays or sickness. Enjoy. I have. You have to register for VAT if you TURNOVER more than £72000.

BN9 BHA · Sep 28, 2014

Dolph Ins said:
Do get an accountant (mine costs £300 a year). Sounds like you should be able to do your own books. Buy 1 of those red books with lot's of columns from a stationers and fill in outgoings 1 side and incomings the other. Bloody simple then the accountant does the rest. Don't believe HMRC that they are there to help you. My 1st year they tried to get me to pay £8000 on £20000 turnover. Ob couldn't pay it accountant got it down to £2000. Get pub liab insurance, should be less than £100. Don't pay bank charges. Remember you are not paid for holidays or sickness. Enjoy. I have. You have to register for VAT if you TURNOVER more than £72000.

Good advice on the accountant, mine seems to get my tax bill down every year, well worth what I pay him, he also double checks all the bookkeeping that my wife has done, saves me worrying about it.

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OT advice sought re going self employed

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