Steps to Register as Self Employed With HMRC in UK

1. StepstoRegisterasSelfEmployedWithHMRCinUK StepstoRegisterasSelfEmployedWithHMRCinUK Startingasidebusinessorgoingfreelancefull-timecanbeboththrillinganddaunting.Before divingin,it’scrucialtostaycompliantwiththelawbyregisteringasself-employedwithHMRC. Consultinganaccountantforselfemployedcanensureyoupaythecorrectamountofincometax andNationalInsuranceContributions,helpingyouavoidunnecessaryfinancialpenalties. RegisteringasaSelfEmployed While it is pretty trustworthy for most of the peoples, there are instances in which your employmentstatusisnotapparent.You’reinalllikelihoodtobeself-employedifthesubsequent elementsfollow: Yourunyourveryownbusiness You’recapableofdecidewhilstandthewayyouwork,aswellaswhatyoufigureon Youhavetheoptionofhiringdifferentpeoples Youhavemorethanoneclientorcustomerconcurrently Youarenotpaidanormalsalaryorrevenue YouacquireearningsthatisnottaxedunderneathPAYEforitemsorservicesyouprovide It’salsopossibletobeemployedandself-employedattheidenticaltime,inclusiveofwhileyou’re doingfreelanceworkontopofyourdayjob. Tip:Ifyou’restillunsure,checkouttheHMRCEmploymentStatusIndicatortool.You’llbeaskeda seriesofquestionstodetermineyouremploymentstatus.YoucanalsocallupHMRCtoaskabout youremploymentstatus.Ctoinviteaboutyouremploymentpopularity. WhenDoINeedtoRegisterasSelf-employed? You need to register as soon as you become self-employed. It doesn’t matter if you haven’t yet foundworkorbroughtinincome,asHMRCconsidersyourbusinesstobeinoperationthemoment youstartactivelyseekingwork-suchaswhenyoubeginyourmarketingactivities. Ifyoufailtoregisterwithinthreemonthsofstartingyourbusiness,you’llbechargedafineof£100. Furtherdelaysmayresultinadditionalpenalties. HowDoIRegisterasSelf-employed? You’llneedtoregisterasself-employedifyou’resettingupasasoletraderorpartnership. Youwon’tneedtoregisterifyou’resettingupalimitedcompany,asyou’llbeconsideredasboth theownerandanemployeeofthebusiness.Thisprocessismorecomplicated,andwe’llcoverthis inaseparatearticleonsettingupalimitedcompany. Asasoletrader,youcanregister: Online:Fillinthisformifyou’vesentareturnonlinebefore.Ifyouhaven’tsentareturnonline previously,you’llneedtoregisterfirst. Orbypost:Fillupthisform,printitoutandthenpostittoHMRC. StepstoRegisterasSelf-employedOnlinewith HMRC Theprocessofregisteringasaself-employedpersonintheUKiseasy.Thisstep-by-stepguidewill benefityougetthroughtheprocess: AccesstheHMRC Website:StartbyvisitingtheHMRCwebsite. CreateanGovernmentGatewayAccountIfyoudonothaveanyandyou’renotsurehowtogetone, you’ll need to set up an Government Gateway account. It will grant the ability to access HMRC’s servicesonline. Filloutyourregistrationform:Onceloggedin,findtheoptiontoregisterasself-employedandfill outtheformwithyourdetail.Then,fillintheformwithallyourdetails.Includeyouraddress,name, NationalInsurancenumber,andthekindofworkyou’llbeperforming. Fillouttheform:Whenyou’vecompletedyourformonline,senditin.HMRCprocessesyour requestandthensendyouareceipt. GetYourUniqueTaxpayerReference(UTR):HMRCwillmailyoualetterthatincludesthedetailsof yourUTRthatwillberequiredforanyfuturetaxreturns. TaxResponsibilitiesofSelf-employed Whenyou’reself-employedThereareanumberofimportantlegalobligationsyouhaveto meet.Thisincludes: Asaself-employedindividualIfyouareself-employed,youmustsubmitanannualselfAssessment taxformtoHMRC.Thetaxreturndeterminesyourtaxliabilityfromyourincomeafterdeducting allowable expenses for business. You’ll be taxed on your profits, which are your earnings minus expenses.You’llpaytaxonyourprofits,whichisyourincomeminusexpenses.Consider availingselfassessmentserviceifyouarenotproattaxobligationsanddoingityourself.

2. DeadlinesforKeyDeadlines: 31stofJanuaryItisthedeadlineforyoutocompletetaxreturns.SelfAssessmenttaxreturnand payanytaxowedfortheprevioustaxyear. 31st Jul:Ifthetaxyouoweislargeandyouareinneedofasecondpayment,make anotherinstallmentonyouraccountonthisdate. NationalInsuranceContributions (NICs): InadditiontothetaxyoupayonyourincomeInaddition,youmustcontributeNationalInsurance Contributions(NICs).TherearetwokindsofNICsthatself-employedpeoplemustpay: Class2NICs Theyarepaidwhenyourearningsaregreaterthananamountthatiscertain(currently PS12,570percalendaryear).Class2NICscanbeusedtocontributetobenefitssimilartothoseof theStatePension. Class4 NICs Theyarecalculatedbaseduponyourearningsandarepaidoutifyourearnings surpassagreaterthreshold.Class4NetNICsarecalculatedusinganamountofyourearnings. RegisterforVAT: IfyourturnoverforbusinessismorethanPS90,000overa12-monthperiod,thenyouhavetobe registeredtochargeVAT.Thismeansthatyou’llbechargedVATonproductsorservicesandfile taxesonVATfortaxpurposestoHMRC.Ifyourrevenueislessthanthisitispossibletosignup voluntarilyinordertoclaimVATonpurchasesmadebybusiness. MaintainingProperRecords Otherlegalobligations,likemakingyourtaxreturninatimelymanneriseasierifyoukeepaccurate documents.Makesureyoukeeptherecordsofyoursales,expenses,andalsopayrecordsifyou employemployees. Keep the originals of all important documents, such as bank statements, receipts and invoices.Onceyou’vefiledthetaxreturnsforaparticularyear,allpertinentdocumentsthat pertaintotheyear’sreturnshouldberetainedforaperiodoffiveyears.Thisisduetothefactthat HMRCmightaskyoutolookoverthedocuments,andyoucouldbefinedifyoudon’tkeeptrackof yourrecords.