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0 Choosing to earn a living through self-employment affords people with the flexibility and freedom to choose their own hours, lifestyle, and line of work.
As of November 2024, there are around 4.4 million self-employed workers in the United Kingdom. Those between the ages of 45 and 54 have the highest self-employment rates, indicating middle age is a popular time to make the leap.
There are several things to consider before setting up a self-employed business.
Self-Employment
Self-employment can mean operating as a sole trader, partnership, or limited company.
All self-employed businesses are responsible for registering with HMRC and completing comprehensive record keeping and accounts, detailing expenses and cash flow. This will allow them to complete their annual tax return. Businesses are responsible for their own tax and national insurance payments. Tax may include income tax, corporation tax, or VAT.
Some self-employed businesses employ staff. If this is the case, there are considerations as to wages, national insurance contributions, and income tax. You will also require careful planning regarding sick pay, annual leave, and employee benefits.
How your business is funded will need to be managed. Will the buying of essential stock and equipment, or a premises, be self-funded, or funded via business loans, overdrafts, or credit cards? Businesses may also apply for external funding, in which case they will require a full and comprehensive business plan for investors.
You may wish to set up a business bank account, where you can keep track of business money as a separate entity to personal finances. This will aid you with bookkeeping and submitting an annual tax return.
Accounting for Self-Employed
Managing the financial aspects of business can be daunting, especially when it comes to tax.
Business accountants Birmingham, such as https://www.hazlewoods.co.uk/expertise/business-accountants/birmingham, provide self-employed entities with a quality, affordable means of managing accounts, records, and tax issues.
An expert accountant is a worthwhile investment from the outset, with them offering professional assistance on a wide variety of issues, from financial planning and payroll, to audit and compliance.
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