So you have decided that you would like to be self employed as opposed to conducting your business through a company. Well this is what you now need to do.
1. Set up a business bank account.Longer term it is better not to mix up private and business expenses and income. This is better for your accountant and better when dealing with the tax man.You will need to keep the statements for 6 years.
2. You have to notify HMRC within 3 months of starting. If you fail to do this there is a £100 penalty.
3. Contact HMRC to register for national insurance and income tax. They will supply you with a 10 digit unique tax reference number (UTR).
4.Once you have a UTR you can then register to use the online service. As part of this process they will send you an activation code so you can complete the process.
5.If you expect your sales to be in excess of £79000 pa then you have to register for VAT.They will issue you with a VAT registration number and as for income tax you can administer this online.
6.You need to decide to what date you would like to complete your trading year. We recommend 31st March each year to coincide with the tax year. Technically it is the 5th April but the 5 day difference is ignored by HMRC in most cases.
7.You should budget for any income tax payable. This is due on 31st January in the tax year and 31st July after the tax year.These two payments are always estimates.The balance is paid 31st January the year after the tax year.This means each January you have two payments to budget for. Half of what you think you will need to pay this tax year plus any under/overpayment for the previous year.