so im thinking of actually making a serious go at the freelance work i currently do, spending a small amount of money advertising etc... But there are a few things which i need clearing up first.

 

The big one is tax; now by what ive read i don't have to pay tax until i earn over £5,693 or something silly like that, or am i mistaken. And also i plan on just filling out a self assesment form each year to see how much tax i need to pay on what i earn. Is this the right thing to do. Im asking here not because im too lazy to research it myself, because i have. But i generally find its quite hard to find acurate details on this subject and i figured that there are gonna be some freelancers here who have all this sorted and can share what they currently do.

 

thanks

Just do a self assessment each year, keep receipts and start a spreadsheet you have to notify HMRC after 3 months anyway and paying at least class 2 NI is a good idea

You don't have to pay tax until you earn over the limit which is around £7k these days I think. But you still need to register with HMRC and start paying your NI contributions. But yes, follow Panda's advice. You'll be surprised how easy it is.

thanks guys, i knew i weren't too far off, i also read that if you think you will be earning under 6k you may not have to pay NI...

thanks again

thanks guys, i knew i weren't too far off, i also read that if you think you will be earning under 6k you may not have to pay NI...

thanks again

 

if your earning 6k or less are you not going to start a pension either? Best pay something even if its only £2.50ish a week at class 2 you got some kind of contributions going in and will not be made to pay catch up if you later decided to go off and be employed later down the road. I could be wrong but I've always paid it.

if your earning 6k or less are you not going to start a pension either? Best pay something even if its only £2.50ish a week at class 2 you got some kind of contributions going in and will not be made to pay catch up if you later decided to go off and be employed later down the road. I could be wrong but I've always paid it.

 

oh ok,

 

is it possible to pay for the whole year in advanced, as that would be quite convenient to known its out the way?

oh ok,

 

is it possible to pay for the whole year in advanced, as that would be quite convenient to known its out the way?

 

not 100% you can pay 6 monthly though I think, give them a call I don't deal with that side of things my accountant does so I'm not up to date with latest trends, laws and changes to the HMRC system

If you're self-employed

 

If you're self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:

 

Class 2 National Insurance contributions are paid at a flat rate of £2.50 a week

Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 9 per cent on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount

 

If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions.

 

From April 2011, your Class 2 National Insurance contributions payments will become due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit – follow the first link below for more information about payment dates.

 

You pay Class 4 National Insurance contributions when you pay your Income Tax.

 

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/NationalInsurance/IntroductiontoNationalInsurance/DG_190048

right ok.....so its not really too hard, its just a case of keeping your records accurate and registering for self assessment and NI class 2, which then makes everything legal and means i wont have big mean in suits banging at my door

 

thanks pandadoodle

No problem

 

Have 2 x leaver arch files 1 for incoming and 1 for outgoing 12 polly pockets in each and put what you spend and what you make (invoices) in relevant folder and month pocket. Keep a record in excel as well

For outgoing expenses do you need to keep records of all outgoings related to the business?

 

hardware / software, notebooks pens and such?

 

and what about things like domain registration for clients and personal hosting fees?

Keep a record of everything! Anytime your out and spend money keep the receipt! If you do your shopping at tesco for example and on your weekly shop you buy 100 cans of pepsi max keep that as you can claim back that section as a business expense etc.

 

Yup keep all the invoices for anything you spend for client wise then mark the cost (plus mark up if any) on the invoice going out to the client. Just keep a track of all the ins and outs.

 

Computers, hosting, domains all business expense for your business. If you lease a computer claim back the payments against it, depreciation value and all sorts. Fuel costs, mobile phone bills.

 

If you work from home you can claim back a % of the gas, electric and water bills

Edited September 19, 201115 yr by pandadoodle