being self employed vs not being self employed lol

Found 4th May 2010
missus has always worked for a business has always been on the books etc

she works as a hairdresser (not sure if that makes a difference)

but she has been offered a job in a new salon but she would have to be self employed

i started my busines with someone who helped with all that so i really dont no where to start

she has asked me to find out the following any help would be great

would she be better off self employed if the difference between her wages before and now would only be £40 a week

she was told by a freind who is self employed that for tax reasons (even do he is a builder) he had to get a company name etc

  1. Misc
Groups
  1. Misc
58 Comments

self employed just means you don't do the paye stuff, but once a year pay the tax on your earnings and pay your own NI contributions

hmrc.gov.uk/sel…ed/

May also be advisable to get a book-keeper / accountant to help you do your end of year and keep everything in tip top accuracy.

Banned

How accurate do you need to be when declaring taxes??

Also being self employed you don't get the benefits of paid holidays and sick pay. I take it she is renting a chair in the salon? Has she got a strong enough client following to make it pay well?

Another point is if she needs to go on a course to update tecniques and styles she will have to pay for them herself, does she need to buy her own tools and products?

Banned

faevilangel;8524778

self employed just means you don't do the paye stuff, but once a year pay … self employed just means you don't do the paye stuff, but once a year pay the tax on your earnings and pay your own NI contributionshttp://www.hmrc.gov.uk/selfemployed/May also be advisable to get a book-keeper / accountant to help you do your end of year and keep everything in tip top accuracy.



You pay tax on profits, not earnings.
A lot of things she could buy through as a sole trader for her work that would then be tax deductible.

faevilangel;8524778

self employed just means you don't do the paye stuff, but once a year pay … self employed just means you don't do the paye stuff, but once a year pay the tax on your earnings and pay your own NI contributionshttp://www.hmrc.gov.uk/selfemployed/May also be advisable to get a book-keeper / accountant to help you do your end of year and keep everything in tip top accuracy.



It would also mean (in this case), I am guessing, that the self-employed person would not be paid for sickness days, & that any previous employment rights (such as pension, holiday entitlement, or even redundancy payment entitlements) will be lost & will have to be funded out of the same £40/week that also funds the accountancy fees.

Would the hairdressing work require mobile visits to clients? Previously in a non-self employed capacity, the travel costs may have been paid, but now these expenses will also need to be funded from the same relatively small increase per week.

Are all materials to perform the hairdressing services covered by the new salon?
Again, another expense to take into account.

As suggested, you are better speaking with a qualified accountancy service that can look at the financial implications in more depth than I suspect you wish to share in this thread.

BFN,

fp.

My Mum went self employed just over a year ago, I helped her do her tax return form the other month and it took all of an hour really. Just remember to keep day to day/weekly books of everything as then it is easy to work everything out at the end of the year.
Thus no accountant needed.

JonnyTwoToes;8524809

You pay tax on profits, not earnings.A lot of things she could buy … You pay tax on profits, not earnings.A lot of things she could buy through as a sole trader for her work that would then be tax deductible.



My mistake ;-) I meant to put profits

fanpages;8524819

It would also mean (in this case), I am guessing, that the self-employed … It would also mean (in this case), I am guessing, that the self-employed person would not be paid for sickness days, & that any previous employment rights (such as pension, holiday entitlement, or even redundancy payment entitlements) will be lost & will have to be funded out of the same £40/week that also funds the accountancy fees.Would the hairdressing work require mobile visits to clients? Previously in a non-self employed capacity, the travel costs may have been paid, but now these expenses will also need to be funded from the same relatively small increase per week.Are all materials to perform the hairdressing services covered by the new salon?Again, another expense to take into account.As suggested, you are better speaking with a qualified accountancy service that can look at the financial implications in more depth than I suspect you wish to share in this thread.BFN,fp.



Yes, no holiday pay, no sickness etc, you don't work, you don't get paid.

If you need to buy products for work, you can write it off as a business expenditure.

Getting professional advice is recommended, as if you do it wrong, you can lose out

Banned

fanpages;8524819

It would also mean (in this case), I am guessing, that the self-employed … It would also mean (in this case), I am guessing, that the self-employed person would not be paid for sickness days, & that any previous employment rights (such as pension, holiday entitlement, or even redundancy payment entitlements) will be lost & will have to be funded out of the same £40/week that also funds the accountancy fees.Would the hairdressing work require mobile visits to clients? Previously in a non-self employed capacity, the travel costs may have been paid, but now these expenses will also need to be funded from the same relatively small increase per week.Are all materials to perform the hairdressing services covered by the new salon?Again, another expense to take into account.As suggested, you are better speaking with a qualified accountancy service that can look at the financial implications in more depth than I suspect you wish to share in this thread.BFN,fp.


:-D You'll find the majority of self employed people don't get sick! I've been five years without a sick day.

Personally, I wouldn't use a bookkeeper for something such as being a hair dresser. As long as she keeps on top of things and put a day a said every two weeks to focus on the books, she should be fine.

Turnover minus expenditure minus perks = net :-D

You can do class 2 NI via DD and class 4 through your tax return.

fanpages;8524819

It would also mean (in this case), I am guessing, that the self-employed … It would also mean (in this case), I am guessing, that the self-employed person would not be paid for sickness days, & that any previous employment rights (such as pension, holiday entitlement, or even redundancy payment entitlements) will be lost & will have to be funded out of the same £40/week that also funds the accountancy fees.Would the hairdressing work require mobile visits to clients? Previously in a non-self employed capacity, the travel costs may have been paid, but now these expenses will also need to be funded from the same relatively small increase per week.Are all materials to perform the hairdressing services covered by the new salon?Again, another expense to take into account.As suggested, you are better speaking with a qualified accountancy service that can look at the financial implications in more depth than I suspect you wish to share in this thread.



PS. Another implication to consider is if you wish to apply for a mortgage within the first three years of commencing self-employment you will be severely limiting your options & may well find nobody wishes to lend you any substantial sums of money.

You will be asked for (at least) three years worth of (audited) accounts for the business to demonstrate your financial stability & ability to repay in the future.

BFN,

fp.

PS. Speaking from experience!

Banned

faevilangel;8524852

Yes, no holiday pay, no sickness etc, you don't work, you don't get paid. … Yes, no holiday pay, no sickness etc, you don't work, you don't get paid. If you need to buy products for work, you can write it off as a business expenditure. Getting professional advice is recommended, as if you do it wrong, you can lose out



On the plus side, the sky really is the limit in terms of turnover. I'd go self employed over being employed any day.

Banned

fanpages;8524872

PS. Another implication to consider is if you wish to apply for a … PS. Another implication to consider is if you wish to apply for a mortgage within the first three years of commencing self-employment you will be severely limiting your options & may well find nobody wishes to lend you any substantial sums of money.You will be asked for (at least) three years worth of (audited) accounts for the business to demonstration your financial stability & ability to repay in the future.BFN,fp.



That's a very good point - don't expect any credit in the first three years, and only then with a decent P&L

well it depends I guess, with being self employed all of her expenses are tax deductable if she could not do her work without it, ie travelling costs to and from work any equipment she buys the rental of the chair, NI contributions are less pm about £10 but if you go over a profit of £5,715 at a rate of 8% of what you earn over this,

as for the company name she could just call it her name, or go for something more catchy if she wants there is no cost to doing this,

as for the tax returns things she needs to keep receipts for everything work related that she spends and total it all up at the end of the tax year, the self assesment is easy you really only need to fill in 3 lines unless she earns over £68k in that case she needs to be vat reg as well, anyway the 3 lines are income less expenses = profit, you do need to keep more than that obviously incase the inland revenue want to look more into the business, we keep a monthly record of money in and out, via a spreadsheet. easy always keep every receipt though

I do my husband books but I am a trained in accountancy, but I had never done one before but was pretty straight forward, perhaps an accountant is something you could do without in the early years until she is a little busier, but happy to help out if you have any other q's about whats deductable or anything else

Banned

i know people that are self employed and at the end of every year they make hardly any profits, they get a shed load of working tax credits their kids go to nursery and the fees are paid, their rent is paid and they dont have to pay council tax. they are minted and its all above board they just have a good accountant(dodgy)

Banned

tracyhay;8524898

well it depends I guess, with being self employed all of her expenses are … well it depends I guess, with being self employed all of her expenses are tax deductable if she could not do her work without it, ie travelling costs to and from work any equipment she buys the rental of the chair, NI contributions are less pm about £10 but if you go over a profit of £5,715 at a rate of 8% of what you earn over this, as for the company name she could just call it her name, or go for something more catchy if she wants there is no cost to doing this, as for the tax returns things she needs to keep receipts for everything work related that she spends and total it all up at the end of the tax year, the self assesment is easy you really only need to fill in 3 lines unless she earns over £68k in that case she needs to be vat reg as well, anyway the 3 lines are income less expenses = profit, you do need to keep more than that obviously incase the inland revenue want to look more into the business, we keep a monthly record of money in and out, via a spreadsheet. easy always keep every receipt though



£15k last time I looked. Anything over that would mean you fill out the whole form. Might have changed since I last looked - my accountants do that for me now.

tracyhay;8524898

well it depends I guess, with being self employed all of her expenses are … well it depends I guess, with being self employed all of her expenses are tax deductable if she could not do her work without it, ie travelling costs to and from work any equipment she buys the rental of the chair, NI contributions are less pm about £10 but if you go over a profit of £5,715 at a rate of 8% of what you earn over this, as for the company name she could just call it her name, or go for something more catchy if she wants there is no cost to doing this, as for the tax returns things she needs to keep receipts for everything work related that she spends and total it all up at the end of the tax year, the self assesment is easy you really only need to fill in 3 lines unless she earns over £68k in that case she needs to be vat reg as well, anyway the 3 lines are income less expenses = profit, you do need to keep more than that obviously incase the inland revenue want to look more into the business, we keep a monthly record of money in and out, via a spreadsheet. easy always keep every receipt though



You need to keep receipts, invoices, & all associated paperwork for at least seven years.

Depending on this amount of paper, & without your own dedicated premises, you might struggle to store it in your normal home environment.

BFN,

fp.

churchill;8524906

i know people that are self employed and at the end of every year they … i know people that are self employed and at the end of every year they make hardly any profits, they get a shed load of working tax credits their kids go to nursery and the fees are paid, their rent is paid and they dont have to pay council tax. they are minted and its all above board they just have a good accountant(dodgy)



Good accountants are not necessarily dodgy accountants.

BFN,

fp.

Banned

fanpages;8524925

Good accountants are not necessarily dodgy accountants.BFN,fp.



Very true.

Banned

Could one of you knowledgeable people break it down as to what the benefits are then in terms of income using examples rather than terms please.

JonnyTwoToes;8524911

£15k last time I looked. Anything over that would mean you fill out the … £15k last time I looked. Anything over that would mean you fill out the whole form. Might have changed since I last looked - my accountants do that for me now.



nope not anymore used to actually be £30k we have the new forms in and there is a leaflet in saying £68k before you have to fill all that in the £15k is for earning from property rental is the limit you are thinking about

fanpages;8524917

You need to keep receipts, invoices, & all associated paperwork for at … You need to keep receipts, invoices, & all associated paperwork for at least seven years.Depending on this amount of paper, & without your own dedicated premises, you might struggle to store it in your normal home environment.BFN,fp.



+1 on that but only if they suspect fraud will they check that far back, and it shouldnt take up much space a few folders unless it was a multi million pound company, we manage fine and have been running the business from home for 3.5 years now

Banned

Benefits:
You pay slightly less tax being self employed (on the whole).
You can buy items 'for the business' that you can put through the business as tax deductible. (ie, you need a new pair of GHDs for home....I mean for business). :thumbsup:
You can earn a lot more as you are working for yourself - as long as you are willing to put the hours in.

master_chief;8524961

Could one of you knowledgeable people break it down as to what the … Could one of you knowledgeable people break it down as to what the benefits are then in terms of income using examples rather than terms please.



Unlimited earnings
No boss
Write off expenditures if you can show you need it for your business e.g. tools

The above made me go self employed :-D I still work part time for someone else until my earnings pick up though :thumbsup:
You need to make sure you can survive on the money before you jump in

Banned

JonnyTwoToes;8524985

Benefits:You pay slightly less tax being self employed (on the whole).You … Benefits:You pay slightly less tax being self employed (on the whole).You can buy items 'for the business' that you can put through the business as tax deductible. (ie, you need a new pair of GHDs for home....I mean for business). :thumbsup:You can earn a lot more as you are working for yourself - as long as you are willing to put the hours in.



What's that mean financially?

So sticking with the hairdresser example. If I went self employed and in my first year took 40k in takings?

master_chief;8525023

What's that mean financially?So sticking with the hairdresser example. If … What's that mean financially?So sticking with the hairdresser example. If I went self employed and in my first year took 40k in takings?



would need to estimate your expenses as well before a figure could be given

faevilangel;8525004

Unlimited earningsNo bossWrite off expenditures if you can show you need … Unlimited earningsNo bossWrite off expenditures if you can show you need it for your business e.g. toolsThe above made me go self employed :-D I still work part time for someone else until my earnings pick up though :thumbsup:You need to make sure you can survive on the money before you jump in



Playing "Devil's Advocate"...

Limited employment (i.e. easier to "sack" / no employment rights unless you have a contract with the new salon).

No customers (if they "belong" to the salon you are working from).

You pay for expensive items yourself (out of your taxable earnings) if HM Revenue & Customs can prove you did not purchase them wholly for use by the business.

BFN,

fp.

master_chief;8525023

What's that mean financially?So sticking with the hairdresser example. If … What's that mean financially?So sticking with the hairdresser example. If I went self employed and in my first year took 40k in takings?



I am assuming none of us (or very few of us) are qualified/experienced to guess the extent of the outgoings to generate £40,000 worth of takings for a hairdressing business.

Hence my previous comment about discussing the subject in private with an accountant so that all the financial implications at a personal level can be established.

Yes, you may "make" £40,000, but start-up costs in the first twelve months may mean that the net result is less than £0 in your pocket at the end of the year.

BFN,

fp.

fanpages;8525048

Playing "Devil's Advocate"...Limited employment (i.e. easier to "sack" / … Playing "Devil's Advocate"...Limited employment (i.e. easier to "sack" / no employment rights unless you have a contract with the new salon).No customers (if they "belong" to the salon you are working from).You pay for expensive items yourself (out of your taxable earnings) if HM Revenue & Customs can prove you did not purchase them wholly for use by the business.BFN,fp.



they would only do things like that if you purchased a new car and tried to claim all the milage and cost as strictly business or a expensive mobile contract only for business when you are using it for personal use, just be honest with things like that

Banned

master_chief;8525023

What's that mean financially?So sticking with the hairdresser example. If … What's that mean financially?So sticking with the hairdresser example. If I went self employed and in my first year took 40k in takings?



So turnover if £40k.

From a gross turnover, you minus all expenditure/overheads to get to your net figure. The net figure is your profits that you are then taxed on.

The point is, being self employed (sole trader), you can get rid of quite a bit in the gross to lower your net profit and therefore lower your tax liability.

Problem with this is that you are then showing a low profit so getting credit (mortgages) could be a problem.

The best thing is to be honest. Run an honest business and you won't go far wrong.

fanpages;8525069

I am assuming none of us (or very few of us) are qualified/experienced to … I am assuming none of us (or very few of us) are qualified/experienced to guess the extent of the outgoings to generate £40,000 worth of takings for a hairdressing business.Hence my previous comment about discussing the subject in private with an accountant so that all the financial implications at a personal level can be established.Yes, you may "make" £40,000, but start-up costs in the first twelve months may mean that the net result is less than £0 in your pocket at the end of the year.BFN,fp.



could always try the business gateway instead of paying for an expensive accountant, also a bit of market research would find that out for free as well, business gateway are also good at helping you find start up grants as well so look in to that as well we got £2k when we started ours up

tracyhay;8525074

they would only do things like that if you purchased a new car and tried … they would only do things like that if you purchased a new car and tried to claim all the milage and cost as strictly business or a expensive mobile contract only for business when you are using it for personal use, just be honest with things like that



I would recommend just being honest

Coming back to a point above that I made about storing records for at least seven years...

If you, through no fault of your own, made an error in a tax return & this was discovered to be an ongoing annual error then all your records may be reviewed by the Inspectors to determine the extent of the tax that was owed, not just for the current year, but perhaps all the way back to the date at which the first tax return was submitted.

BFN,

fp.

Banned

I can't see start up costs of being a self employed hairdresser being that much.

If you need some start up funding, have a look at the Thomas White trust. Interest free loans over ten years.

fanpages;8525106

I would recommend just being honest :)Coming back to a point above that I … I would recommend just being honest :)Coming back to a point above that I made about storing records for at least seven years...If you, through no fault of your own, made an error in a tax return & this was discovered to be an ongoing annual error then all your records may be reviewed by the Inspectors to determine the extent of the tax that was owed, not just for the current year, but perhaps all the way back to the date at which the first tax return was submitted.BFN,fp.



usually up to 5 years they only go back as far as 7 IF they suspect fraud

Banned

Barclays offer a decent start up business banking package. You get Sage and instant data backup for minimal fees.
Also ask your bank for first year free as well! Most will give it if you show some long term alliance.

JonnyTwoToes;8525128

Barclays offer a decent start up business banking package. You get Sage … Barclays offer a decent start up business banking package. You get Sage and instant data backup for minimal fees.Also ask your bank for first year free as well! Most will give it if you show some long term alliance.



santander do free business banking for life, there are limitations on how many cheques you can pay in about 100 a month I think, but its great as there are no hiddens costs been with them for 3.5 years as well and not a single charge, on a business with a income of about £35k, its an online/phone service only though

Banned

tracyhay;8525169

santander do free business banking for life, there are limitations on how … santander do free business banking for life, there are limitations on how many cheques you can pay in about 100 a month I think, but its great as there are no hiddens costs been with them for 3.5 years as well and not a single charge, on a business with a income of about £35k, its an online/phone service only though



What about one with 500k?
Just moved to Barclays from HSBC who are dire. Personal banking great, business banking crap! Forever trying to sell pensions and insurances!

JonnyTwoToes;8525194

What about one with 500k?Just moved to Barclays from HSBC who are dire. … What about one with 500k?Just moved to Barclays from HSBC who are dire. Personal banking great, business banking crap! Forever trying to sell pensions and insurances!



it does have its limits I think it is aimed at saving the small business money, you could ask them exactly what limitations there are now been a while since I looked at them so cant remember them off hand, but do ask:thumbsup:

JonnyTwoToes;8525194

What about one with 500k?Just moved to Barclays from HSBC who are dire. … What about one with 500k?Just moved to Barclays from HSBC who are dire. Personal banking great, business banking crap! Forever trying to sell pensions and insurances!



Gotta pay the wages of their sales staff some how :whistling:

tracyhay;8525125

usually up to 5 years they only go back as far as 7 IF they suspect fraud



Being suspected of fraud & actually engaging in that activity are two different things (especially when HM Revenue & Customs are involved).

Before the Inland Revenue & HM Customs & Excise merged, the Revenue side had less legal powers.

The Customs officers could break into your premises & remove items to the value of the liability you owed. Revenue officers could ask for your assistance in repaying the debt owed to them.

I'm not saying that is why the two organisations now operate as one unit, but I would advise always being pleasant when you speak to any of their agents.

To be fair, I have always found both sets of agents are very keen to rectify any issues & will try to help with debts incurred due to individual personal circumstances. Just be honest & open when you communicate with them & they will try their best to accommodate you.

Lie & get caught... and you only have yourself to blame!

BFN,

fp.

Banned

tracyhay;8525208

it does have its limits I think it is aimed at saving the small business … it does have its limits I think it is aimed at saving the small business money, you could ask them exactly what limitations there are now been a while since I looked at them so cant remember them off hand, but do ask:thumbsup:



Cheers! :thumbsup:
Post a comment
Avatar
@
    Text
    Top Discussions
    1. printing pictures22
    2. Second sky q mini box - can i buy from ebay?1318
    3. active noise cancelling headphones32
    4. How are these websites Direct2Mum, PreciousLittleOne?22

    See more discussions