Self Employment rules & regulations

[scattyfox]

I have an interview tomorrow for a salon in my local area on a part time basis, thelady concerned has advised she wants me on a self employed basis, I said yes as i was so excited but not really sure what this means.

Do i have to been certified (i know i do mentally) with anyone like the council or do i need a Ltd company to get paid, I really am not sure how this works.

Initially it is to cover some sick leave and then will be used on a as and when basis which quite suits me and will give me the salon experience i need to get the last bit of my speed down hopfully. The salon is in a prime location in a trendy area and wil get loads of walk by trade as well as regular clients.
I saw a previous thread where Geeg advised that you should be asking whether they provide products, advertising, front of room (it is) but just not sure on how i am affected.

Any help and advice gratefully accepted

 

[Trinity]

With regard to pay, all you need to do is call the Inland Revenue and register as self employed - once a year (beginning of April) they will send you a tax return to complete. Based on the info you give them, you will be sent a tax bill which you pay. It's a simple and as complicated as that :irked:

This happens instead of the PAYE (Pay As You Earn) tax deductions that happen when you are employed by an employer.

The tax return looks quite daunting, and I've used an accountant to do mine, it cost me £100+VAT for the first year books. All I did was keep an excel spreadsheet of everything I earned and everything I spent. I was owed a refund as I was PAYE for part of the year and self employed for the last few months. Come this April I will have my first year to pay, I've just tucked away 25% of everything I've earned. The tax bill will be nowhere near that amount, once they've deducted various allowances I'm entitled too (uniform, training, car, phone, etc.) so I'll have a little nest egg too

With regard to authorised by your Council, it depends on your area - talk it through with the salon owner, she should know these things if she's having others work in her salon.

You don't need to be a limited company, this is only for those earning more than £40K per year - I'm sure you're a fab tech, but probably won't be earning that amount...in the first year at least!!! :wink2: Even when you reach the £40K bracket there is only a need if you want to start claiming VAT back, but worry about that when you need too.

The Business Link in your area will be able to help loads, and do a seach on business link on here too, they're great and there's loads of support out there for you

Good Luck with the interview :hug:

HTH
Trin
xx

 

[scattyfox]

Thanks Trinity
I was panicking a bit but feel much better now and my nails came out really well tonight thanks to geeg and her advice. What would i do without this site
x

 

[Curzy]

Hi

Just spotted this post and wanted to clarify something.

You can be a sole trader no matter what you earn, there is no upper limit.

You also dont have to be a limited company to be VAT registered. You can register voluantarily or compulsory if turnover reaches over £50,000 ( currently £56k ish).

If you are a limited co you have to prepare statutory accounts with certain disclosures etc which a sole trader does not have to do.

The best adivse I can give is that if you turnover a small amount keep all receipts & details of income etc and get an accountant to work out your tax etc. (may even be able to save you tax which you wasn't aware of) Dont worry about the limit company thing unless your turnover dramatically increases.

Another thing that may help is when you come to chose an accountant pick one who is either a Chartered Accountant or Chartered Certified Accountant. This will be in the name of the firm.

There are many rouge accountants around who have never had a days training. Unfortuantly anyone can set up and call themselves an accountant but those with the titles above are fully trained and qualified. I know, I spent three years training and qualifing as a Chartered Accountant!!

Hope this helps.

 

[scattyfox]

Thanks girls will take your advice i knew i would find the answer with a little help from my friends
x

 

[Trinity]

By the way, if you want to set up a business bank account (which you don't have to, Mr Taxman doesn't care where you keep your money as long as you can show him if he asks!) have a look at the Abbey.

They are offering a free banking for life business account which is ideal for us lone techs - you can bank up to £3k per month for free (I wish I was earning £3K a month!!) free DDs, etc.

I looked around for ages and the cheapest I could find wanted a tenner a month minimum - but as long as you stay in the Abbey's guide-lines it's free.

HTH
Trin
xx

 

[scattyfox]

Excellent cheers for that trinity
x

 

[Bryony]

Another thing that may help is when you come to chose an accountant pick one who is either a Chartered Accountant or Chartered Certified Accountant. This will be in the name of the firm.

There are many rouge accountants around who have never had a days training. Unfortuantly anyone can set up and call themselves an accountant but those with the titles above are fully trained and qualified. I know, I spent three years training and qualifing as a Chartered Accountant!!
Hope this helps.

Sadly, Bit like being a nail tech then?

As for a previous suggestion, I contacted local Business link and they've been really helpful. Apologies if it's already been said, not read previous posts fully - but you get 3 months grace then have to register for tax/ NI. The number you call for this, they can also give you advise, got a pack from them that's also been a help (I have been exempt from Class 2 NI as I pay Class 1 through my employer and my self employed (nails) does not earn enough so don't have to pay NI). Business link will send you loads of info on COSHH, RIDDOR, H & S, Tax & NI, business plan etc. etc and you also get a free 1 hour session with an advisor.

 

[Bagpuss]

QUOTE...
once they've deducted various allowances I'm entitled too (uniform, training, car, phone, etc.) so I'll have a little nest egg too




can someone pls help with a quick question, i was told you couldnt claim for self training. meaning the money i paid to train myself i cannot claim off my tax, is that right ?

 

[Sassy Hassy]

I've been on several of the free courses with the Inland Revenue and they said that you cannot claim against training for yourself. They did explain why but I can't remember what it was - am I helpful or what!

 

[Bryony]

I've been on several of the free courses with the Inland Revenue and they said that you cannot claim against training for yourself. They did explain why but I can't remember what it was - am I helpful or what!

Sassy, Thanks for confirming that one,
but no - you're no help at all!!:lol: :lol:

 

[Trinity]

can someone pls help with a quick question, i was told you couldnt claim for self training. meaning the money i paid to train myself i cannot claim off my tax, is that right ?

I've been on several of the free courses with the Inland Revenue and they said that you cannot claim against training for yourself. They did explain why but I can't remember what it was - am I helpful or what!

My accountant has claimed allowance for my training (most of it was in this year so we'll see in April how he does the bulk of it later)

A friends father is an Accountant and he told me you can claim for training as long as it is relevant, for example I couldn't claim for 'flying lessons' but I can claim for my Masters

Perhaps we need to find a Nail Tech who was a former Accountant - with the diversity of Techs on here there must be one somewhere!!! :lol:

 

[Curzy]

Hi

Made a previous post on this thread and I am a Chartered Certified Accountant!

Had a baby two years ago and could not face going back to a 'desk job', also had a passion for nails which has increased since I found this site.

Unfortuantly you can not claim tax relief on training (ie deduction). This is very unfair as how can we trade if we do not get training and continue to train to improve!!! The Inland Revenue can be a law unto itself sometimes!

Make sure that you get deductions for any trade subscriptions such as payment to ANT, BABTAC etc but not the actual training courses themselves.

I learnt this the hard way. It cost thousands to train as an accountant, which was not tax deductable, but the annual fee to the institue was allowable which was only £160 in comparision.

Hope this makes sense as it is 12.45am and my eyes have gone a bit misty - note to self - leave the Nail Geek Site alone and go to sleep!

 

[Trinity]

SEE!!! I knew we had one somewhere :lol:

I wonder what my accountant put my training down as?!

I'll have another conversation with said friends Dad as he claims for his sons training every year!

 

[Trinity]

Right - this is mad, it's 2.27am and I'm reading tax books [sadcowicon]

According to the Daily Mail Tax Guide 2004/5, Section 6 - Income from your Business - Page 128 for those who wish to check it out themselves, says:-

[under employee costs]

You can deduct all the costs of hiring other people, whether they are permenant, temporary or casual staff, or subcontractors. This includes pay, pension contributions, employer's NICs and all other staff related costs, such as fringe benefits and training.
However, you cannot deduct your own pay, National Insurance, benefits or pension contributions. You can claim the cost of your own training if this is to update your existing skills, but you may have difficulty justifying your claim if the result is a completely new specialisation or qualification.
If you take on an employee you will have to comply with the new requirements for operating PAYE blah blah blah

I am assuming my accountant and said friends Dad are taking advantage of the above - hence the analagy of learning to fly. It's not exactly updating my nail skills!!

From that I assume you would have to swallow the cost of your Creative four day foundation for example, but could claim for a Brisa conversion (or whatever they're called these days) and other systems/products as this would be updating skills and not a totally new specialisation and/or qualification??????

I guess it's all about interpretation, and maybe a little bit of 'chancing your arm' so to speak!

Off to bed now - night all

Trin
xx

 

[Sassy Hassy]

It sounds like one of those grey areas known as Creative Accounting!!
BTW, how did the interview go Lucia?

 

[scattyfox]

tHE INTERVIEW WENT WELL THANKS SASSY AND I STARTED IN THE SHOP ON FRIDAY, UNFORTUALTELY I DREAMT I WOULD BE DOING NAILS ALL DAY, RELEALITY WAS THE SALON NEEDED CLEANING LOL
X

 

[scattyfox]

I hope you all managed to get some sleep at some point girls, i am going to print off all the info you have given me. Looks like from what trinity was saying at some unearthly hour this morning, that i would be able to claim for my masters as this is updating the skills to a necessary level of competancy, as a 4 day course would not give you the required skill level to set up in business.
Thank you all so much i would never have fought my way through all this without any help from you all

THANK YOU
X

 

[Kim Lawless]

Tax question: What should you do if you're just starting out and maybe only doing 1 or two sets of nails a aweek. Will the Inland Revenue believe you or will they assume that your earning a much higher amount and tax you on that?

 

[bimbogeri]

The IR aren't allowed to ASSUME anything. It is possible that they may not believe you, although I would think this would be unlikely when you are just starting out - it would be more like if it were 3 years down the line and you weren't earning a liveable (is that a proper word?) wage, they would maybe wonder what extra money you might be living on. Or if your outgoings were a lot higher than your income (although again this will be after your first year as everyone knows you spend a lot more to set up a business than you will initially get back), they would wonder what you paid for everything with.

It's a pretty much an accepted fact of life that if you're self employed the odd £10 in every £100 or so may not go through the books, it's the perk of doing it yourself (really want that pair of jeans? don't put a set of extensions through the books and use the cash to get them, etc) but you do have to be careful not to do it to such an extent that suspicions are aroused.

So long as you keep records of all money in and out (except those occasional tenners) and can show and justify where you got any extra money from (such as emptying a savings account or getting a loan) they're not going to come after you. The main key is SAVE EVERYTHING, keep photocopies if you're prone to losing things, and make sure you fill in your expenses/accounts books regularly and fill in your tax return as soon as you get it (or get an accountant to do it), so you don't panic at the last minute and mess something up.

Now, where did I put that file full of receipts.....?
xxx