Setting up as self-employed

Everything you need to know about setting up as self-employed

So you are thinking about setting up as self-employed? There are many advantages to working for yourself; you are in charge of the hours you work, the work you undertake and much more.

As experts in payroll solutions, we help many people just like you get to grips with being self-employed. Just call us now on 01923 521 096 and we will be happy to help you find the right solution.

We have some specific guides if you are thinking of becoming self-employed as a hairdresser,beauticiantaxi driver or graphic designer.

We have summarised some of the key things you need to know, including:

  • VAT
  • National Insurance
  • Expenses
  • Tips to finding work

Our Sole Trader Solutions

One of the main reasons people can be put off going down the self-employed route is the prospect of having to keep their accounts in order and file a tax return. However, it doesn’t have to be daunting at all. If you are self-employed and have received a UTR (unique tax reference) from HMRC then Futurelink Group has two solutions that can help to greatly reduce the amount of paperwork you need to do each month – enabling you to focus your time on developing your business.

If you are looking for a straightforward invoicing and payroll solution, then our sole trader solution is perfect. We offer daily pay runs Monday to Friday, a low weekly margin, a dedicated Payroll Coordinator and much more.

Alternatively, if you are looking for a more comprehensive service that also covers your VAT and tax affairs our Sole Trader Premium package is right for you.

For more information look at Sole Trader Solutions.

Claiming Expenses

It is important that you claim all the expenses that you are allowed because any cost that you have which is wholly, necessarily and exclusively for the purposes of your business is tax deductible. The expenses that you claim will vary according to the industry you are working in, but some common examples include:

  • Business telephone bills
  • Rent on business premises
  • Travel to client’s premises
  • IT equipment
  • Hotel room on business trips
  • Stationary
  • Business insurance

As a client of Futurelink Group, we’ll provide you with jargon-free guidelines to help you understand exactly what expenses you can claim.

The ins and outs of VAT

You will only need to register for VAT if your annual turnover exceeds the current VAT threshold of £81,000. However, some people choose to register even if their earnings are below the threshold as it can often make their company appear larger.

You can also register for the Flat Rate VAT scheme to gain further tax saving benefits. Below is some useful information; however our team are here to help and take away the burden of most of the paperwork.

The Flat Rate Scheme

In a nutshell, the Flat Rate VAT Scheme allows you to charge your clients VAT at the standard rate of 20% but pay back HMRC a reduced rate. Essentially this means that you could profit from charging VAT.

The rates at which you pay back VAT to HMRC vary according to your “category of business” so make sure you check which rate is applicable to you before deciding whether or not to register on the scheme. Additionally, it’s useful to note that in your first year of being VAT registered, you can reduce your flat rate by 1%. For example, if you are working as a self-employed management consultant, the flat rate for management consultancy is 14% but in your first year of VAT registration this would only be 13%.

Continuing as a management consultant here is an example of how much VAT would be paid to HMRC on a standard invoice under the flat rate scheme:

  • You invoice your client £5,000 plus 20% VAT for your services, a total of £6,000.
  • In your first year you only need to pay HMRC VAT at a rate of 13%, £780.

Note that the 13% is calculated from the VAT inclusive amount of £6,000. You get to keep the difference between the standard rate of VAT received and the flat rate paid to HMRC. Therefore, using this example you have made a profit of £1,000-£780=£220.

If you have any further questions on the Flat Rate Scheme and what effect it could have on your business, please call one of our friendly experts on 01923 521 096.

National Insurance

If you have previously been employed, you may have noticed NIC (National Insurance Contributions) on your payslip. National Insurance is what entitles you to certain state benefits such as the National Health Service and state pension. We have summarised the key aspects of NIC below, but everything is straightforward, all you need to do is register for National Insurance with HMRC and pay via a monthly or six monthly direct debit.

Once you are finished setting up as self-employed , HMRC will send you a quarterly bill for Class 2 NIC at a flat rate of 2.75 per week. Any additional National Insurance payments (Class 4) will be calculated with your earnings for the tax year and the amount owed will be included in your tax bill.

If your earnings are expected to be particularly low (Below £5,885), you can request to not pay any NIC until your earnings increase.

Top tips to finding work

Finding work as a self-employed person can be a particularly daunting task, especially when you are just starting out! It’s ok, there are a number of things you can do to get your name out there and you don’t need to have a marketing degree to do them.

Get online

Whether you are a management consultant, a window cleaner or a mobile beautician, one of the first places any consumer will go to find people such as yourself is the internet. As a result, it is essential to have a professional website, blog or Facebook page that tells people who you are and what you do.

A good website doesn’t have to break the bank; in fact, there are a number of free tools available on the web to help you build a website by yourself.  You can also use Facebook to set up a company page or start using sites like Blogger or WordPress to generate a blog.

Just make sure that your site is visually appealing and clearly promotes your services.

Offer free taster sessions

Whilst offering your services for free may not make you money, doing a talk or demo of your services to prospective clients can make you stand out from the crowd. When it comes to the time a client is looking for a supplier, you should be the first name that pops in their head.

Let’s say you are a personal trainer. You could speak to the local adult football team about offering a free 30 minute fitness session before their training starts.

If the players enjoy the session and can feel the benefit, they are far more likely to consider personal training in the future. Just make sure that you have some business cards and/or leaflets handy so that they end up contacting you and not a competitor.

Diversify in the quieter months

Most industries tend to go through a quiet period. For example, there probably isn’t much demand for a gardener in the height of winter. As a result, if you are a gardener and need some extra money in the quieter months, think about what other skills you have to offer.

Perhaps one of your regular customers’ needs their patio cleaned or fence mending? You could offer to do this for them. Just make sure you don’t diversify too much as it could soon get confusing!

Now that you know more about going self-employed and what you need to do, take a look at our sole trader solutions or call a member of our team on 01923 521 096.

“I’ll most certainly pass on your details to people I know. You run a great service there, keep up the good work.”

William Cadden, Self-Employed Contractor

“For me, Futurelink Group was the best solution, as a foreign and a lack of knowledge of the UK rules, they were extremely helpful in all aspects. Always fast in answering all my questions. I almost didn’t do anything and they put me on track to invoice and receive my payments. I can fully recommend them.”

Ronaldo, Umbrella PAYE contractor

“WS Contractors Ltd are extremely happy with the services that Futurelink provide. The efficient and friendly staff are always willing to help and assist. The feedback from our operatives is positive and pleasing. We would recommend Futurelink to all new recruits joining our team.”

Michelle Hughes, WS Contractors Ltd

“We at Gemini would like to thank you and your team for all your help and support in connection to payroll solutions. We find Futurelink Groups approach to be responsive to action when required with a courteous and bright manner – keep up the good work!”

Frank Mcfarlane, Gemini Security Services Ltd

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Futurelink Group consists the following companies, all incorporated in England & Wales: Futurelink Group Ltd (0620 6129), Futurelink Accountancy Services Ltd (0532 0147), Team Construction Ltd (0493 5270), Horizon RCS Ltd (0620 6202) and Horizon RCS Europe Ltd (0620 6136). Privacy Policy | Terms & Conditions