advice to new self employed

advice to new self employed

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As a qualified accountant, I have been asked for some basic financial advice from a family member on becoming a self employed maintenance/home improvement person. Apart from bookeeping, I dont know where to start ! do you have any general advice, or do you know any good publications on matters such as whether to set up a company name, paying NIC, tax and pension contributions, etc.
A Noon

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By AnonymousUser
13th Jun 2002 12:01

Worrying
Is it not more worrying that a qualified accountant doesn't know where to start as regards business and financial advice but is quite comfortable providing bookeeping advice.

Without wishing to be critical of the individual concerned I suspect this has more to do with the training undergone both in exams and on the job.

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By AnonymousUser
06th Jun 2002 22:37

Some good advice but....
Booklets and the registration forms are good ideas. Watch the help line. If you are using the advice make a note of the name of the person you have spoken to and the date and time. The help line is not infallible (far from it) but, unless you can prove that you did speak to someone, the Revenue will not always accept that you acted in good faith if you follow incorrect advice from the helpline.

The problem with the help line is that it covers such a wide area and the staff are not always trained in all aspects they may encounter.

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By AnonymousUser
05th Jun 2002 15:44

NEW BUSINESS
It is not clear if your client intends trading as a self-employed person or as a company. Only a company needs to `register` a name.

Assuming self employment, your client needs to complete a form CWF1 to register with IR NICO (for class 2 NIC) and the Inland Revenue (for tax and class 4 NIC). This has to be done within 3 months of commencement of trading to avoid a £100 penalty (subject to taxable net income).

You can obtain a CWF1 from your local tax office or download it from www.inlandrevenue.gov.uk. where youwill also find useful information.

This procedure will ensure your client is registered correctly as a self-employed person. He/she will then not be subject to PAYE tax or NI and only needs to be concerned in that area if employing someone. As far as pension contributions are concerned he/she would need to set up a personal pension, stakeholder pension or a company scheme (if limited). Remember you must be registered with the Financial Services Authority to provide financial advice of that kind.

Presumably he/she will not be working for contractors otherwise construction industry subcontract rules apply.

You should advise and be aware of the fact that if starting trading now the first tax bill will become payable 31.1.2004. In addition payments on account will have to be paid at 50% of that amount also on 31.1.2004 and 31.7.2004. These will be credited against the following years tax and so on. It will be sensible to make some calculations so that provision can be made.

Depending on the projected income consider the formation of a limited company. This has personal protection benefits and, with correct tax planning will result in lower tax/ni bills and the elimination of `payments on account` of tax/ni. That also registers a trading name.

Hope that helps

GRAHAM ASSOCIATES (INTERNATIONAL) LTD
www.graham.sage24.com
[email protected]

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By lfidler
05th Jun 2002 14:59

From the horse's mouth?
You could do worse than try the Inland Revenue's own website and make use of its New Employer's Helpline and leaflet P/SE/1. Won't help with strategic planning, but it's free and accessible. Go to http://www.inlandrevenue.gov.uk/startingup/index.htm
The blurb begins: These pages aim to help you understand some of the many things you need to think about when you're running a business, especially the main tax and National Insurance issues. We also highlight some other important areas of the law which aren't the Inland Revenue's responsibility - and we suggest where to go for further, more detailed information.
The IR Helpline for the Newly Self-Employed
is on 08459 15 45 15.
Open from 8am to 8pm, seven days a week.
Call for advice on tax and National Insurance.
To speak to someone in Welsh, call 08457 660 830.


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