So, is being self-employed easy? Let’s find out…
One of the main reasons many individuals want to be self-employed is that they don’t want to be dependent on a job. Some take the route of being self-employed to work whenever and wherever they want.
For some it is all about having “freedom”. But there are many others who who wouldn’t dare quit their job.
Are you wondering if being self-employed will always be easy?
In a simple answer, No. Definitely not. Being self-employed means being able to afford to live without having a regular income (a salary). It all falls down to whether you will earn or have enough money or not. You have to be motivated each and every day – because if you’re having a “day off” ( being lazy or not feeling well), you won’t be earning any money. And when you’re self employed, no one else is going to motivate you.
The first step is going to be a tough choice. You have to believe that the product or service that you are going to be providing will be better than others that are already available. You have to have self-belief that you can do it. You have to be committed to what you are doing. And, of course, you need to be dedicated.
What sacrifices need to be made?
You’re going to have to sacrifice your personal time. You have to accept the fact that you are going to be working for a few years like no one else would do. In the early days, this will not necessarily seem like work though, because you will be enjoying your new found energy and passion for being self-employed. Some self-employed individuals may work harder than they used to as an employee. Some people are happy and content working their 9-5 job but that isn’t for everyone. Many will sacrifice going for a night out, or family time, or treats to remain focused on delivering their product or service and maintaining their self-employed life. Put in the time and effort in the early days and you will be able to reap the rewards later.
This reminds me of an image of a guy standing by his Lamborghini saying to an employee, “If you work hard, put in the effort and increase the revenue for the business,… I can buy another one of these.”
So why take the plunge to become self employed?
Like the story of the business owner and the employee (above), some don’t want to work hard for others to reap the rewards. So they take the risk of setting up as self-employed to reap the benefits themselves.
Many self-employed individuals have not regretted their decision either. It’s been tough at times but they love being self-employed and working for no one else but for themselves.
It doesn’t mean that you’ll be driving flash sports cars and own all the luxuries available but if you work hard and put in the time and dedication to your own business, you can make a success of your business. There are also many advisers and consultants that you can discuss your plans with. It’s always sensible to speak with an accountant and we would be happy to discuss your plans, to see if we can be of assistance.
Don’t forget, if your dreams are big enough and you are strong willed, nothing will stop you from being successful.
So, is being self-employed easy? No, it is not – but it is very worthwhile.
Becoming Self-Employed .. by choice or by feeling you really have no other option
Close to a quarter of a million self-employed parents admit they started their own business after feeling ‘pushed out’ of their old role after having children – with this issue affecting more women than men. Contributor Max Jennings, Co-founder – Hoop
That’s according to a new report by family activity app Hoop, which lifts the lid on the UK parent workforce and the reasons why an increasing number of skilled entrepreneurial mums and dads are choosing to ‘go it alone’. It found that of the 2,000 parents polled 39 percent said they are planning to start their own business in 2019.
Within this group, a quarter of working mums and dads (24 percent) cite the inflexibility of a previous workplace as a key driving factor. This encompasses a lack of understanding about time restrictions put on parents, team changes made whilst they were on leave, not feeling like they had a job to return to and feeling directly ‘pushed out’ of their prior role.
The impact is felt most by mums. 20 percent of mums (twice the number of dads) felt that nursery hours and school drop off times didn’t work with their office hours and commute. On top of this 1 in 5 mums (vs 1 in 10 dads) just didn’t feel that their job was suitable to looking after the kids in the school holidays.
Max Jennings, co-founder at Hoop added: “The tide is turning for a lot of parents who are fed up of the inflexible workplace, and as a result are more empowered than ever before to shape their careers around family life. We’re seeing it on Hoop – a recent survey of the kids activity organisers found that 80 percent are parents, and it’s a growing industry, the number of activities across the UK for kids is growing every day.
Childcare, nursery and school opening hours, office hours, and the school holidays are challenging for working parents and so they are responding by taking control. A combination of making an existing passion a reality and the advancements of technology are giving new parents the opportunity to shape work around their lives. This is hugely positive, but clearly there’s an issue around inflexibility in the workplace that also needs to be addressed to stop talent being pushed away.”
But it’s not all plain sailing. Starting a business comes with its own unique set of frustrations and challenges. This includes, fluctuating finances (23 percent), people not taking parent entrepreneurs seriously (19 percent) and the lack of a ready-made support network (16 percent). One in eight (13 percent) also admit to feeling lonely.
Ultimately though, the benefits outweigh the frustrations. Half of self-employed parents (49 percent) report feeling happier and a third more empowered (33 percent). A quarter (24 percent) of this growing cohort say they started up after feeling the urge to transform a passion project into a business, and the same amount (24 percent) wanted to use their existing skills in a different way.
Jennifer Mushumani is a great example of one such parent entrepreneur. A former actress, Jennifer became a franchisee of Debutots – a class on Hoop that’s focused on learning through interactive storytelling and dramatic play – after having her two children.
Jennifer Mushumani said: “This job was the perfect choice for me, as it combined my expertise in drama, a love of working with children, plus also my administration and organisational skills. I’d often thought about running my own business, and I’m so glad that I had the courage to take the plunge. I also love the flexibility. I now have more control over my working hours and can be there for my children whilst they are growing up without giving up on my own passions and dreams.”
Max Jennings, Co Founder at Hoop added, “We have designed our service to make it as easy as possible for activity organisers to use our platform to reach thousands of new families. We want to help businesses to launch, grow and to thrive. Similarly, we want to make sure that parents across the UK can easily find everything happening locally for the age of their children, to make it that little bit easier to try new things and make more memories together as a family.”
Content from thehrdirector.com
FILLED IN YOUR SELF-EMPLOYED TAX RETURN CORRECTLY… OR NOT SURE?
A survey from accounting software provider Intuit QuickBooks asked 1,010 self-employed people across the UK what they would rather do instead of file their tax return.
Of the 11.6 million people who have to complete the self-assessment tax return:
- one in five people (2.4 million) said they would rather give a speech to 100 strangers
- one in five people (2.3 million) would rather spend a night in a haunted house
- one in five people (2.2 million) said they’d rather hold a tarantula for a minute
- one in seven people (1.7 million) would rather get trapped in a lift
- one in eight people (1.4 million) said they would rather jump out of a plane
Other findings from the research include:
- one in two people (5.3 million) worry they haven’t filled in their tax return correctly
- two in five people (4.5 million) feel stressed about doing their tax return
- one in four people (2.6 million) will complete their tax return in the final two weeks
- Women take twice as long as men (12.3 hrs vs. 6.7 hrs) to complete their tax return
It doesn’t have to be that scary. With QuickBooks Self-Employed, it’s possible to take pictures of receipts in the app. The software will then automatically categorise your expenses, and when it comes to January, allow you to prepare your self-assessment without the fuss. It’s a user friendly app and doesn’t have all the technical accounting options required by accountants – but it does integrate with our scaled up version with all the bells and whistles.
Other innovative features in the QuickBooks Self-Employed software include automatic mileage tracking within the app, and the ability to integrate with your bank account to automatically keep track of invoices and scheduled payments from clients and customers.
QuickBooks Self-Employed also includes QB Assistant, a conversational chatbot that combines data-driven insights and natural language processing to unearth valuable insights for people who work for themselves.
Shaun Shirazian, Head of Product, Europe at QuickBooks, said: “The self-employed have more than enough to worry about between keeping on top of their cash flow, drumming up new customers and balancing their work and private lives. Self-assessment shouldn’t be another stress to add to the list. Using software like QuickBooks Self-Employed, all your financial information is at your fingertips, ready to easily submit to HMRC.”
The research, conducted by Opinium from 5-15 January 2019, also revealed young people were twice as likely as older people to submit their returns at the last minute (6% of 18-34-year-olds submit in the final 48 hours vs. 3% of those aged 55+). One in 100 people (110,000) were already planning to file their return after the 31 January deadline.
Content from www.businessleader.co.uk
Common Tax mistakes that business owners make from juggling various tasks.
Common Tax mistakes and how to avoid being a victim or culprit of these common tax mistakes. As a business owner, you juggle many roles and when there are urgent business tasks to do, spending time with your accountants may not be your number one priority. However, if you’re not regularly talking to your accountant, then there’s a danger of making some of these common tax mistakes:
NOT KEEPING PROPER RECORDS
Bundles of receipts – collating, sorting and keeping them all is not a hugely exciting job is it..? However, for VAT registered business owners, not keeping them is a common mistake. You might as well hand your well earned funds straight to HMRC. The next time you are offered that VAT receipt for your purchase, consider this – will you pull out your wallet and chuck it away? I would hope not.
Now, with so many apps on the market, the task of keeping your tax records properly has become less… taxing (sorry). With these apps, you can easily take a quick photo of the receipts as you receive them and then collate them later. This amazing technology and your awesome accountant will handle it from there. We recommend AutoEntry.
HOME EXPENSES – CLAIMING TOO MUCH
What’s wrong with claiming household expenses related to your business? Nothing, there is nothing wrong with claiming these expenses. The problem lies with over claiming them, leaving you with potentially paying a lot more tax in capital gains tax when you come to sell your property. Why is this? As the value of your home increases and you lose generous tax relief on the part of your home that you turn into business.
THE BUSINESS STRUCTURE/EMPLOYMENT STATUS
Maybe, when you started your business, you were advised to go for a sole trader, partnership or a limited company. However, the rules change… and change. When did you last take time to review and compare the different tax structures available?
Similarly, an important and complex area is that of self-employment. Whilst you may safely get your own status right as a business owner, are you confident that your freelance workers and associates are correctly self-employed? Be aware that HMRC is cracking down on the ‘gig economy’ and are putting the accountability on business owners to make sure this aspect is correct.
WASTING TAX ALLOWANCES (£26,000)
It is said that tax allowances are like your muscles. Use them or lose them. But did you know that if you add up the income tax allowance, capital gains tax allowance, savings allowance and dividends allowance, you get a whopping £26,000 plus allowances in the year? Previously we have seen many of these tax allowances go to waste. So make sure are making the most of your “muscles”.
You may have been introduced to and taken steps in using crypto currencies like Bitcoin, Litecoin, Ethereum and Ripple. Make sure you make the most of the capital gains tax allowance.
Have you considered how to make use of the allowances of your spouse and children?
POOR EVIDENCE (OR LACK OF) TO BACK UP CLAIMS
The rules on expenses that can or cannot be claimed are not as clear and as straight forward as you may think. By not choosing to appoint a good accountant or tax adviser, many business owners make this costly yet avoidable error. For example: a business owner, who rented accommodation (short term) in order to avoid the higher expense of hotel bills whilst on a long business trip, was denied tax relief because the evidence that had been submitted was not sufficient to meet the so called “wholly and exclusively for the purpose of trade” test.
When claiming expenses for business, make sure that the primary purpose is for the business – and be able to provide all the relevant documents to support this.
MISSING OUT ON THESE TAX BREAKS
Did you know that there are more tax breaks available within the law that most entrepreneurs miss out on. Here are the most common ones:
- R&D – Research and development.
- Bad Debt Provision (make sure you have taken all the relevant steps to recover the money)
- Capital allowances on equipment used for the business including fixtures as part of the building that you have bought
- Lease premiums
- Warranty provisions
- SEIS and EIS tax reliefs
- Entrepreneurs relief
- £40,000 lettings relief (although this might be scrapped by HMRC)
And the reason why most of these available tax relief options get missed is that you actually have to make a claim to get them.
BANKING MONEY FOR TAX (OR NOT)
Many businesses suffer with cash flow and it can be a huge problem at times. But when it comes to VAT and PAYE, it’s not your money. It is due to the taxman. When it comes to Income Tax and Corporation Tax, waiting until December or January to discover that you have a huge tax bill with no funds put aside to settle it is an extremely common mistake business owners make.
Our simple advice is: To avoid this problem, look at your business model and plan for your taxes and liabilities. We recommend opening a separate bank account to deposit funds to cover your taxes that will be due.
30% MORE TAX WHEN SELLING YOUR BUSINESS?
You’ve decided to sell your business and put your feet up (time to retire). However, you’re dealing with a buyer who is well-informed with regards to tax. They propose paying more for the company’s assets but is not interested in the shares. Let’s say that you agree to the sale of the assets at the higher price. The problem is, you have potentially lost out on a 10% tax rate with a potential additional 30% tax (or more). Why is this? Hypothetically, the company sells the assets at the agreed higher price and it pays corporation tax at 19%. Conservatively speaking, you would pay 20% income tax on the cash extracted. 19% and 20% is obviously more than 30%.
BUSINESS PROPERTY RELIEF – TAKING ADVANTAGE?
Of course your business has value. However, a common mistake we see, is the lack of planning around how the business should be passed-on tax free. Subject to some conditions, the rules allow your hard earned work to be enjoyed tax free by your loved ones. ALERT: If you do not have a Will or if in your Will you’ve passed the business to your spouse, you’re wasting this generous tax relief.
BUYING YOUR COMPETITOR’S SHARES
Ooh the empire is building and you’ve decided to acquire your competitor. In order to wrap up the deal quickly, you buy the shares of the company instead of the assets. As in one of the previous points above, this is a common tax mistake because whilst buying the shares is a good move for the seller, you lose the tax relief associated with buying the assets. Essentially a reverse of the point about selling the business earlier.
Check you are not a victim or culprit of any of these mistakes. If you are at all unsure about these points, give us a call. Rather than being reactive and attempting to do some retrospective tax planning, make sure you have a tax plan in place alongside your business plan.