Freelancers: Top Tips when Starting on your Journey
Embarking on a journey into self-employment can be both thrilling and daunting.
While freelancing gives you the freedom to follow your career ambitions and relish the enhanced flexibility this offers, it's important to work compliantly within the tax rules while operating as tax efficiently as possible so you can maintain your cash flow.
Top tips to keep you on the right track as you start your freelance journey:
Register with HMRC: You’ll need a 10-digit code from HM Revenue and Customs (HMRC). This is your Unique Taxpayer Reference Number (Personal UTR), and means you are legally obliged to complete a self-assessment tax return annually. You can apply online with HMRC here and you should do so if you earn more than £1,000 and you intend to keep trading.
Understand IR35 Rules: If you fall inside IR35, it means that you’re working in a similar way to an employee in HMRC’s eye and so should be paying the same amount of tax and making the same National Insurance contributions as an employee versus a freelancer. If you’re unsure whether you fall inside or outside of IR35, please check the legislation here.
Get protection: Depending on your freelance work, there are various insurances you should consider for yourself, like income protection in case you fall ill for example and cannot work, and don’t forget legal requirement to have employer’s liability insurance if you hire staff, for example. We can help direct you to the right person to get the protection you need, contact us here.
Getting organised means you don’t overpay in tax: keeping good records of money in and money out means you are not only reporting correctly to the taxman but you are also learning about what is allowable as a business expense and what is not. And having efficient financial administration processes in place doesn’t have to be difficult with accounting software tools that are easy to use and give you real-time insights into your business too.
