Monthly Archives: April 2017

Self Employment Business

First of all, you should cover all the right bases and get the schooling you need to learn about your career choice and get the skills you need to become a success in your business. There are some risks that you will need to know about when it comes to being your own boss. It is important to talk to other business owners when starting up your own business so they can give you the pros and cons of being self-employed and running your own business.

It is good to get all the advice that you can about your new business so you can make sure you are taking the right steps to make your business run smoothly without any catches. This is why talking to other business owners, especially those within the same type of business or field as you are intending, is a good idea in order to learn more about what processes and experiences they went through. Forming good relationships with other business owners can benefit your business, especially if someday they refer some of their customers to you. Your local chamber of commerce is a good place to learn about the requirements needed for filing state and local forms. Here you can talk to other business owners within your community. Some of these business owners may help you with finding services and equipment that can help your business to grow and become a success.

When being self-employed and owning your own business, you must consider taxes. Finding someone that you can trust to handle your taxes each year is a good idea. This person will be able to inform you about the tax laws for a business owner. Some business owners have accountants handle their taxes. If you need advice and help with getting a loan for your business your bank will be able to help you with this no matter what size of business you are planning to start.

Basis Periods For Self Employed Business

Self employed business in the UK is required to produce a set of financial accounts for a 12 month trading period. The format of the accounts is the personal decision of the proprietor and can be a full set of annual accounts including profit and loss account and balance sheet including using control accounts and cash and bank records and the self assessment tax return.

An appropriate accounting system for many self employed business would not be to prepare a full set of annual accounts but instead to prepare a simple income and expenditure account. Preparing an income and expenditure account allows a much simpler accounting or bookkeeping system where simple accounting software can be used.

The objective of any bookkeeping software being to maintain accurate financial records and produce the accounting records and totals required to complete the inland revenue self assessment tax return each year. Financial control is very important and the bookkeeping software should also produce regular financial statements showing the profit and loss of the business throughout the accounting trading periods.

The financial tax year varies depending upon which country business is conducted. In the US accounts are prepared during an accounting period from 1 January to 31 December each year. In the UK the standard financial year adopted by the inland revenue is from 6 April each year to the 5 April the following year.

In the UK tax rules are set for each financial year and by adopting the standard tax year a small business can benefit by preparing the financial accounts under a single set of tax rules and preparing the self assessment tax return accordingly. Adopting a different financial period involves straddling the official tax year and more than one set of tax rules might be applicable to the tax calculation resulting from the net profit being declared.

After choosing the April to April financial tax year accounts are required to be submitted by the submission deadline of 31 January the following year. Earlier submission is recommended as by submitting the final accounts and tax returns online by 31 October each year the inland revenue will calculate the income tax and national insurance payable.

When a self employed business has been in business for two or three years and has chosen a different 12 month accounting period to the financial tax year the 12 month tax is calculated according to a basis period. Up until that point the accounts may be subject to apportionment to calculate the tax due.

The basis period under which the business tax is calculated is the 12 month accounting period ending in the specific tax year. A business which has a 12 month trading period ending 31 December 2007 would be taxed under the basis period 2007 to 2008 being the basis period 6 April 2007 to 5 April 2008. The same rules apply if the accounting periods are shorter or longer than the standard 12 month period.

If the accounting date is changed by a sole trader the inland revenue are informed of the change on the self assessment tax return and the re3asons for the change. If as a result the self assessment tax return arrives late the tax will be assessed on the previous basis period.

Changing an accounting date that overlaps two basis years results in the business being taxed twice for the same accounting profit as the business would be taxed under both basis years. The extra tax paid can be highly unwelcome but can be reclaimed at a later date through the self assessment tax return.

Online Self Employed Business

Being self-employed does not always mean starting from scratch. There are self-employed businesses opportunities that can get someone started as an entrepreneur with little or no risk. These opportunities give a person the ability to make a viable business where they set their own hours, and have the flexibility to spend time with family or recreating. However, often there is some expense with the opportunities in the form of a start up cost. This covers the cost of materials, web sites, and training. If it is not something that can be afforded, a loan can be taken out for the necessary funds. Many times lenders are more than willing to lend to a small business and there are specific loans designed just for this purpose.

One of the great things using an existing business opportunity that does not require starting from the ground up is that there usually exists tested market. There is also customer service and people who can assist those just starting out and have never been self employed. Take a look at the online business opportunities available and see if there is anything that is workable. Many of them can be done part time to start as supplement income giving a sense of financial security at the same time a new venture is being made. Starting part-time while continuing regular employment also gives a little more capital to work with and reduces stress. Keep in mind that self-employed business taxes would be paid by you the business owner and not the opportunity presenter.

If a business opportunity that doesn’t involve significant risk, has an already established market and is all about being self employed without having to start from scratch is appealing than there are a number of opportunities available to suit individual tastes and needs in the business world.

The first step in making something like this work is to change one’s thought process. Many people see themselves as employees meaning they work for other people. However, this is not all bad because there is not limit to your income, no boss to make demands on you and no preset job duties or hours. If the thought of being free from the corporate shackles is appealing – start by doing a Google for online businesses and join a few news letters and forums. Get the pros and cons then start small and see where you end up. Who knows, you could be the next Internet millionaire success story.

Save Tax in a Self Employed

Self-employed taxpayers are taxed on their profits, whether or not they take the profits and spend them or plough them back into the business. Unlike a limited company, therefore, there are fewer opportunities for tax planning, but that’s not to say that tax savings are not possible. Here are some ideas:

1. ‘Think Business’ for Expenses.

Many self-employed business owners throw money away by not keeping enough receipts. It’s not sophisticated tax planning, but the more expenses you have, the lower your profits and the less tax you are liable to pay. You simply need to train yourself to do two things every time you buy something. First you need to think whether what you are spending is really a business expense. It is if it is ‘wholly and exclusively in the course of your business’. What that means depends upon the business you run. If you are a plumber, then a wrench would qualify; if a model, lipstick for a fashion shoot; if a university lecturer, then books to research for a journal article. A legitimate expense will therefore vary from business to business so it pays to stop and think whether what you are about to purchase is directly related to your business. The problem when you start a business is that you may well already be in the habit of buying such items. But you are the owner of a business now and you need to think like one. Secondly, you need to ask for, and then, keep the receipt as evidence of the purchase. If you don’t keep a record you are likely to forget the purchase and consequently pay more tax. Training yourself to think and keep receipts will always save you money in the end.

2. Make Sure You Use the Annual Investment Allowance.

Purchasing equipment is not dealt with in your accounts in the same way as buying other expenses. Equipment such as a car or computer is depreciated according to the rules for capital allowances. So, instead of being simply offset against the income in the year in which the expense is incurred, the cost is spread over the estimated life of the asset. The rules for doing this tend to change quite regularly and it’s easy to be caught out by changes unless you have professional advice. Currently, it is possible to claim the first £100,000 of capital expenses (apart from cars and buildings) as Annual Investment Allowance (AIA) and depreciate it all in the year of purchase, any more than that being depreciated at 20{c16690d587dda8d0acdf109768c9fb1ef95316006fa17a13947530abf1f4ec90} per year as a reducing balance. Next year the AIA reduces by half and we don’t yet know what will happen after that. So, if you are thinking of buying a large capital item, then this year would be a good time to do it in order to reduce your tax liability.

3. Register for the Flat Rate VAT Scheme.

If you are VAT registered and have limited expenses on which to reclaim VAT, then it may be worth you simplifying your VAT-related administration by registering for the VAT Flat Rate Scheme (FRS). Under the FRS you simply pay a fixed percentage of your turnover to HMRC rather than calculating the difference between the output and the input VAT. Each business category has a different percentage attached to it. You need to be clear though that the percentage relates to the total invoicing; that is the amount you charge plus VAT at the appropriate rate. As well as saving in administration, this can give rise to a tax gain if your expenses are particularly low. If you end up paying less VAT using FRS than you would be liable otherwise, then you can keep the difference, though it does becomes taxable as income. Any tax saving would probably not be the main motivation for registering for FRS but it may be a welcome additional benefit.

4. Claim for Use of Home as an Office.

Many business owners start their business from a spare room and for some the business is able to grow without needing to relocate to separate offices. If you do work from home you should definitely make a claim for the use of your home as an office. Often people do not do this because they are not sure what constitutes an appropriate claim and that is understandable because this can be a complex and confusing area. In general HMRC will allow an allowance of £ per week for using your home as an office. This is an accepted amount to claim for employed workers who are required to do some work from home and, for some types of self-employment where only incidental administration is carried out at home, this may be all that is sensible to claim. On the other hand, if you use a room mainly for business purposes, most days then it becomes reasonable to claim an appropriate percentage (by the number of rooms used or by floor area) of home expenses as a business cost in order to reduce your profit. I do recommend getting some professional advice on this as your advisor will have wide experience of how HMRC view different situations and can advise you on the risks and benefits of different approaches. They will also be able to warn you about the potential Capital Gains Tax traps so that you can avoid them.

How to Find the Best Online Self Employed Business

Perhaps you’ve just found yourself unemployed and wondering how you’re going to find next months mortgage payment or on a bigger scale you’re just sick of your 9-5 job and want to get out of the rut that you’ve been stuck in for so long.

So, you turn to the internet to search for some life changing opportunity but looking for an online Business Opportunity on the internet is like looking out into space on a moonless night in the desert. There are literally millions of opportunities out there to choose from and to the new or inexperienced opportunity seeker the task of finding the right one can be daunting. Try a Google search on ‘online business opportunity’ and you’ll get over 60 million articles to choose from.

And, there seems to be so many shining stars. How do you find the best one? It can be a frustrating and time consuming experience looking for that life changing business opportunity.

The solution to finding the best online self employed business opportunity lies in research. Research that only you can do. Beware of relying on any supposedly unbiased reviews because if you do find any, they are normally so cleverly disguised that ultimately they funnel you into their business opportunity before you realise what happened.
So, if you want to find the best online business opportunity here’s what you need to look for:

o An online business opportunity with a marketing system that allows you to sell multiple low end and high end products. Why? Because in most cases low end products will only cover your expenses and you need high end products to make a realistic income.
o Give preference to a business opportunity which sells information, education or both and not a business which sells a physical product. Why? The internet is already full of people selling every kind of miracle berry juice or natural soap – and remember my first point – do they have a high end product? Information and education are the most valuable commodities on the internet and always will be and both provide the opportunity to sell low and high end products.
o Look for a business that already has a well established turn key or automated marketing system in place. Why? Because the biggest challenge you have when starting any online business will be generating leads. The only successful way to do this is by having an automated marketing system that works for you 24/7 even when you are asleep. Without this you will not be able to compete or generate the leads you need to succeed.
o Find a business that provides online support and training not just in what they sell but everything you need to be a successful internet marketer. This should include essential training you may need in areas like blogging and WordPress development, Google AdWords, copywriting, article marketing, creating videos, press releases, email marketing, keyword research, writing ebooks, website creation and social media development.