Starting in self-employment – Mini guide to tax

Perhaps you know someone else who would benefit from reading this checklist?

1.0: Should you trade as a Sole Trader or Limited Company?

Whether you are to trade as a Sole Trader or as a director of your own Limited Company is an essential decision to make and get right from the start, the consequences of which can mean significant tax savings. It isn’t something that can be covered in a couple of sentences and it requires calculations specific to your situation to make an accurate assessment.

Figurit can help you make this decision! Contact us today to discuss:

020 7376 9333 or send your details to info@lansdellrose.co.uk

2.0: Registering for self-employment with HMRC

First things first…HMRC need to be informed of your new “self-employed” status. This enables them to set you up on their system and ensure you are fulfilling your tax requirements according to the legal deadlines. Form CWF1 can be used to complete this registration, which MUST be done within 3 months of your start date, else £100 penalty applies. In addition, there is likely to be a requirement for you to pay Class 2 National Insurance (NI), which can be paid by Direct Debit using Form CA5601. To check if you are required to pay Class 2 NI, read the HMRC guidelines.

3.0: Setting up a business bank account

Even if you are a dental associate or medical consultant with little paperwork like that of a practice owner, setting up a separate bank account for business transactions is essential. Benefits of keeping a separate business bank account:
  • Better organised, keeping business and personal transactions separate
  • Cash flow for your business is easier to manage
  • Save time each month maintaining your tax records
Specialist high street bank accounts are available for healthcare professionals, some of which offer FREE business banking.

Get connected with a specialist healthcare bank manager.

Contact the team on: 020 7376 9333.

4.0: Recording your income and expenses

Carrying out “bookkeeping” on a regular basis is essential to track your income, expenses and subsequent profit. You will need a good system to be able to efficiently keep track of your business activity and there’s a legal requirement to keep tax records for a minimum of five years from the filing date. There are many software solutions available to assist with this task however after many years of experience, Figurit have selected to partner with Xero, an online solution that saves literally hours of time each month. Figurit clients are provided with Xero FREE of charge, as part of our comprehensive Accountancy and Tax service package. Whichever system you conclude is best for you, ensure you set aside time each month to update your records.

5.0: Important dates for doctors and dentists

Familiarise yourself with important dates, specific to your situation as soon as you start your business and you will be more equipped not to miss deadlines. Key dates in the tax diary:
  • 31 January – self assessment tax return due for filing
  • 31 January – tax due for payment, relating to previous tax year ended 5 April + 1st payment on account
  • 5 April – end of tax year
  • 31 July – 2nd payment on account due for payment
You will also need to establish your financial year-end with your accountant. Many dentists and medical consultants use 31 March to tie in with the tax year. Read our related article: Important dates for doctors and dentists

6.0: Selecting a specialist accountant for doctors and dentists

Using the services of an accountant to assist with your business will not only give you the reassurance of having a professional on hand to help with your tax compliance but they will be able to ensure that you are paying the least tax possible. Typically tax savings will far outweigh the cost of your accountancy fees simply because they can apply all the tricks of the trade to minimise your tax bill.

Selecting the right accountant is important!

Figurit, dental and medical specialists, offer a free meeting at our premises for all new clients so you can meet the team and assess if we are the right accountants to help you. Call today to arrange a meeting: 020 7376 9333

7.0: Protect yourself against tax investigation

HMRC in efforts to clamp down on tax evasion investigate a number of tax returns each year, some of which are selected on the facts and figures submitted but some are selected completely randomly. In light of the fact that everyone is at risk, business owners should all consider tax investigation insurance to cover the costs involved with this, often lengthy, process.

8.0: Saving for your tax bills

Because there is a delay between when you earn money and when you pay the related tax, you need to save a % of income for tax purposes. Open a savings account to make transfers in and out. Read our related article: How much should you be saving for your tax?

9.0: Appoint a specialist financial advisor

As well as having an accountant on hand, a financial advisor can also help with things like protecting your income in event of sickness or death as well as how to grow and build your wealth as you start to generate profits. Get connected with a specialist Independent Financial Planner. Contact Figurit: 020 7376 9333.

10.0: “Starting in Business” booklet

Don’t forget to request your free electonic copy of the Figurit “Starting in Business” booklet to provide you with more information on what to do when starting your own business.

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