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View Full Version : self employed - ARRRGHH! (and bank acc!)



urbanfairy
16-03-2008, 03:11 PM
hello!
crikey, i'm asking a lot of questions on here, sorry! heres another!

i'm going self employed (i also work 'employed') and like many it seems, new questions keep coming into my head! i'm not going to get a business account (dont want to be robbed anymore then i am!!) but if i have a sperate account just for my 'business' ( i say this loosely!) and i put in what i receive in sales, and take out what i need to purchase materials, how do i account for anything left over to use for myself (kids more like! and thats if theres anything left in there of course!)

one minute i'm 'up' about the whole thing, next minute i'm scared witless (single parent blah blah). anyone who understands any of this, is doing the same, or even any advice in general about being a self employed crafter - please help!!

:confused:

Ifor-Jones
16-03-2008, 04:32 PM
You don't necessarily need a separate account if you are self-employed, but just keep very accurate records of sales and purchases, plus stock used by yourself etc etc to do your accounts. I am self-employed so obviously all the money that is spent buying stock is mine and the takings go into the same pot - you do however need to be sure you record everything for your accounts, including stock held. A spreadsheet on the computer should be sufficient to start with, better to note too much down than not enough, it is easier to do your tax return then. The tax man basically wants to know what you have spent and what you have taken (putting it in very simplistic terms) in order to work out if any tax if due. You do have to record all items of stock that are used by yourself as that is counted as a sale.I find the better records I keep the easier other things are - for instance marketing - because I keep an accurate record of what sorts of cards (and numbers) I sell I have a much better idea than coming home and marking sold 5 cards and the price. Once you have your spreadsheets set up it should not take long to keep them up to date.

Focus on Life
16-03-2008, 04:45 PM
Can I just say I know where your scaredy feelings coming from, I have it too! Have always worked for someone else and I'm about to take the plunge and have a bash at being self employed too...

...but what a BUZZ it will be to have your reins in your own hands and be brave enough to go for it, takes a lot of bottle and I have every respect for anyone who does it, so do congratulate yourself on how courageous you are whenever any doubts creep in :)

Have you spoken with your local Business Link yet? You can usually get a certain amount of free advice from them and, if you go in armed with all your questions pre-written down, you can make the most of your time with them

All the very best of luck wth your new adventures!
Shaz x

janetdc
16-03-2008, 05:39 PM
I have been self-employed (in a previoous life!) and although it is scary to start with it is also extremely liberating. I took as much free advice as possible in the beginning and later on when it really took off I employed a good accountant who saved me moey in the long run. If you work from home you can claim a certain amount against your household outgoings as you are using some of the space for your business. Keep on top of your bookkeeping and hang on to all your receipts however small. Lots of luck.
:)

urbanfairy
16-03-2008, 11:03 PM
YOU LOVELY, LOVELY PEOPLE! cant really put it any other way. havent been on here long (about a week?) and feel a bit bad that i've not answered any questions for other people, only asked them! (yeah, like i'd have the answers!! haha)

and as for shaz (focus on life) you little star you;) talk about making me feel good about myself!! i literally grew another 10inches reading that post!!!:D thank you so much. and let me know how it goes with your own self employment adventure eh? and dont forget to listen to your own advice............................ its one thing to give out good advice, but another entirely to apply it to yourself! ;)

just one thing. i dont really like swearing, and someone here is guitly of that - 'spread sheet' OMG! there, ive said it. doesnt make it any easier though......................... hahaha

ok, one more question (for now, OBVIOUSLY!) how accurate do you have to be in describing your sales when logging it? obviously i want to know for reference etc, but does that lovely young man (now that would be a turn up!) from the tax office have to know the full description if/when he looks at my books? oh yes, just a little one...................... how much (very roughly) would it cost to have an accountant check your books at the end of the financial year?

and dont worry my little lovelies, this time next year you'll be able to ask me anything.................................... i'll be like the wisest of wise old owls............................;)

Focus on Life
16-03-2008, 11:58 PM
and dont forget to listen to your own advice............................ its one thing to give out good advice, but another entirely to apply it to yourself! ;)
;)

Aw bless you babe. And tell me about it, I'm kacking it a bit cos my safety net redundancy money is almost used up now and the pesky mortgage bill & all his little brothers & sisters are all down to me alone! So you might see me playing it safe for a little while & take on some home-working type jobs so I can still get my crafty biz off the ground around it

We'll keep each other posted eh chuck! Good luck! :)

Shaz x

Ifor-Jones
17-03-2008, 12:08 AM
Sorry about swearing, but spreadsheet is not really that bad!!!! Every computer has one, even if you haven't got Excel or one of the main ones, most computers have a spreadsheet under Works or similar. Sorry, if you haven't used them before they do sound horrid, but really is a very easy way to keep records, you don't even need to be able to use all the functions at first, just keep a list of things. If you don't want to use a spreadsheet (sorry swearing again!!) just keep your lists on the computer in some other format (and don't forget to back them up).

Good luck anyway. I think the tax man is more concerned as to what you have sold something for rather than a full description of the goods.

0103media
17-03-2008, 08:40 AM
Things to consider..

If you open another personal account with say a different bank its free like a normal current account.. If you use the account for buying and for all the profit it make life easy.. You don't need a business account unless you want to be paid by a company name.

Also consider a credit card that again is only used for purchase stock .. The more you seperate things the faster you can see your records..

Don't forget paypal is a bank account its no different to your current account..

Hope that helps

candles by lisa
17-03-2008, 08:59 AM
I agree with Mr M - I am employed however am registered with the IR for my self employed candle status. I found it much easier to have two personal accounts the first is the old one where the wages and all the household things go - the 2nd one I set up is solely for the Candles - nothing else, I find this very very easy to keep track and it is obvious if the card has been cloned or something because an unusual payment for a meal for two would stick out like a sore thumb.

I did think about getting a separate business account but looked into the charges and realised how much I would need to make each month before I broke even put me off. It does look more professional I think to be able to take cheques payable to the company name but I can honestly say that I haven't had anyone comment or complain if I ask for cheques to be made to me as opposed to Candles by Lisa (and this includes wholesale customers).

HTH.

Lisa

:D

Focus on Life
17-03-2008, 02:10 PM
That sounds a great tip, to set up a separate personal account

I was chatting to a business account adviser in passing at a recent event and she said the only benefit to a business account rather than personal is you can build up a relationship with your adviser so maybe its useful if you need to take out a biz loan to generate some cash?

I dont have one though so I'm only quoting her, and she's biased of course :p

Shaz x

saraeden
17-03-2008, 08:36 PM
I have a business plan that i add to and cross off things that are no longer any use , my business adviser said to do this .... i cannot give the business link peeps enough praise they are wonderful !!
I have a basic savings account for saving for big business items and for putting in my small profits .
I save all my receipts for everything .. just in case !!
I do my own tax returns i did have an accountant once and he lost all my records and i got a fine ... so now i do my own its very easy you just fill in the right bits and add up and take away and the peeps at the tax office are very helpful too !!

Sorry did i waffle a bit !!

Sara x

Chris W
17-03-2008, 09:14 PM
I have been self-employed for about 30 years, the best advice I can give you is to keep a record of everything you spend and everything you earn. If you can afford an accountant it is a good idea. It shouldn't cost too much if you can find a retired one or a working mum. Don't worry too much about getting it wrong, so long as you keep some kind of record. I have found the Taxman to be very understanding and helpful. Be as flexible as possible in your thinking and watch you don't overspend initially, try to get lots of feedback and grow organically. It is very tricky to get pricing right.

urbanfairy
26-03-2008, 02:50 PM
fantastic advice everyone, thanks a million!

the seperate account bit i'd planned to do anyway. mainly cos i need to keep things clear and seperate for my head to understand it!

i'm hoping that the tax man is understanding, as for the unforseeable future i'll be doing my own, but i'm keeping everything remotely relevent just in case!

i also have employed work (part time) so i have a regular amount coming in (boy would i like to stop!) does this mean i should pay national insurance on my self employed status, even though i pay with my employed status? for now i'm guessing its easier to just to pay, but is this going to confuse them??

Blooming Felt
28-03-2008, 04:40 PM
No - you only have to pay National Insurance once and if you're paying it through your part-time work, won't have to pay it from your "self-employed" status (well, that's what the guy from Business Link told me anyway !)

Focus on Life
28-03-2008, 07:23 PM
No - you only have to pay National Insurance once and if you're paying it through your part-time work, won't have to pay it from your "self-employed" status (well, that's what the guy from Business Link told me anyway !)

I have a feeling thats right too, I only recall it from when I was about to appoint an accountant a couple of years ago when I first thought of starting up a small business and I was still working full time then - the accountant brought me a form I just needed to complete to state I was already paying my NI through my full time employer

Shaz x

Pelenna
29-03-2008, 09:13 PM
Hiya, new here so hope this is useful!
If you are going to be taking mostly electronic payments (paypal etc) there are a couple of completely free business accounts available - HSBC Direct and Abbey are the two I know of. You don't get a counter service or a dedicated advisor, but you can take payments under your business name. The other option you can do is join the federation of small businesses, they run a bank account with the Coop that is completely free and you can set it up so you can do all your banking with a nominated local post office. It does cost 130 to join the FSB though, but they offer all sorts of other benefits - you can check it out on their website, just google them.
Hope this helps :)

Beadservice
29-03-2008, 11:49 PM
The Inland Revenue don't require you to have a business bank account. They just require you to keep the business money and transactions seperate to your personal money.

You could get an 'Abbey business account' which gives free banking.
You could consider this if you have a branch near you. You use the ATM machine if you need to pay in cash or cheques.

There's not really a problem using a seperate personal account, as long as the bank doesn't get wind of it.

I believe as other's have said, if you're already paying NI contributions through your employment then you don't need to pay them again. However there is an additional NI contribution you pay when self employed, but it's linked to your profit.

Debbie

Bea
30-03-2008, 05:59 PM
Sorry but you WILL pay extra NI, called NI class 2, at a rate of 2.20 per week (2.30 from April 08), collected monthly by direct debit. This will start when you register as self employed, even if you have another job.

http://www.hmrc.gov.uk/nic/class2.htm

As for the business bank account, as many have said, it will make things a lot easier for you if you have a separate bank account, be it personal or business. And if you take money out of the business for yourself, that's called ''drawings''.

ladyluckjewellery
31-03-2008, 02:21 PM
>Sorry but you WILL pay extra NI, called NI class 2, at a rate of 2.20 per week (2.30 from April 08), collected monthly by direct debit. This will start when you register as self employed, even if you have another job. <

That contradicts what the helpline advisor at HMRC told me this morning, he said that if you are already employed you should only pay Class 2 if your self employed profit goes over the Small Earnings Exemption limit (I think around 4k p/a), otherwise you don't have to pay, but you must apply for exemption, it's not automatic.

I'll see what he sends through in writing - it might be different again!! :o

Claire

Bea
01-04-2008, 01:47 AM
>Sorry but you WILL pay extra NI, called NI class 2, at a rate of 2.20 per week (2.30 from April 08), collected monthly by direct debit. This will start when you register as self employed, even if you have another job. <

That contradicts what the helpline advisor at HMRC told me this morning, he said that if you are already employed you should only pay Class 2 if your self employed profit goes over the Small Earnings Exemption limit (I think around 4k p/a), otherwise you don't have to pay, but you must apply for exemption, it's not automatic.

I'll see what he sends through in writing - it might be different again!! :o

Claire

Claire, this is correct. I didn't mention the exemption but it is explained in the link I provided. However I think they combine the earnings so if you have a full time job, I think you can't get the exemption, but you'll find out when you apply as it's all automatic.:)

Hazels Crafts
03-04-2008, 05:15 PM
Urban Fairy, i have just opened two business accounts with the Abbey. They have NO FEES at all for business accounts!!!!! (except if you go overdrawn) Very quick and easy to set up and it is very nice not getting any fees per month, and they pay a small amount of interest. I was so impressed i swapped over my personal account too. I am employed and self employed and because i have to do my own tax return it is much easier having seperate accounts.

Nu Joolz
13-05-2008, 02:31 AM
Hazels Crafts, Did you need to provide a business plan to abbey on opening your account?? I am currently using a seperate personal account of mine but it would be nice to start accepting cheques in my business name.

Also just as an after thought we are considering buying a larger home and i'm wondering what if any effect would a business bank account or lack there of have on my ability to use some of the profits on a mortgage application.

Also is there a minimum turnover. I only made around 3k profit last year but turnover was wround 14k before deductions of materials etc. ALso do you have to be with them for a certain about of time before they allow you certain services such as a debit card??

Sorry for the 1001 questions.

thanks

jamesd
31-05-2008, 12:11 AM
ive thought of it for a while , i see some of you are also employed ,
heres the question how much more tax or do you paye tax on your first job , and do you need to tell your employer .
james

Bea
31-05-2008, 12:42 PM
You certainly do not need to tell your employer. Your tax code won't change and you won't pay more tax on our first job. Basically they won't know unless you tell them and you don't have to (I should say as long as there are no conflict of interest)
You'll only pay more tax if you make a profit, i.e. tax on your profits, at the end of your first year when you submit your self assesment.