Hi ,
Following redundacy in the first Lockdown, after a lot of both job and soul searching, I decided to embark on setting myself up as a local Handyman. I only began working in April 2020 and
so far it's gone pretty well. It's getting towards the end of the financial year and I will have to submit some tax related papaerwork to HMRC. However, despite my age (54), I haven't ever had any experience of dealing with taxes etc, as I have always been on PAYE
Is there anyone else who has been in this position and could you please steer me towards any resources that you would recommend I can learn about this from.
I'm thinking specifically Income Tax allowances, expenses, vehicle, and National Insurance
Many Thanks in Advance
John
I would suggest you find a good local Tax Advisor. There will be all sorts of areas that he or she will be able to help you with. Even their cost will be a legitimate business expense that will be deducted from the tax you might be liable for I would imagine.
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Local tax advisor as per below. It was many years since I was a sole trader but I think I paid a couple of hundred pounds for them to do the tax return for me and they saved me way more than that I’m uncovering deductible allowances.
You need to find a local accountant who handles small businesses & you should have done it when you started. Hopefully you've kept all the relveant trading records because without them you may having problems claiming expenses & allowances. Don't try & work this out yourself - get an accountant.
Absolutely get help with this.It's one thing that will almost certainly pay for itself. Yes, you can learn about it , but it's tedious beyond belief and you'll probably miss something. Strange as it is for normal people to understand, there are people who actually enjoy doing this, and do it for a living.
Shouldn’t you have already filled a return for 2020/2021 by end of January 2022? Are you already registered as a sole trader with HMRC?
Originally Posted by Mr Pointy
This, Johnny.
Ask friends for a recommendation for a local accountant and seek his/her expert help.
This might be of some use but definitely suggest, as other have, that you get advice.
https://www.gov.uk/working-for-yourself
Good luck. A good handyman is worth their weight in gold!
OP: this site has a lot of information about "self employed" although it's heavily skewed towards those working through PSCs rather than Sole Traders:
https://www.contractoruk.com/
There's an accountant directory on there which may be useful & you could also ask on your local FB group - lots of STs post on ours & they may have recommendations.
Use an app for day to day recording of expenses/income. Freeagent for sole traders is the one I chose which is on HMRC's approved list, this means you can submit your own year end figures electronically using the app. The other useful feature is (like most electronic accounting packages these days) it will link to your bank account and fill in all the transactions automatically, all I have to do is verify them and add an explanation if necessary.
However, I still use an accountant to actually submit my figures to HMRC but all she has to do is log on to my Freeagent account and check, adjust if necessary and submit. It doesn't take her long and doesn't cost much but has the benefit of her knowing all the ins and out of distributable reserves, depreciation and all that sort of stuff.
Freeagent the best thing I've bought for my business, I used to do it all with spreadsheets using an old school accountant and the whole process sapped so much time and was a right pita. Now it takes at most 5mins a day to keep everything in order and up to date and my new school accountant is happy.
What I thought, seems a year behind.
If you definitely don't want to use an accountant(some of them are sharks working to get your hard earned into their pockets) keep a spreadsheet of all income and outgoings related to your business and you can use the government website to submit a self assessment, it's really pretty simple.
I took it the OP meant the April 5th end of 21/22 year would be here soon and he'd need to get last years figures sorted ready for submission by January. However, reading back when to the date he started trading I fear you could be right! There was a one month late penalty holiday to the 28th of Feb to ease C19 pressures but that was almost a month ago.
They are sending out late submission letters already, as my mother got a £100 fine for not completing a return.
Despite we winding down the company she was a shareholder in 2years ago & her calling HMRC to tell them she received no dividend income during the tax year.
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My wife is a qualified accountant and can't believe it either. When studying/training she did small business accounts and the horror stories of shoeboxes full of paperwork are absolutely true.
Just keep your paperwork in order and find a good advisor/accountant.
The “accounting” software adverts on television are hilarious. What they don’t remind you of is the very old computer saying: garbage in; garbage out.
And a decent accountant will do a lot more than complete your tax return (correctly!).
That seems like really good advice.
Also - with receipts, I would advise the OP to be absolutely rigid in his discipline in making entries and also in respect of receipts.
With receipts - get large bulldog-type clips with a clear label. Have one for each month, and add receipts to the back of the stack for each month. At least then - you know that they are chronological and you can search month-by-month.
For electronic receipts - file in an annual folder, they will sort by date anyway.
Thank you so much to everyone that took the time to reply, your advice had been great to read and I will be acting on it straight away.
However, I do owe everyone an apology, as I incorrectly said that I strted the business in April 2020, when in fact it was April 2021!
Such an idiot and yes, as many of you pointed out, if it had been April 2020, I would have had to fill out a tax return for that year.
Now looking for a local accountant that works with idiots like me to get things right
Thank you again for your advice
John
I wouldnt contradict all of the above advice but add that there is a definate value in being hands on with the bookkeeping.
that way you learn what you are doing and why you are doing it. Then you can manage and maintain strategies as you run your business. It could make the difference between a getting a tax bill or a new van.
I found this place helpful and the questions are answered by HMRC
link https://community.hmrc.gov.uk/customerforums/
I'd add that paper records are not hard to maintain and are very easy to access years later. No software, printer, compatability issues. just quick and easy.
So for a one man band it is one school exercise book every year.....
and remember, have fun or you are doing it wrong
It's true that dealing with your own records can help you understand the process of keeping accounts but the most important time to get an accountant is at the start as they will guide you in issues like record keeping & what is claimable as an expense.
Unfortunately the days of using a spreadsheet, let alone an excercise book, are over & MTD will very soon require electronic accounts & submissions. Given that it's going to happen the OP may as well get started now with a package that his chosen accountant can access - Freeagent & Xero are popular but sadly they cost rather more than an exercise book.
No decent accountant thinks a client is an idiot. You have your skills and they have theirs. The key thing, to reiterate, is to keep good records. Not sure if anyone mentioned but definitely get a business bank account to make it easier to separate personal and business transactions. If you do that, the relationship with your accountant and HMRC will be straightforward.
As I said before, I wish you luck but doubt you’ll need that as reliable competent traders sell themselves and the only problem will be managing the demand for your services.
There's some helpful advice here written in a straightforward way https://www.litrg.org.uk/tax-guides
As above I recommend an accountant but it doesn't hurt to understand the basic principles
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NatWest offers FreeAgent for free to their business customers, so if you've got a business bank account you get the software too.
https://www.natwest.com/business/bus...freeagent.html
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