Small Business Accounting
Accounting for small businesses and self-employed
You are self-employed if you run your own business for yourself and take responsibility for its success or failure. Self-employed workers generally aren’t paid through PAYE, though you can be both employed and self-employed at the same time.
Being self-employed is different from operating as a limited company, though much of the same obligations apply.
If you are a sole trader and/or landlord whose annual income exceeds £10,000, Making Tax Digital will affect how you keep financial records and file you income tax return.
What records must you keep as a small business?
When you become self-employed you are required to notify HMRC of your earnings and pay the relevant taxes, to do this you must complete a tax return annually called self-assessment. In order to complete the return, you must keep the following records:
- Invoices raised
- Expenses incurred
- Profit calculations
Do VAT rules apply to self-employed businesses?
Yes, the VAT rules are still applicable to self-employed businesses. We recommend you check out our VAT page if your invoice totals are close to the VAT threshold of £85,000.
What expenses can I claim?
- Office costs, e.g. stationary or phone bills
- Travel costs, e.g. fuel, parking, train fairs
- Clothing expenses e.g. uniform or safety clothes
- Staff costs, e.g. salaries or subcontractors
- Things you buy to sell, e.g. stock or raw materials
- Financial costs, e.g. bank interest or insurance costs
- Premise costs of your business, e.g. lighting and heating
- Advertising or marketing, e.g. websites
- Training courses, related to your business e.g. refresher courses
- Costs you can claim as capital allowances e.g. equipment, machinery or vehicles
Please note there are various restrictions and conditions attached to the above such as personal use and being wholly and exclusively related to trade.
How can Treetops help?
We can make your tax return process simple, all you need to do is provide your records and we can review each item to determine the correct tax treatment. We will remind you of the deadlines, keep on top of your accounts and let you focus on running your business.
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