Working in a self employed capacity can allow you a great deal of freedom from the day to day stresses of employment, but it will also bring with it certain legal requirements and expectations. Being self employed requires you to fill in a tax return each year, showing your income and any capital gains. Here are some of the legalities for being self employed.
Whether you are a sole trader or in a partnership you will be expected to fill in a self assessment form. For some people who may not working in a standard self employed basis, there may still be the need to fill in a form, for example: A company director, someone receiving foreign income or a trustee.
Before you can fill out a tax return, you will need to register for self assessment. When you inform HM Revenue and Customs of your self employed capacity, they will ask for certain information to help set up the correct records and deal with you quickly and efficiently. You should receive a form in April clearly stating what you need to do and when to complete the form. If you have not acquired the form by the end of April, then it is wise to get in touch with them and let them know.
Tax Returns and who is eligible:
· If your income from property is £2,500 or more( after you have deducted any expenses that are allowed)
· £10,000 of income from property before any expenses have been deducted.
· If you have £10,000 or more from any income or savings.
· Any annual trust funds that you receive or any settlements.
· If there is an income from a deceased beneficiary where the tax may be due.
You will be given the choice to either send your tax return in paper form or via the internet. Obviously it is quicker and more reliable by internet, but just as straight forward if you choose to send it by post. If you decide to send it by post then it needs to be with HMRC by midnight on the 31st of October. If you wish to send it via the internet, then you will have until midnight on 31st January. If they do not receive the return within the allotted time then you are liable to pay a fixed fine of £100. Should you continue to withhold the return and not submit it, then the cost of the fine can increase.
If you are employing anyone in your business then you will be required to obtain employers insurance. Whilst there are many other areas to look at regarding insurance and what should be covered for, the employers liability insurance is a compulsory legal obligation. An insurance broker will be able to help you with this, generally without making a charge for any advice. There are legalities for being self employed, but there is also a great deal of free advice and help out there. Numerous government websites will guide you on tax issues and even offer free day courses and handouts to help you forward with your business.