The Practical Guide to Limited Company Tax
If you have chosen to operate your business as a limited com...
By Lynne Gowers on 16th November 2016
With around 1 in 7 workers in the UK working for themselves, being your own boss is an increasingly popular career path. Much of the appeal is in the flexibility and freedom it offers. You get to choose when and where you work and the people you work with and for.
Firstly, let’s have a look at the terminology. Is there any difference between being self employed and being a sole trader? In short, not really.
“Sole trader” describes your business structure, while “self employed” means that you don’t work for an employer or pay tax through PAYE. In most cases, both terms are applicable – if you are self employed then you are basically running a business as a sole trader, regardless of whether you think of yourself as a business owner.
Another option is to set up a limited company, and be employed by it as well as being its director.
In this guide we outline the key factors to consider once you make the decision to strike out on your own.
Once you have decided to go self employed, good preparation and planning will go a long way to ensuring your success. This includes:
Everyone has certain regular commitments, mortgage, rent, bills etc., so ideally you should have sufficient financing in place to see through the cash flow peaks and troughs that comes with self employment.
Looking ahead and managing your time effectively is crucial when you are working for yourself. You need the motivation and commitment to work every day but also to make sure you know when to take a break.
When you are self employed there are lots of pulls on your time other than your actual day-to-day work. You are responsible for all of your financial, legal and tax administration. Our specialist sole trader accounting service takes much of this hassle away. Find out more.
When people first start working for themselves, setting up as sole trader can be a straightforward and simple way of doing it. There is minimal administration and setup costs compared to that of a limited company, however there are downsides too.
✔ Register as self employed with HMRC. You can do this here.
✔ If your turnover exceeds the VAT threshold you will need to register for VAT. You can do this here.
✔ Keep accurate records from the outset, including all invoices, receipts and bank statements.
✔ Consider taking out business insurances. Policies such a public liability and professional indemnity will protect you if someone puts in a claim as a result of an error or omission you have made in your work.
✔ Engaging a reputable accountancy provider, with specialist sole trader experience, can save you time and money.
Our guide to closing your business explores some of the options for closing or suspending a limited company
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If you need a little help to find the right accountancy service, don’t worry.
Thousands of contractors, freelancers and locums turn to Boox for help and advice with their limited company accounting. They love our personal service and app.
Specialist accounting for sole traders and the self employed, Boox combines easy online tools with expert support to take away the stress of handling your accounts.
Our combination of market-leading accounting software and expert personal advice gives you greater financial control and more time to grow your business.