I’ve invested hours of my own time learning how to get my small business up and running.
What I’ve learned over the past years of being a self-employed accountant dealing with other small business owners is that the same questions seem to persist.
Below you’ll find some of the most common questions I get asked about self-employment to help you set up, grow and manage your own small business.
What licences do you need when you go self-employed?
The exact licences you need depends on the type of business you are planning to run and where you will be based.
If you plan to work from home, then you should check your mortgage or rental agreement to make sure you are not in breach of any rules.
Do you need a business plan when you start a business?
A business plan can be useful. It is a document that details out information on your business, what you do and where you plan to be in the future.
Although it is not necessary, it can help you analyse your business and set goals.
Business plans generally include 7 essential sections and if you want to prepare one, there are some useful resources to help get you started on the HMRC website.
Can I Claim Benefits When I’m Self-Employed?
Certain benefits are available when you’re self-employed. They can help supplement your income if you are just starting out or your business is having a quiet time.
- Working Tax Credits
- Tax-Free Childcare
- Maternity allowance
- Universal Credit
- New Enterprise Allowance
- State Pension
You may not be able to claim certain benefits if you have not paid Class 2 National Insurance, even if you earned below the threshold. For that reason, many people choose to voluntarily pay Class 2 National Insurance contributions, regardless of how much money they have made.
Do You Need to Name Your Business?
When you are self-employed you are not legally required to name your business. That means you can choose to trade under your own name.
Some people opt to use a name that means they add “trading as” and their business name.
Here are some dos and don’ts when it comes to naming a business.
Do I need to register as a sole trader again for my second business?
No (unless you are starting a limited company, in which case you’ll need to register that separately with companies house).
You’ll just need to fill out a separate self-employment section when it comes to completing your tax return for each business you are running.
Register twice and HMRC will expect two tax returns from you!
What is the Self-Assessment Tax Return Deadline for 2019?
The tax return deadline for filing your self-assessment online is 31 January. If you fill out a paper tax return the deadline is earlier on the 31 October.
What Happens if You Miss the Self-Assessment Deadline?
There are penalties and interest if you miss the 31 January self-assessment. You’ll be charged penalties for failing to file your tax return, as well as penalties and interest on any unpaid tax.
Penalties and interest will continue to rise at set amounts until you file your return and pay any outstanding tax.
Do Sole Traders Need Business Insurance?
Business insurance is different from personal insurance. It is specific to your business only and is protection for things like:
- Damages to you and anyone else you or your products come into contact with;
- You home if you work from there or have clients visit you.
There are 7 main types of insurance:
- Professional Indemnity
- Public Liability
- Product Liability
- Business Equipment
- Business Interruption
- Employers Liability
- Business Motor
It’s unlikely that you’ll need them all. But when you go self-employed it is sensible to protect yourself and others around you. You don’t want to be faced an expensive lawsuit or having to replace expensive equipment that goes missing.