Being your own boss as a Usborne Books at Home Organiser means you need to be self employed. If self employment is new to you, it can be difficult to know where to start and what it all means.
Here I show you how to get started as self employed, unravel some of the confusion around taxes and get you prepped for doing your first tax return.
What is Self Employment
Self employment means that you work for yourself rather than for someone else. This means you:
- Are responsible for finding your own work, Usborne Books are not obligated to guarantee you with products and income;
- Come up with ideas to make your own sales;
- Need to have your own methods to collect payments from your customers;
- Will not receive sick pay or holiday pay, so you will go without earnings during these times;
- Need to register as self employed, work out your own taxes and send a tax return to HMRC.
Being self employed doesn’t restrict you to just working as a Usborne Organiser. It means you can take on work elsewhere or even hold down a full time job while working for the Usborne on the side.
Useful Reading: Being Employed and Self Employed
What Taxes Do You Pay
You will need to pay Income Tax and 2 types of National Insurance (Class 2 and Class 4) on your Usborne Earnings.
Earnings means all your Usborne Book sales less expenses and other allowances you are entitled to.
There is often a misunderstanding amongst self employed Usborne Organisers that their earnings are tax free so they can work without any tax obligations. This is not true.
Usborne Organisers must register with HMRC and declare their earnings. Earnings may be tax free because you earn below the personal allowance, however you still need to declare everything to HMRC using a self assessment tax return.
There is one exception however.
You only need to register and pay tax on your Usborne income if you earn more than £1,000 in a tax year (6 April to 5 April). If you make less than £1,000 from Usborne then it’s tax free and you don’t need to declare it. Useful if you wanted to just test out life as a Usborne Organiser or just earn a small amount on the side. This perk is called the HMRC Trading Allowance.
How to Register as Self Employed
If you make more than £1,000 from Usborne or you intend to build up a steady self employment income, with Usborne a regular part of that then you should register with HMRC.
Remember a tax year runs from 6 April to 5 April. And when it comes to taxes get used to thinking of everything in this way. It is on this you need to work out your earnings and taxes for HMRC.
When to Register as Self Employed
Officially you should register by 5th October in the second tax year of being a Usborne Organiser.
So if you became a Usborne Organiser on 1 April 2018 then you would need to register as self employed by 5th October 2018.
How to Register as Self Employed
You can register as Self Employed online. It’s fairly easy to do yourself and I’ve put together a video guide here.
Useful Reading: How to Register as Self Employed Video Tutorial
What Are Expenses
One of the perks of being self employed is that you get to set off costs against your income. This reduces the amount of tax you have to pay.
There are rules set out by HMRC which expenses you can claim for (allowable expenses) and those you can’t (disallowable expenses).
Allowable Expenses for Usborne Book Sellers
In the main anything you need to pay for in relation to working as a Usborne Organiser will be allowable or “tax deductible”.
Here are some common examples of allowable expenses for self employed Usborne Organisers:
- Usborne commissions and fees;
- Books;
- Use of home;
- Telephone;
- Computer and internet;
- Space hire;
- Marketing;
- Insurance;
- Accountants fees;
- Bank charges for a business bank account.
There may be expenses you pay for that you use personally, like your mobile phone. In these cases you can only claim a portion as an allowable expense.
So if you use your mobile phone for 60% work and 40% personal, then you take 60% of the total costs to put against your taxes.
Disallowable Expenses for Usborne Book Sellers
After years of people pushing the boundaries and claiming for some questionable expenses, HMRC have a growing list of expenses that are disallowable.
Here are some common examples of disallowable expenses for Self Employed Usborne Organisers:
- Fines and penalties;
- Lunch, unless in special circumstances;
What Records Should You Keep
Everything!
Once you are self employed you need receipts to support all the expenses you want to claim You’ll also need to keep your income reports from Usborne Books to document any income you receive from them and anyone else.
The simplest way to do this is to:
- Open up a separate bank account for yourself and set this to send/receive any payments. That way when tax time comes you have a record of everything that has happened.
- Save all your receipts and reports in the cloud using google drive or dropbox (both are free up to a certain amount of storage).
A Beginners Guide to Bookkeeping and Tax Records When You Become Self-Employed
What is a Self Assessment Tax Return Form
A Tax Return is a form you need to complete online once a year by 31 January each year. The penalties for missing this deadline start at £100.
A tax return contains:
- Your personal details;
- A summary of all your income not just Usborne (like bank interest, employment income and rental income);
- Details of allowable expenses you wish to claim against your taxes;
- A tax calculation;
- How much tax you need to pay.
One tax return form covers a tax year. A tax year runs from 6 April to 5 April. So a tax return for 2017/2018 covers earnings during 6 April 2017 to 5 April 2018 and needs to be filed by 31 January 2019.
You’ll need to pay tax due by this date too, as well making a contribution of 50% towards your next years tax bill. This is called a Payment on Account.
You’ll need to make a payment on account if:
- Your tax bill is over £1,000
- You pay less than 80% of the tax they owe through the payroll system
There are proposed changes to the reporting system called Making Tax Digital. This will abolish the current system of reporting once a year and replace it with quarterly reporting and tax payments. This change currently on hold but will be enforced at some point.
How to Fill Out Your Tax Return
To get started with filling your tax return you will need any paperwork which reflects your earnings including:
- Personal Information
- Your Government Gateway Login and Password
- National Insurance Number
- Partners Information if you want to claim Marriage Allowance
- Income
How To Submit Your Self Assessment Tax Return
You need to submit your self assessment tax returns online, except for in really exceptional circumstances.
The form can be found by logging into your Government Gateway Account to complete your self assessment tax return online. You set this up when you registered for self employment. Once logged in you can choose the option to “Complete Your Self Assessment Return”.
Complete the Right Sections
You need to complete the first part of the tax return form with your personal details. This includes a series of questions which help ‘Tailor Your Return’. By doing this the right sections will be provided for you to fill in. For Self Employed Usborne Organisers you’ll need to make sure you fill out the Self Employment section to declare your business income.
If you have a full time job you’ll need to enter your earnings and any tax deducted by your employer in the “Employment Section”.
Your Key Actions to Become a Self Employed Usborne Organiser:
- Register as Self Employed
- Open a separate bank account
- Set up a bookkeeping spreadsheet
- Set aside money for taxes each month at your highest tax rate.
