Keeping your tax and expenses in check when you are self-employed
As of June 2024, there are 4.27 million self-employed professionals in the UK. This figure has continued to increase in recent years as people look to take control of their earning potential. Whether this is because individuals want to be their bosses or the cost of living crisis means a side hustle is essential, self-employment is hugely beneficial for many.
Despite the positives, being your boss can quickly take a negative turn if the responsibilities of being a sole trader are not properly considered. As experts in providing personal accounting services, we have made it our mission to help self-employed workers keep their finances in check.
How to Best Manage Tax and Expenses When Self-Employed?
Becoming a self-made success is possible for anyone, especially when you have some financial know-how to support decisions. While it can be tempting to run ahead with business planning and earning money, having proper foundations in place to manage taxes and expenses is essential. Without this, there is a high chance earners can end up with debts and issues which are hard to recover from.
Fear not, though, as by following these simple steps, all risks can be eliminated.
Record Keeping
Self-employed professionals should keep tabs on their income and expenses, ideally through digital software. Keeping tabs on all financial activity will not only make it easier for end-of-year accounts to be completed but also means that should anything need to be revisited, information can be reliably accessed.
Educate Yourself
Even if you are starting with zero knowledge of what it means to be self-employed, all is not lost as with some helpful advice, educating yourself is simple.
From learning about brackets for income tax to knowing what can be included as an expense, when armed with the right information, anything is possible. This will also improve the success of your solo venture, as accessing new markets confidently is a proven way to achieve positive outcomes.
Plan Ahead of Time
Our next tip is to know what your calendar of obligations looks like as a self-employed professional. This includes knowing dates for self-assessments, when payments are due and when to best chance invoices.
Budget Wisely
Another way to stay on top of taxes and expenses is to budget wisely for spend, personal bills and tax requirements. This is something an accounting professional will be able to help you with as it's not just a case of having money for the present but also creating forecasts to understand longer-term financial landscapes.
Professional Support
Working with an accountant is recommended for individuals exploring being self-employed. They will be able to help with setting aside the right amount of funds, planning for success and helping with the daily management of financial tasks.
Accounting professionals will also be able to offer real-time support and advice when financial changes plus help with communications between yourself and HMRC in terms of submitting accounts and managing any queries.
To learn more, contact our team now for a free, no-obligation consultation.