presented by tim wicksteed swmobile “going freelance” 29/05/13€¦ · swmobile “going...
TRANSCRIPT
Presented by Tim Wicksteed
SWMobile “Going Freelance” 29/05/13
www.twicecircled.com @twicecircled [email protected]
Step 1 - Should I Self-Account? Accountants cost money…
BUT
It takes time to do your own accounts
Is your time better spent working?
Yes No
Steady work? Unsteady work?
Good rates? Not freelancing full-time?
Professional accounting £30/m Control freak
Genuine interest?
“I’m going to do my own accounts!”
Step 2 – Sole trader/Ltd Company Sole trader means only one tax form to fill in at the end
of the year.
Limited company is significantly more complicated but there are advantages:
Tax efficient
Possibility to expand business, take on staff/contractors
Limited liability
This presentation only deals with the Limited Company route.
Step 3 – Setup 1. Incorporate your company with Companies House
2. Receive UTR1 from HMRC in the post
3. Request an Authentication Code for Web Filing from Companies House
4. Register your company with HMRC/Government Gateway
5. Wait until you start trading
6. Log-in to HMRC and use your UTR1 to enrol for Corporation Tax
7. Receive confirmation pin from HMRC in the post
8. Enter pin into HMRC to finalise enrolment
9. Repeat steps 6-8 for PAYE (if applicable)
1Unique Taxpayer Reference
Step 4 – Keeping Accounts Optional guidelines are in Financial Reporting Standard
for Smaller Entities (FRSSE), effective April 2008
Make a spreadsheet to track everything at the beginning!
Update it as you go along!
Use my simple template
ACCOUNTING PERIOD
Year 2013 2013 2013 2014 Year Total
Quarter 1 2 3 4
From 06/04/13 06/07/13 06/10/13 01/01/14 06/04/13
To 05/07/13 05/10/13 05/01/13 05/04/14 05/04/14
TURNOVER
Development Services £0.00 £0.00 £0.00 £2,000.00 £2,000.00
Total turnover £0.00 £0.00 £0.00 £2,000.00 £2,000.00
COST OF SALES £0.00 £0.00 £0.00 £0.00 £0.00
GROSS PROFIT OR LOSS £0.00 £0.00 £0.00 £2,000.00 £2,000.00
DISTRIBUTION COSTS
Travel £0.00 £0.00 £0.00 £50.00 £50.00
Total distribution costs £0.00 £0.00 £0.00 £50.00 £50.00
Income Statement
Twice Circled Ltd.
Step 5 – Paying yourself Option 1 – Dividends and more dividends!
Pay 20% corporation tax on everything.
Pay additional 25% on any dividends beyond £32,010 (before tax)
Option 2 – Tax free salary + Dividends
Pay 0% on your salary up to £7696 (2013/14 Secondary Threshold)
Pay 20% corporation tax on everything above £7696
Pay additional 25% on any dividends beyond £32,010 (before tax, including the £7696 salary)
PROFIT = GOOD!
WRONG!
Corporation tax is proportional to profit!
Quick recap:
Standard expenses
Things your company pays for directly:
Salaries
Rent
Utilities
Etc.
Step 6 - Expenditure
Reimburseable expenses
But wait! Only certain items can be reimbursed by your company as business expenses, see 480 and 490.
Key notes:
Business mileage in your own car can be reimbursed (without receipt) at 45p per mile (< 10000 miles)
Keep a record of every trip you make though
Receipted travel and subsistence (hotels, trains) have to declared on form p11d and self-assessment. Excellent explanation.
Get a dispensation to avoid the hassle.
However for both of these you need to register your company for PAYE.
Step 6 – Expenditure (2)
When you buy equipment your company does not incur a loss
Appears as asset on balance sheet
Hence, does not reduce corporation tax liability
Annual Investment Allowance (AIA) for capital expenditure:
Equipment
Software
£250000 for 2013/14
Step 6 – Expenditure (3)
Step 7 – Corporation Tax Return Decide on your company’s tax year
Login to Companies House and change your company’s accounting period to line up with your tax year
Wait until the company’s tax year has finished…
Login to HMRC and file your corporation tax return – you will have an option to change the dates!
Follow the process through and download form CT600
Use the Joint Filing service to do your Company Accounts simultaneously
Your spreadsheet should have all the numbers you need to complete the form
Settle up the corporation tax due 9 months later
“I’m going to do my own accounts!”
Questions?
Presented by Tim Wicksteed
www.twicecircled.com @twicecircled
Slides available at: http://www.twicecircled.com/resources/tools/accounting/accounting_for_freelancers.pptx