Do I need to register myself as self-employed?

Discussion in 'Accounts & Finance' started by Tomahawk, Jan 15, 2014.

  1. Tomahawk

    Tomahawk UKBF Newcomer Free Member

    Posts: 42 Likes: 3
    At the moment, I work full-time, but I have a separate business that has income. Do I need to tell HMRC that I'm self-employed?

    If so, what sort of National Insurance should I be paying, given that I have a job as well as a business?
    Posted: Jan 15, 2014 By: Tomahawk Member since: Dec 17, 2013
    #1
  2. cheaper accountant

    cheaper accountant UKBF Newcomer Full Member

    Posts: 403 Likes: 56
    Are you a Sole Trader or operating a Limited Company? Both situations are very different.
    Posted: Jan 15, 2014 By: cheaper accountant Member since: Oct 20, 2012
    #2
  3. Merchant UK

    Merchant UK UKBF Ace Full Member - Verified Business

    Posts: 2,389 Likes: 584
    Years ago you could wait a while before telling HMRC that you were self employed, 30 days I think, but now you need to tell them the minute you become self employed, and if your late they could fine you. heres a handy section from the HMRC website http://www.hmrc.gov.uk/working/intro/selfemployed.htm
    Posted: Jan 15, 2014 By: Merchant UK Member since: Aug 15, 2010
    #3
  4. Scalloway

    Scalloway UKBF Legend Free Member

    Posts: 6,753 Likes: 1,639
    If you expect to earn less than £5,725 in the period 6 April 2013 to 5 April 2014 from self employment you can apply for exemption from Class 2 NI. You will not pay Class 4 NI at that level either.

    http://www.hmrc.gov.uk/forms/cf10.pdf
    Posted: Jan 15, 2014 By: Scalloway Member since: Jun 6, 2010
    #4
  5. David Griffiths

    David Griffiths UKBF Legend Moderator

    Posts: 10,344 Likes: 3,283
    That exaggerates the situation quite a bit. There is no longer an obligation to notify HMRC within 3 months of starting self employment. The normal rule is that you should notify by 5 October following the end of the year in which tax liability arises. After that you could theoretically be open to a "failure to notify" penalty, but even then if you pay the tax on time that won't be charged.

    Not quite "the minute that you become self employed"
    Posted: Jan 15, 2014 By: David Griffiths Member since: Jun 21, 2008
    #5
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  6. Tomahawk

    Tomahawk UKBF Newcomer Free Member

    Posts: 42 Likes: 3
    I'm operating a limited company; what's the difference (in terms of reporting myself as self-employed or not)?
    Posted: Jan 15, 2014 By: Tomahawk Member since: Dec 17, 2013
    #6
  7. Tomahawk

    Tomahawk UKBF Newcomer Free Member

    Posts: 42 Likes: 3
    By the way, what happens if I tell them I'm earning less than £5,275 and then by April business goes well and I end up earning more than that much?
    Posted: Jan 15, 2014 By: Tomahawk Member since: Dec 17, 2013
    #7
  8. Newchodge

    Newchodge UKBF Ace Free Member

    Posts: 2,221 Likes: 546
    If you are working through a limited company you are not self employed. Have you registered the company with HMRC?

    Are you paying yourself a salary through the company? If so you have to register the company as an employer and complete payroll returns every time you pay yourself. The small earnings exemption applies to the self employed, which you are not.

    If you need help with a payroll, please drop me a PM.

    If you are not paying yourself a salary, but merely paying yourself dividends from company profit, you don't need to do anything other than register the company with HMRC unless your dividend income takes your total income into the higher tax bracket.
    Posted: Jan 15, 2014 By: Newchodge Member since: Nov 8, 2012
    #8
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  9. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    Posts: 9,765 Likes: 1,909
    TomaHawk you mention in a later post its a limited company you have so no you dont register with HMRC as self employed but you must tell HMRC the company is trading.

    You may find it helpful to have a read of this on the HMRC website if you intend to look after the company accounts and tax yourself.

    To answer your question regarding National Insurance as a company director you will generally only pay NI on any salary you draw from the company depending on the amount.
    Posted: Jan 15, 2014 By: MyAccountantOnline Member since: Sep 24, 2008
    #9
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  10. Merchant UK

    Merchant UK UKBF Ace Full Member - Verified Business

    Posts: 2,389 Likes: 584
    Thanks David that clears it up :)

    Now you know why I do welding and not accounts :p
    Posted: Jan 15, 2014 By: Merchant UK Member since: Aug 15, 2010
    #10
  11. Tomahawk

    Tomahawk UKBF Newcomer Free Member

    Posts: 42 Likes: 3
    Thanks for the advice guys, very much appreciated!

    I've registered the limited company and I let HMRC know that the company is active. However, I've been taking payments directly into my personal bank account and that's also where the expenses have been coming from. (The banks have been really slow at opening my business account, I still don't have one yet, so I've just been using my personal account.)

    Therefore, I haven't really separated the company finances from my own yet, and I haven't paid myself any salaries or dividends (it's all just sitting in my personal account).

    So unfortunately, it's all quite messy right now and I'm trying to find an accountant to help sort it out while also waiting on the bank to open my business account..

    In the meantime I just wanted to know if there was something else I need to do?
    Posted: Jan 15, 2014 By: Tomahawk Member since: Dec 17, 2013
    #11
  12. VanillaOnlineAccountancy

    VanillaOnlineAccountancy UKBF Newcomer Full Member - Verified Business

    Posts: 221 Likes: 33
    You don't legally need a separate business bank account but it's a good idea as it's easier to keep track of things. Make sure you keep invoices issued and receipts paid and it can be unpicked.
    Posted: Jan 15, 2014 By: VanillaOnlineAccountancy Member since: May 3, 2013
    #12
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  13. faradaykeynes

    faradaykeynes UKBF Ace Full Member - Verified Business

    Posts: 2,406 Likes: 424
    Keep record of your income and expenses some how may be online software of excel, once your business account is ready, see how much net balance should on your for bank and transfer that to company bank account.
    Posted: Jan 15, 2014 By: faradaykeynes Member since: Apr 19, 2012
    #13
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  14. Tomahawk

    Tomahawk UKBF Newcomer Free Member

    Posts: 42 Likes: 3
    Thanks a lot Vanilla, Faraday, your posts have given me much needed peace of mind!
    Posted: Jan 18, 2014 By: Tomahawk Member since: Dec 17, 2013
    #14
  15. petitionserver

    petitionserver UKBF Newcomer Free Member

    Posts: 22 Likes: 0
    yes, you need to tell
    Posted: Jan 20, 2014 By: petitionserver Member since: Jan 19, 2014
    #15