Podcast Summary
LinkedIn: Your Go-To Platform for Hiring Professionals: Don't overlook LinkedIn for hiring, as 70% of its users don't visit other job sites. File your taxes early and stay organized for a less stressful experience.
LinkedIn is an essential tool for small business owners looking to hire professionals. It's like searching for car keys in a fish tank to ignore LinkedIn, as over 70% of its users don't visit other leading job sites. LinkedIn offers access to professionals who might not be actively seeking new opportunities but could be open to the right role. Additionally, tax season is approaching, and if you're a freelancer or have a side hustle, it's crucial to understand the tax return process. Many people find it daunting, but experts recommend filing early and staying organized throughout the year. Some surprising facts include the 2,700 people who filed on Christmas Day last year and the busiest time being between 2 and 3 in the afternoon. Remember, the longer you wait, the more stressful it becomes. So, take a break from your chores, gather your documents, and tackle your tax return with confidence. For more tips and insights, tune in to the Money Clinic podcast.
Understanding the tax system's timing for self-employed individuals: Set aside 20-25% of income for taxes, obtain UTR early, and don't wait until the last minute to prepare tax returns.
Managing taxes, especially for the self-employed, requires careful planning and preparation. Deborah, our chartered accountant, emphasized the importance of understanding the timing of the tax system. Profits earned before the January 31st deadline may be spent by the time taxes are due, leading to financial stress. To avoid this, setting aside 20-25% of income for taxes is recommended. However, getting into the right mindset and making time for tax preparation is crucial. Before starting, you'll need your unique tax reference number (UTR), which can take up to 10 days to obtain. HMRC's Chiquetta suggests having all necessary documents, such as bank statements and interest or dividend records, readily available. Approximately 11 million people in the UK are required to file an annual tax return, including those earning over £1,000 as freelancers, those earning over £100,000, and parents earning over £50,000 claiming child benefits. For those generating extra income, the £1,000 trading allowance may not apply if profits exceed this amount. To make the process smoother, don't wait until the last minute, and ensure you have the necessary documents and UTR before starting. Treat tax preparation as a business function and set aside dedicated time to complete it.
Sole Traders: Reporting Requirements and Expenses: If your small business turnover is under £1,000, no reporting is required. Otherwise, register as a sole trader, report turnover and profits, and deduct business expenses.
If you're running a small business with a turnover under £1,000 per year, you don't need to report it to the tax office. However, if you're buying or making items to sell, it's likely considered a business and you'll need to register as a sole trader. A sole trader is someone who operates their business under their own name, and the business and the individual are legally the same. For freelancers and sole traders, turnover is the amount of money brought into the business, and profit is what's left after all costs are deducted. Only profits are taxed. Common expenses that can be deducted include office costs, travel, stock, advertising, and business premises. However, expenses must be solely for business purposes and not for personal use. Some common oversights include forgetting to claim for tools and equipment. Guard dogs and clothing for work are also not deductible expenses.
Properly managing expenses can lead to cost savings and tax efficiencies: Stay on top of expenses, capital allowances, and record-keeping for potential tax savings and pension eligibility. Consider hiring an accountant for complex tax situations or business transitions.
As a self-employed individual or business owner, understanding and properly managing expenses, including capital allowances and record-keeping, can lead to significant cost savings and tax efficiencies. This includes expenses related to working from home, which can be claimed without submitting a tax return. Additionally, staying on top of National Insurance contributions is crucial for eligibility for the state pension. While the cost of an accountant may seem high, it can be a worthwhile investment for more complex tax situations or for those transitioning from sole trader to limited company status, as it can lead to increased tax efficiency and asset protection. Keeping detailed records is essential for maximizing expenses and making the most of tax benefits.
Forms starting with 'P' for self-employed tax returns: Maintain organized financial records, use accounting apps, and establish a separate business bank account to simplify tax return process
If you're a listener with a side hustle or self-employed, you'll need several documents, including forms beginning with the letter "P," to complete your tax return. These forms include a P60 summarizing your salary and tax paid, a P45 detailing your earnings up until leaving employment, and a P11d reporting employer-provided benefits. To make tax preparation less burdensome, establish a regular habit of organizing financial information, use accounting apps like Xero, and maintain a separate business bank account. Apps like Tide and Starling, designed for sole traders, have no monthly fees, automate processes, and integrate with accountancy software. By following these tips, you can simplify the tax return process and better manage your finances.
Contact HMRC for tax return queries or payment arrangements: Reach out to HMRC for assistance with tax return questions, seek professional advice, communicate for payment plans, and provide provisional figures if necessary.
If you have any questions or concerns about your tax return, don't hesitate to reach out to HMRC or seek advice from professionals. HMRC offers various resources such as a YouTube channel, web chat, phone line, and Twitter for guidance. If you're unable to pay your tax bill on time, it's important to communicate with HMRC to discuss payment arrangements instead of ignoring the issue and risking late payment fines. If you need to estimate figures on your tax return, you can tick the box for provisional figures and make adjustments within 12 months. And for those earning over £100,000, you'll need to complete an annual tax return as you lose some of your tax-free personal allowance. To reduce your tax liabilities, consider sacrificing more of your salary into your company pension scheme. Remember, it's essential to stay informed and communicate with HMRC to avoid potential financial troubles.
Exploring Financial Topics with The Money Clinic Podcast and Shopify for Business Growth: The Money Clinic podcast offers financial advice and resources, while Shopify empowers businesses to sell online and grow. 1800flowers.com delivers smiles through thoughtful gifts.
The Money Clinic podcast, hosted by Claire Busheikin, is a resource for discussing various financial topics. If you have a money-related issue, you can reach out to the show through email, Twitter, or Instagram. The podcast is produced by Persis Love, with assistance from Talia Augustidis and executive production by Manuela Saragosa. Shopify was also mentioned as a platform for businesses looking to sell online and grow. Additionally, 1800flowers.com was highlighted as a destination for gift-giving, emphasizing their commitment to delivering smiles through their products made with love. The podcast itself does not provide individual financial advice, so it's essential to consult an independent financial adviser for personalized recommendations. Shopify, a global commerce platform, was introduced as a solution for businesses looking to sell online and grow, from their initial stages to significant milestones. It offers an Internet's best converting checkout, helping businesses convert browsers into buyers more effectively than other leading commerce platforms. Lastly, 1800flowers.com was emphasized as a place for celebrating all life's special occasions with friends and family, with their products made with love and care. Overall, the podcast and the mentioned companies provide valuable resources for financial advice and business growth, respectively.
