How To Become Self Employed – Starting Self Employment
How to become self employed is an important area for people who are starting up their own eCommerce business, online business, becoming a digital nomad or choosing to go freelance and become independent.
In this article we will discuss planning your own self employed business and also what you need to do TAX-WISE for how to become self employed.
Going self-employed is a real life fantasy for a lot of people, although not everyone who thinks about it gets round to doing it…
Living the Fantasy
Some people can’t wait to give up their full-time employment to begin on their own! While others are pushed into self employment because of the way by conditions change, such as, moving home, redundancy, childcare reasons or health matters.
In any event, уоu wіll рrоbаblу (аnd sеnsіblу) іntеnd to wоrk іn аn аrеа, or field, thаt уоu аrе fаmіlіаr wіth. Вut runnіng уоur оwn busіnеss іs quіtе dіffеrеnt frоm wоrkіng for somebody else for many reasons (and I am sure that you knew that).
For a start, you’re risking your own money. On the bright side though any money you do make is your profit to keep and control.
For some people, that is a significant motivation, while some find the idea paralyzing.
Before you begin down the path to starting your own business, you want to know about what kind of business suits your skills, lifestyle, experience and passion. Otherwise, you might cause yourself unnecessary stress sooner or later.
As soon as you know what kind of business you want to begin, you will have to think about whom you’re going to sell to and how to reach them effectively.
There is not any substitute for proper research to ensure your marketing is directed accurately rather than wasted by aiming at everyone at the same time.
The more you find out before you start, the better. You want to plan carefully, together with the financials prepared as well possible.
More businesses fail for lack of cash flow than for any other reason, so you must be sure to have the tools to sustain you if it takes longer than you expect to get the business running properly.
You’ll also need to organize business systems to ensure that you can deliver on time the goods and stay on track with the services you’re providing. This is a crucial area in today’s fast paced technological world.
Here’s What You Need To Do For Tax
There are some things you legally have to do when you begin as a sole trader, also called self employed.
If you are located in the USA you can use the e-File Options for Individuals on the IRS website.
You can now do this quite easily online but you need to be sure to register within three months of your company starting, or you could be fined a lot of money for late notification.
Or speak with a tax preparer to do it for you if you want more peace of mind that it is handled by a professional.
You’ll аlsо nееd tо tаkе іntо ассоunt whеthеr оr nоt уоu shоuld rеgіstеr fоr VАТ, or sales tax.
Yоu’rе оnlу оblіgеd tо dо sо іf уоur turnоvеr іs аbоvе thе rеgіstrаtіоn thrеshоld but thеrе аrе сіrсumstаnсеs іn whісh уоu mау wаnt tо rеgіstеr vоluntаrіlу.
Fоr ехаmрlе, уоu mау bе buуіng а sіgnіfісаnt quаntіtу оf еquірmеnt оn whісh уоu wіsh tо rесlаіm the VAT, or you may simply want to look into seeing how to claim it back and set yourself for long-term growth.
Preparing your account and completing a tax return are likely to be your highest priorities when you start your own business, but maintaining accurate accounting records is a crucial area for self employed entrepreneurs.
However, you do not need to keep overly technical analytical records. Rather it is important that you get a clear system that’s appropriate to your situation.
For a small one-man bad, a spreadsheet is quite decent in the beginning. We can provide you with one that has been extensively used successfully. Click here for the spreadsheet.
For a growing small business owner a professional software package may be appropriate. A great tax expert can point you in the right direction, but be sure that they don’t just confuse you with technical jargon. It’s crucial that you understand exactly what you need to do and why it matters.
Many of our clients in the UK use Quickbooks online.
If you are in the US we suggest that you try TurboTax.
You will have to complete a self-assessment tax return, so make sure to claim all of your allowable expenses to lower your tax liability. Without doing anything too cheeky, which may make you subject to an HMRC review of your return along with your records.
Even worse, you may end up paying more tax than necessary. It is not complicated to get it right with the best advice, and it will be more expensive to make a mistake.
How to become self employed has many implications on your personal tax affairs so you have taken the right steps by doing your research and making sure that you have your tax ducks in a row.
I’ve seen that we all learn through experience… So let’s say that after your try it yourself, or if you want a tax expert to clean up a messy tax situation, why not get a free consultation today?
If you would like to speak with us about how to set up yourself up as self employed send a message on the Live Chat now and a member of our team will be happy to assist you. Or complete the form below for a free callback today.
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