In this article we will tell you the most common expenses that you need to be aware of and get the nail on the ahead early on!
The following are costs you should be aware of to help you stay ready and assist you in effectively managing the finances of your business.
As the economy continues to change rapidly more people are leaving the workforce and opting for self-employment.
We believe that long-term it is the best decision you can make if you are looking for more freedom.
But there are some things to plan ahead first…
Although being in business for yourself can provide many advantages, there are lots of additional responsibilities and new self employed expenses that you will have to be aware of.
One new area for you will be the self-employed tax costs that are involved in running a company.
For you, as the business owner you need to be ready for them, instead of sticking your head in the sand.
Among the self-employed tax costs, you’ll need to pay the new self employment tax when you register as a sole trader, or start up your own vusiness.
that will equal a certain percentage of whatever your net earnings were for a calendar year.
The tax rate can vary depending on where you live. The most common tax rates range between 10 – 30%.
Unless you are lucky enough to live in the Bahamas or Dubai where there is 0% income tax!
This is an amount you will have to keep track of and put aside per contract or job.
As it will be tough to ascertain a precise amount if you leave it right until the end of the year to add up all of your sales invoices.
If you are in the UK, you will also need to pay class 2 and class 4 national insurance costs yourself if you are a self employed sole trader.
To find an approximate amount of what you will have to pay, many websites are offering online tax calculators that will help you think of a close estimate.
If you want to play it safe, you may want to put a little extra aside so that you don’t end up short.
Other costs you will need to consider are retirement accounts that you have for yourself and your employees if you have a limited company.
These self employed tax costs are incurred during the year and will need to be regularly maintained to be sure that you’re paying in the right amounts.
If this sounds like a lot of work, there are payroll companies who can take care of this task for you and save you some time.
The best thing to do to save time and grow your business long-term is to set up your own limited company.
You will want to keep accurate records as you’ll need to complete the proper tax forms during tax time.
The amount paid to an adviser, payroll company or tax expert, is usually deductible, so this will help minimize the taxes you may be responsible for paying at the end of the year.
When considering all of the expenses you have to cover yourself self-employed tax costs can be yet another responsibility that could cut into your profits.
To offset these costs, be sure to get in touch with a certified tax professional to better understand what deductions you can claim.
You never know the full extent of what you can write off, so in case you keep track of your questions so that you can present it to your tax person.
Remember that you can get the first tax consultation free, so you don’t have to worry about that investment right now!
The final tip is to plan, prepare and prosper.
The more time you devote yourself in advance to prepare for your taxes, the more time you will have to find a way to allocate the self employed expenses accurately and focus on growing your income instead.
To learn more about our tax services, start a conversation on the Live Chat now and a member of our team will be happy to assist you.
Hello, my name is Ruth and I'm the founder of TaxTwerk.com. Also the author of the bestselling books 'How to Make Your Tax Sexy' and '12 LinkedIn Messages That Actually Work'. Did you pick up your free gift from me?>> Get Access Here