Self-employment is one of the most common business structures that many individuals use to run their business in the UK. A self-employed individual works for herself or himself and runs a business in such a way that, unlike most employees, they are responsible for preparing and submitting their personal tax return.
Your self-employment status must meet the badges of trade criteria, and you must not a deemed employee. It is also essential that your contract with your customers is “for services” and not “of services”.
As a self-employed individual, your responsibilities include maintaining accurate accounting records, preparing and filing your self-assessment tax return, and paying class 4 and class 2 national insurance contributions.
A common misconception is that a self-employed individual cannot register their business for VAT or as an employer. Self-employment is a business structure that enjoys many benefits available to a partnership or a limited company.
Your level of income is one factor that defines whether you should run your business as a self-employed individual or via a limited company. However, this is not the only factor.
Our tax experts are qualified and experienced. Before advising whether you should be self-employed or incorporate a limited company, we look at your overall personal circumstances. We ensure that your business is tax-efficient; you can use available allowances and reliefs and save for the future using pension schemes.
At Spherical Accountants, we help hundreds of self-employed individuals each year by preparing their self-assessment tax returns in the most tax-efficient manner.