accounting_for_freelancers

advertisement
Presented by Tim Wicksteed
SWMobile “Going Freelance” 29/05/13
www.twicecircled.com
@twicecircled
[email protected]
Step 1 - Should I Self-Account?
Accountants cost money…
BUT
It takes time to do your own accounts
Is your time better spent working?
Yes
No
Steady work?
Unsteady work?
Good rates?
Not freelancing full-time?
Professional accounting £30/m
Control freak
Genuine interest?
“I’m going to do my own
accounts!”
Step 2 – Sole trader/Ltd Company
 Sole trader means only one tax form to fill in at the end
of the year.
 Limited company is significantly more complicated but
there are advantages:



Tax efficient
Possibility to expand business, take on staff/contractors
Limited liability
This presentation only deals with the Limited Company
route.
1Unique
Taxpayer Reference
Step 3 – Setup
1.
2.
3.
4.
5.
6.
7.
8.
9.
Incorporate your company with Companies House
Receive UTR1 from HMRC in the post
Request an Authentication Code for Web Filing from
Companies House
Register your company with HMRC/Government Gateway
Wait until you start trading
Log-in to HMRC and use your UTR1 to enrol for
Corporation Tax
Receive confirmation pin from HMRC in the post
Enter pin into HMRC to finalise enrolment
Repeat steps 6-8 for PAYE (if applicable)
Step 4 – Keeping Accounts
 Optional guidelines are in Financial Reporting Standard
for Smaller Entities (FRSSE), effective April 2008
 Make a spreadsheet to track everything at the
beginning!
 Update it as you go along!
Income Statement
Twice Circled Ltd.
ACCOUNTING PERIOD
Use my simple template
Year
Quarter
From
To
2013
2013
2013
2014 Year Total
1
2
3
4
06/04/13 06/07/13 06/10/13 01/01/14 06/04/13
05/07/13 05/10/13 05/01/13 05/04/14 05/04/14
TURNOVER
Development Services
Total turnover
£0.00
£0.00
£0.00
£0.00
£0.00 £2,000.00 £2,000.00
£0.00 £2,000.00 £2,000.00
COST OF SALES
GROSS PROFIT OR LOSS
£0.00
£0.00
£0.00
£0.00
£0.00
£0.00
£0.00
£0.00 £2,000.00 £2,000.00
£0.00
£0.00
£0.00
£0.00
£0.00
£0.00
DISTRIBUTION COSTS
Travel
Total distribution costs
£50.00
£50.00
£50.00
£50.00
Step 5 – Paying yourself
 Option 1 – Dividends and more dividends!


Pay 20% corporation tax on everything.
Pay additional 25% on any dividends beyond £32,010 (before
tax)
 Option 2 – Tax free salary + Dividends



Pay 0% on your salary up to £7696 (2013/14 Secondary Threshold)
Pay 20% corporation tax on everything above £7696
Pay additional 25% on any dividends beyond £32,010 (before
tax, including the £7696 salary)
Quick recap:
PROFIT = GOOD!
WRONG!
Corporation tax is proportional to profit!
Step 6 - Expenditure
 Standard expenses
 Things your company pays for directly:




Salaries
Rent
Utilities
Etc.
Step 6 – Expenditure (2)
 Reimburseable expenses
 But wait! Only certain items can be reimbursed by your
company as business expenses, see 480 and 490.
 Key notes:





Business mileage in your own car can be reimbursed (without
receipt) at 45p per mile (< 10000 miles)
Keep a record of every trip you make though
Receipted travel and subsistence (hotels, trains) have to declared on
form p11d and self-assessment. Excellent explanation.
Get a dispensation to avoid the hassle.
However for both of these you need to register your company for
PAYE.
Step 6 – Expenditure (3)
 When you buy equipment your company does not incur
a loss
 Appears as asset on balance sheet
 Hence, does not reduce corporation tax liability
 Annual Investment Allowance (AIA) for capital
expenditure:


Equipment
Software
 £250000 for 2013/14
Step 7 – Corporation Tax Return
 Decide on your company’s tax year
 Login to Companies House and change your company’s






accounting period to line up with your tax year
Wait until the company’s tax year has finished…
Login to HMRC and file your corporation tax return – you will
have an option to change the dates!
Follow the process through and download form CT600
Use the Joint Filing service to do your Company Accounts
simultaneously
Your spreadsheet should have all the numbers you need to
complete the form
Settle up the corporation tax due 9 months later
“I’m going to do my own
accounts!”
Questions?
Presented by Tim Wicksteed
www.twicecircled.com
@twicecircled
[email protected]
Slides available at:
http://www.twicecircled.com/resources/tools/accounting/accounting_for_freelancers.pptx
Download