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As a freelancer or micro-business owner you happily celebrate two new years: the January Auld Lang Syne shenanigans and the start of a new tax year. While the latter doesn’t quite hold the same excitement that surrounds the start of a real New Year, it’s worth making some financial resolutions to ensure the 16/17 annum is one of your best yet.
Having a firm understanding of what you can and can’t claim as expenses when you’re a freelancer or micro-business owner helps keep your business running and maintain a healthy cashflow.
By knowing your allowable business expenses, you can actively lower your profit. This will, in turn, reduce the amount of tax you pay and increase the amount of money that stays in your pocket. Claiming every single expense you’re entitled to – whether it’s office pens or a new computer – will leave you better off than just paying for them out of your own pocket.
You can claim a wide range of business expenses, including:
If you’re unsure whether something counts as a business expense, check with your accountant or HMRC.
If you’ve been freelancing for the previous 12 months, it’s worth going over your books and taking a look at your rates. Were there any projects you worked on that you felt you sold yourself short on? Making sure you’re getting paid appropriately for your work is imperative, not only to keep your business ticking over, but also your self-worth and motivation in check.
As a micro-business owner, chances are you’ve already heard the buzz surrounding the Government’s new National Living Wage – essentially a ‘premium’ on top of the existing National Minimum Wage (and not to be confused with the Living Wage). The National Living Wage entitles all workers aged 25 or over, except those on the first year of an apprenticeship scheme, to at least £7.20 per hour – a rise of 50p. As an employer, you need to keep payroll documentation for three years to prove you’re paying either the National Minimum Wage or the National Living Wage to your employees, should there be an investigation by HMRC.
Let’s be honest, no one really enjoys even thinking about tax, let alone completing self-assessments and returns. It can be a painful, drawn out meander through a year’s worth of accounts, bookkeeping and receipts. However, with a little bit of organisation, thinking about the forthcoming tax year may not seem as daunting, and as business organiser and time management specialist Cory Cook writing for the Guardian states:
“When we’re organised, we think more clearly. We’re in tune with our targets and how to reach them. We have systems in place for carrying out our work – and regular planning ensures we keep priorities at the forefront.”
Keep forgetting when the self-assessment deadline is? Not sure when you need to file your P11D? Reach for your tablet or smartphone and get those important financial dates in your diary. Being fully aware of when these important tax deadlines occur will make the whole process seem more streamlined.
Do you really need to keep that print out? Do you even need to print something out in the first place? Unless what you’re holding is a receipt or something to do with tax / payroll, chances are you can file it under B for bin. Keep paperwork stored safely and create backups if you can. Google Drive is excellent for doing this – it lets you photograph documents then store them for easy access and safe-keeping.
As with any tax year and new Budget set by the Chancellor, as outlined in March, there are many changes afoot. Best to get a head start on the financial year and ensure your business puts its best foot forward.
When you’re running your own business, it’s all too easy to end up chained to your desk. Try to schedule in time away from your usual place of work.
Regularly attending networking events and industry meetups not only provides a welcome change of scenery, but also the opportunity to meet like-minded individuals, promote your business and, hopefully, pull in some new clients. If you can’t find something local that interests you, why not set up your own group?
Our invoice templates are professional and sharp. Use them to directly invoice your clients and get paid fast.
From understanding expenses to starting a limited company, our downloadable business guides can help you.
If a client hasn't paid an invoice, download our late payment reminder templates and get that invoice paid fast.
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The UK has many different tax rates affecting both individuals and businesses - and as a business owner you’ll be affected by all of them.
We'll be covering the budget and highlighting the arising issues and announcements that affect freelancers, contractors, and small business owners.