There are many people who are trying to do something for a living apart from the regular 9 to 5 job that they have. As you certainly know, everyone has to pay taxes for the money that they are earning and each country has its own institution that takes care of this.
If you’re already employed and you get a pay cheque from the company you are working for, they are taking care of paying the taxes for you. The accountants will calculate everything and the money will go from the company to the state in a special account designed for collecting the taxes.
However, things change if you have your own business, and here are more possibilities. You can be the sole owner of the said business and be self-employed, or you could be the manager and have more people in your subordination. The thing is that you will have to pay now the taxes and everything else that comes from this, no matter if you’re self-employed or if you have several people working for you.
The HMRC is the best place where you could get additional information on this, so use the HMRC contact information for getting the right tips about this. Until then, let’s see something that could interest you about this.
Being self employed means that you have a business and you are the only one working there. It’s the case of those small businesses that activate in different areas like providing online services, a small flower shop, a nail designer and so on. Usually, it’s about those businesses that can be run by a single person and who don’t have more employees.
So, if you are self employed, you will have to pay the income tax and also declare the profits from your business. It doesn’t matter how much money you make on month, because you will still have to pay the taxes even if the sum is $100.
The Income Tax
Keep in mind that if you’re self employed, you will have to pay the income tax based on your profit, and not on the gross income. The profit is calculated as the difference of money that results after all the investments were calculated. For example, let’s say you have a flower shop. To calculate the profit you will have to know the business expense and deduct it from the business income.
If you have been in the business for a longer period of time – several years, you can also claim capital allowances, and you can also deduct the losses – if there were any – from previous years. What results is the amount that you will use for calculating the income tax.
How to Do It
Usually, you can use the HMRC information and use the online forms that they give you, but if you’re not sure about something, it’s better to ask an accountant to help you out. If you plan to expand the business in the future, it’s better to have someone specialized to keep track of the income taxes that you’ve paid along the years and also help you with the accountability books that are so necessary in a business.