When registering yourself or your business with HMRC, it’s essential that you do it correctly. If you register yourself incorrectly, you may find yourself in bother, and more importantly, you could end up with a sizeable bill to pay.
When Do I Need to Register?
If you are going to be trading through a limited company, you will need to register the company before doing anything. A Limited Company is separate to yourself, and you can’t trade through something that doesn’t exist.
If you decide to register as self-employed, then it’s far more lenient. You have until October 5th of the following tax year to register with HMRC. So let’s say you began trading in June 2019, you have until October 5th 2020 to tell HMRC.
Quick tip- If your total sales are below £1,000 within the tax year, you don’t need to register with HMRC.
There isn’t a massive difference between claiming expenses as a self-employed person, and claiming as a Limited Company; business expenses are business expenses.
The differences arise when it comes to personal use and business use, of things like your home and vehicle. Fuel expenses, for example, if you are self-employed, you can either choose to claim 45p a mile or claim for a percentage of your vehicle costs. However, if you are a Limited Company, then you can only claim 45p a mile. In addition to this, your car will be classed as a company car, and you will, therefore, have to pay additional insurance for it.
Who Your Clients Work With
As a self-employed person, it is you who your customers deal with, all invoices, contracts etc. Will be between you as an individual, and them as a customer.
Trading as a Limited Company is different, everything has to go through the company, and all contact will follow the same rule. It will be the company with the insurance, and therefore the company who is liable, not you as a person. This also means that any loans to help the business are required to go through the company, not you.
Submitting Your Accounts
A self-employed, self-assessment tax return needs to be done by January 31st at the end of a tax year. Whereas a Limited Company comes with a bit more admin. Your company has to submit its tax return and accounts to HMRC, along with a shorter set of accounts to Companies House, both within nine months of its year-end.
Having an accountant to deal with HMRC for you will always be beneficial, it means less stress for you and it also gives you more time to concentrate on your work or business. Contact us today to see how we can help you with your accounts.