HOW TO PAY YOURSELF AS A SOLE TRADER (UK)
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- Опубліковано 11 чер 2024
- Self employed and wondering how you pay yourself? Watch this.
In this video Dan runs you through how you pay yourself as a sole proprietor / self employed person (UK).
Dan cover questions including as:
How to pay yourself as a sole trader
Owners drawings
Self employed 'wages'
How to save for tax
How much to put aside for tax
..... and more!
#selfemployed #Startup #HMRC
If you have any questions on this, please comment below.
You can see more about what we get up to on the following:
LinkedIn (Dan): / danheelan
Instagram (Dan): / danheelan
Instagram (Company): / teamheelan
Facebook (Company): / heelanassociates
Twitter (Company): / heelanassocs
Web: www.heelanassociates.co.uk
Call: 02392 240040
Email: info@heelanassociates.co.uk
As a 18 year old in the proses of starting my own business and being employed, your videos have helped me so much and I would like to just say thank you!!!
Glad it helped Ryan! Good luck with the business!
2 years late and this information has been the best I have found! I've just started operating as a Sole Trader Mobile DJ and had so many questions around taxing, paying and making purchases for my business i.e. PA system & lights etc
Glad it helped! Yes some of these vids have stood the test of time haha!
Dan you are the Man. Always go to you’re videos when need a question answering 👍🏻
Glad you found them useful!
Very much appreciate your videos, keep it up 👍🏼
Thanks Matt, glad you are finding them useful
absolutely amazing tutorials - keep them coming and i will like
Glad you enjoy!
Thanks a lot! Very helpful!!
Glad you found it useful!
Another great video- thank you
Thanks Jesse! Glad you enjoyed
Very helpful video! Thank you :)!
Glad it was helpful!
Thank you . This is very helpful.
Glad it was helpful!
Your videos are so helpful
Glad you found them useful!
Great video! Subscribed!!
Glad you enjoyed!
Thank you very much for this
You're very welcome!
Great vid!
Glad you enjoyed
Thank you for this! Could you explain how tax would work when in employment and a sole trader?
It all goes in one 'pot' on a tax return. The return gives you tax bill for ALL your income, and then it deducts what you've paid in your job. Any additional then needs to be paid, the or you get any extra back.
Great video! As a sole trader, I'd like to have two separate bank accounts as you mentioned above ... however could you please clarify if the bank account I set up should be another "normal/personal" bank account or should it be a "business bank account". The reason I ask is that it seems a business bank account has a monthly cost to it and I'm not at the trading stage just yet. I am just trying to get everything in place ahead of the trading phase. Thanks
The bank will tell you it's against their terms and conditions to trade out of a personal account. However..... judging by the amount of people that needed to suddenly get a business bank account when they needed a bounce back loan, it's been common place for people to just have a separate account of any type. From a tax point of view, it doesn't matter which!
Thanks very much for this Dan.
Glad it was helpful!
Thank you for your videos. Very helpful!
I am a freelancer selfemployed and I receive monthly payments and allowance payment separately. Do I need to pay tax on my allowance as well, or just on the salary?
Thank you so much.
When you say allowance, do you mean like funds from a parent?
Great video, thanks. I help my daughter with her accounts and we do the self assessment using the easiest cash type. So money in, money out. Does her draw down go on the books as a "money out"?
We'd suggest the term 'drawings'.
very helpful video! could you please tell me how to reconcile drawings? create an account in the chart of accounts is enough?
Yes for most of time its more a log of what you've drawn, so an account in the chart of accounts works well. You can then review it to check you are happy with everything in there.
Hi, love the channel. Quick question: I'm about to take early retirement and have a big build project ahead of me. I want to get involved and do a percentage of the grunt-work, order and manage trades and buy instead of all trades doing that and the taking a % for it. I will be working on the build but initially, I would have expected a salary - as it will be my house. What would you say the best way to move forwards is. Many thanks
Hi David,
Glad you enjoy the videos! This one is difficult to answer in a comment as so much depends on other factors and your goals for the build.
What you describe is certainly sound logic as reason to be involved directly with the build!
Things to consider such as:
How you will fund
Ltd/not limited
Buy/sell or invest
VAT situation
Investors/funding
Commercial risk etc
Extraction of profits
etc etc.
If it's something you'd like direct advice on your situation, please don't hesitate to get in contact with our team who can talk you through how we might be able to support.
Hi thanks for the video! I'm starting a company as I have gathered a lot of stock. My main problem is that my stock is from carboot sales and cash- in hand purchases. How would I go about proving these costs? All I have is bank statements to show withdrawals. Thank you
It’s a tough one. If you can take a little book with you, list the item and see if you can get trader to ‘sign’. If not make a item list and where you got it from, like a ‘self receipt’ is as best as you can do.
So, is profit worked out AFTER drawings are taken into account? I thought, in my tax return, I just put in my incoming, take off my outgoings (materials etc but not drawings) and the 'profit' what that figure. Hope you can advise! Thank you (btw we're talking really really small figures here!)
Profit is the important bit.
So Income - less tax deductible expenses = taxable self employed profit.
What you draw or not isn't factored into the tax bill.
Hope that helps!
Dan, great videos, very much appreciated. I have a couple of questions that I haven't seen posed before and was wondering if you could please comment. My son is a self employed gardener who works for a company who pay him through a payroll specialst. I am employed but help him occasionally on private jobs. We would like to expand this and I am happy to open a business account in my name. Question is this. Could I pay him from this business account directly to his payroll specialist. and would he be classed as a subcontactor and be paid out as wages?
Hi Terry,
This is an odd one, as we'd need to know exactly where the payroll sits in this chain and have lots of questions. Probably more than we can cover in a comment here, but if you still needed some advice on this, get in touch with our team. We have a service where we could defo answer this for you, just needs more info on both of your situations.
Hi, great video. I’m just starting out as a sole trader and have opened a business account for all income and expenses to flow through, as best practice, like you mentioned. However, with very little in the account at the moment and the need for some start-up expenses, how do I go about spending using that account - is it simply a case of adding personal funds to the business account, or will that look like revenue? Apologies if this is a somewhat silly question, I literally have no experience in small business financials… 🤦🏻♂️ Thanks in advance
Not a silly question, pretty common one actually. Yes just add personal funds. You can record in your records as 'capital introduced' or similar.
@@HeelanAssociates Also, for example, if I’m a sole trader, can I purchase two laptops with ‘capital introduced’ as a startup expense and both items would be considered as an expense to reduce the amount I’m taxed on?
Thank you Dan i will contact you GR
Great!
I would like to know about sole trader and child maintenance please .
What area in particular?
Really Helpful Video. As a sole trader I have declared all money 'going in' and all money 'going out'. Do the 'drawings' I take out get added to the 'money out' section? I have completed my return for April 21 and did not take any drawings out, as I wanted to make sure I went by the book and didn't make any mistakes when completing my first return so all profits are still in the bank account. Many thanks.
Yes basically ignore the drawings. It's a common error we see, where someone has filled in drawings as 'wages', reducing their profit and tax!
The tax people then tend to point out the error and ask for money back :- )
Think if you did money in, less money out, what's left is (in theory at least...) your drawings, or possible drawings. Doesn't often come back to that but that's the tax theory, you are getting taxed on your profit.
Hope that helps!
My understanding is that the drawings are taken AFTER calculating the profit (money in/ money out). I then substract income tax, then I can take my drawings (and pay the 20% tax on those too) ...is that correct? Thanks in advance for any responses and great work on the videos.
Have just discovered you and your videos, so thank you. Got a Q though... How and where (ie which box on the SA form ) do I tell HMRC about any drawings I've taken as a self-employed sole trader. I've looked all over but can only find where not to put it.
In the ‘short’ pages you don’t! They are mainly interested in your profits that need to be taxed as a sole trader; whether you drew them all or not they aren’t bothered.
This is both a good and a bad thing!
I found someone who talks about sole traders and it's British!!! I have a question about wages. If I pay myself, would that go under expenses? I don't pay NI or pension as I earn under the 12k. Trying to get things right for the new tax year
No it’s actually a common error, you don’t actually record your wages in an expense box. That box is for wages you pay to any staff you have.
Quick question, should I log my ‘drawings’ on my business spreadsheet somehow? Also where should I record money that I put into my business? I’ve only been in business a short while and am having to transfer in money from my personal savings to pay for business expenses.
Yes it’s good to have a column for drawings. You could use a minus figure in that column for money in, or another ‘capital introduced’ column.
If I work on two businesses at the same time (in one I am employed and in one is mine), do I fill out both together in my tax assessment? Having separate bank accounts for both would not make sense in that case? Also, if I make a personal sale (e.g. sell my old piano on shpock), does that count as taxable income and should I put that on the tax return?
Sale of small personal items are not *usually* subject to tax, but not always the case.
Separate banks account for separate business are always preferable!
Think of your tax return as a bucket, so it captures all of your income from the various places. Only thing from your description that's not totally clear, is that you mention being employed in one - can you expand?
Quite interesting! Can you please explain a bit how taxes would work if you say are in a business partnership and have been employed (in fact furloughed due to the pandemic) around the same time you have registered the business? One thing I've been a bit confused about is that I have to fill out a tax return for both the business and also an self assessment tax return, so I wanted to ask in regards to the self assessment tax return do I have to just calculate the money received from the business or calculate the money I received from both the business and employment/furlough?
The short answer is it all goes into one 'pot' and the tax is worked out on all your income and profits. Then any tax you've paid from any source is deducted and you pay the rest.
If you have a partnership, annoyingly they want a separate return for that as well. You then have to fill out your split of the profits on the partnership pages in your personal tax return (as well as the total in the partnership return).
The employed income goes on the employment pages in the tax return.
If you have any other self employed income (outside the partnership) you would fill out the self employed pages.
Hope that helps!
@@HeelanAssociates ok thank you, makes sense now
@@HeelanAssociates oh one last thing in the self assessment return do you put the total of expenses which you have acquired over the tax year or is that just for the business tax return?
@@kylecattell You put all of your business income and expenses on the partnership return, it then calculates a split of your profits that goes in the self assessment (personal) tax return.
On commercial software the returns are linked; we haven't used the free HMRC version so unsure if this will automatically happen for you there.
If this becomes a nightmare get in touch and we can see
Quick question: I thought I saw somewhere you mentioned that you have to "register" your salary as you pay it? I can't find the reference any more but here you said you just have to draw it out... no mention of filing or registering of your salary as you go? Sorry for being so confused.
Hi Mark, no problem. I presume the mention would of been in relation to limited companies. They have to register for a 'PAYE' (payroll) scheme and declare to HMRC via that. Sole traders don't, as you are only taxed on profits (which you declare on a tax return).
So do I keep the 25% for tax in the business account or do I keep it safe once I've drawn it as wages, and then do I pay my taxes from my personal account ?
As a sole trader it’s very flex, so whatever works best. Some people like it in a separate account but honestly your choice.
nice simple videos. I have a question. I don't earn much anymore (am slowly drawing down my business) I don't have the expenses every month anymore but obviously draw the money I do earn out into my personal account as wages. Is this still classed as expense? because then my profit would be zero at the end of the tax year. .... or am I thinking incorrectly here.?
If this is ‘old’ profit you are drawing would you might actually be in a loss in future years if you had no income.
Hi Heelan, Thanks for this video. Okay i have a question.. - So if my sole trader business made a healthy sum this year and i decided to take for example £2000 per month as drawings into my personal account.. Would it be best to calculate and deduct around 22% of that each month and hide it away for the self assessment in a year or two time when its due to be filed. or do i pay the NI and TAX each month to someone like if i would do if i was in a regular employed job? ALSO - would i then pay taxes separately on the profits I've made in the company? I'm very new to this self employed / sole trader world and i find it very difficult to understand a lot of the accountancy lingo..
Tax on sole trader is paid with your tax return (you get a bill from the return). If you earn enough to pay over £1000 of tax, often you then pay twice a year.
Have a watch of this one: ua-cam.com/video/WHdNN28e_vI/v-deo.html
Hi.
1.How does starting as a sole trader affect my tax code?
2.Would I need to inform my employer as I currently work, but want to start a business on the side.
2. Is it better to start my business as sole trader or LTD?
I prefer to keep my employer out of it when it comes to HMRC matters
1. It doesn't until you submit a tax return, then it might affect it
2. Depends if you contract says you can work or not as self employed. Otherwise, its pretty much up to you.
3. see here: www.heelanassociates.co.uk/going-self-employed-for-sole-traders/
Have a watch of these two:
ua-cam.com/video/D6uU2_v73qI/v-deo.html
ua-cam.com/video/v3T46yqqdcQ/v-deo.html
Is there somewhere i can find like a list of things we can claim for? Can I claim my phone bill? Lunches? My HP car finance?
Hi Tanvir, our start up guide has a brief list, www.heelanassociates.co.uk/setting-up-self-employed-or-sole-trader/ We are planning a video on this also.
Sadly, the answer is (in theory) anything 'wholly and exclusively' for business use..... but then there are certain things that seem like they be ok, but aren't (general work clothes for example...).
Lovely stuff. What happens if you get sent money as a birthday present? Does that need to be claimed as income?
Nope not as trading income, not if its a gift / not related to work you've done.
Hi great series of videos. Could you please explain how personal tax allowance sits in with drawings as a sole trader?
Im thinking the personal tax allowance is just taken off my turnover as well as any business expenses and whatever is left above this threshold i have to pay tax and ni on? example turnover £20000 per year. personal allowance £10000 per year Expenses £5000 per year leaves total of £5000 left that i pay tax and ni on? so 20% tax on the 5k and it doesn't matter how much money i have drawn down to my personal account this doesn't effect the tax i pay?
You are along the right lines.
Think of it as, presuming you had no other income:
Turnover £20,000
Expenses -£5000
= profit £15,000
Then take off your personal allowance (12,500 at time of writing) = £2,500 profit that gets taxed.
And you are correct how much you’ve drawn as a sole trader makes no diff.
@@HeelanAssociates thankyou 👍
Very silly question...but here goes! As a sole trader I am doing my accounts in a very simple 'income/expenses' spreadsheet. I pay myself a wage every month from my business account to my personal account. But what I am not clear on is do I need to add that personal transfer amount somehow to my spreadsheet? As the money is just moving and not either income or expenditure I am a bit confused as to whether I have to factor it into my tax return!
If it’s your money, you could for completeness list as ‘drawings’ in your records. But no doesn’t actually go on your tax return (at least not on the ‘short’ self employment pages normally used).
Hi, thank you for the great video, you mentioned 25% put away for tax bill. Is this 25% of the total turn over or 25% of the profits?
In theory profits, but as mentioned in video its a very rough 'provision'.
Hiya loved the video, looking to expand my business and to become a sole trader, in terms of putting money away to cover taxes, am I able to transfer extra to a personal account and put it into savings with the personal bank? Many thanks!!
As a sole trader yes no issues
Hi, I’ve been a sole trader 17 years using personal bank account. Now about to open business account and use freeagent if I can get my head around it! I understand taking drawings now I think (thank you!), but for example when putting fuel in my van would I use the business account or my own personal account? I am currently using the simplified expenses method so claiming .45p per mile.
Thanks.
As a sole trader it’s not as important on the bank from in terms of payment.
It comes down to what’s best for your record keeping for preparing your tax return - is it easier practically buy fuel from business account and adjust your records for the tax position? If so you could do that.
Can we show expenses which we done to run our business if person is sole trader? like subscription fees, shipping cost, VAT?
Yes you only get taxed on profit.
So if your expenses are ‘wholly and exclusively’ for business like say software subscription for your business, you’d deduct this before paying tax.
Hi, thanks for this video! I had a question about having a full-time job AND working as a sole trader as part of a side hustle. If I am earning over £50,000 from my salaried full time job and am expecting to earn around £10,000 per year through separate work as a sole trader, would that confer any tax benefits?
I understand a self assessment will have to be completed as a sole trader but would this mean that I have an additional £12570 tax free allowance as a sole trader, meaning that I can earn up to that much through my side hustle without paying tax? Furthermore, would me paying myself out of the sole trader account mean that it will count as an income that I then later get taxed on? Thanks!
Sadly it all gets stacked together! Have a read here: www.heelanassociates.co.uk/more-than-one-income-stream-how-the-tax-works/
What's the best way of keeping track of it all for someone new to it that can't pay an accountant as yet
For your records, Xero would be the best investment / easiest to use. Quickbooks is cheaper and good, but slightly hard to get used to from the feedback client give us.
I'm considering going freelance as a kitchen porter by finding my own clients and invoicing them for work carried out. Would this be considered to be a sole trader business if I went ahead with this?
Presuming you have the 'badges of the trade' that HMRC would usually want to see it shouldn't be a problem, i.e you are truly in business for yourself.
Things like finding your own clients, websites, amount of risk you take, how you carry out the work etc......
It's actually a much more detailed answer than we can give here as this topic cross employment law and tax, but its probably easiest to say It you feel like an employee, then that's when things tend to get complex/potentially a challenge. Otherwise sole trader is the usual norm.
Hi Dan, thanks for the great video!
Just a quick question, if i am self employed, but want to hire someone, can i stay as self employed and pay the person through my account where that person is also self employed? Then when i do my self assessment would this be classed as a business expense?
If they are freelancing too you (so you are happy they shouldn't be an employee) then yes totally possible to do this/get a tax deduction.
Hi there I've just become a sole trader and brand new to this whole self employed business. I am currently using quick books. I also have a job PAYE too. I have a few questions that you might be able to help me with.
01. When I first started I did a lot of business expenses from my personal account as I didn't have any income coming in until the end of the first month. How do I log my business expenses from a personal account or what would you advise I do?
02. As as sole trader you said that you don't pay yourself wages as it all belongs to you. But I used my business bank account to pay for my mother's birthday present and card. That has come up as an expense on quick books but not sure what category it comes under as I don't want it logged as a potential deductible tax when it's not.
Any advice? Not sure if you've used quick books before.
01 this may help ua-cam.com/video/LXwDuAzadsU/v-deo.html
02 Stick that down as 'owners drawings' - it's basically money then allocated to you
see if i’m self employed and pay myself through my business account but also work a part time job, do i get taxed more?
Have a watch here BEING SELF EMPLOYED AND EMPLOYED AT THE SAME TIME
ua-cam.com/video/v3T46yqqdcQ/v-deo.html
when i first went self employed as an actress back in april 2019, i started putting 30% of my earnings away for tax and NI, so far this has worked for me. but do you think that further down the line it is best to increase this % to cover things like my student loan. on average what % would you recommend people put away for their tax return
A lot depends on your earnings levels, but 30% is a decent sum.
We did this video for those earning under around £50k ua-cam.com/video/WHdNN28e_vI/v-deo.html
As you mention, student loan can throw this out though! If you did 30% and earning under £50k (ish) you would have a decent 'pot' before tax was due.
Hi, so is the personal allowance 12570 tax free? So if I made 50k the year minus the expenses say 5k so 32430 would be the profit to pay so 20 percent of that 6486 to pay plus national insurance?
I’ve not checked your maths but yes seems correct. It’s your profit (50-5), then bundled together will all other income (if any). Then take off that personal allowance before being taxed.
Hi there so if I were to open a separate account to run my sole trading business from (gardening) what would be Ty consequences of not having a business account? Would it be that they can shut my current account down without any notice? Or would it just be a case of they wouldn’t care?
In reality of whether the bank would care is difficult to say (experience varies), but technically most banks its against their T&Cs to trade out of a non business account.
Now its so easy and cheap to get an online bank, most owners are too concerned now. It's when you need to pay cash in it gets expensive usually.
dpes this also work the other way around? So I pay my sole trader business account from my personal account lets say 5k to for example fund my initial activity as a sole trader (buy equipment, pay agencies. buy material or whatsoever). Can these 5k be deducted from my overall income (as I would start doing this part time)?
The costs you spent the money on may be tax deductible if they follow the usual rules, rather than the actually payment in of £5k. Sounds picky but it’s often the case you may put £5000 in, and spent say £4896.53 in expenses - it’s the later figure that would be tax deductible
What happens if a person starts trading without registering an LTD or as a sole trader?
I'm asking that because I want to start a dropshipping business and I do not want to deal with the bureocracy of running a registered business in the early stages, but register after I make a few hundreds or even thousands
Often the best thing in that situation is be a sole trader, you can then register later if/when you need to and certainly less paperwork. If you haven't registered a LTD, then its binary really, you aren't a company/cant trade as one.
I already have a personal account and a savers account with the same bank, if i open a buissness account idealy i would put aside 25% from each job i do can i put that into my savers so my tax pot is seperate from the funds left over?
Can't see a reason why not, many owners take this approach.
Hi, as 20% is deducted at source when CIS self-employed what percentage should then be set aside for NI contributions & potential expenses before paying myself?
Thanks in advance
That one is difficult to say, as in reality a lot of CIS subbies end up in a repayment situation so don't actually need to put anything aside.
That said, as you earnings go up this ceases to be the case.
If you imagine you are getting a flat 20% deduction, against (under £50k a year) 20% tax + 9% NI, but you are getting first £12.5k at 0%.
Short is, there is a 'rule' as such on that one. If your earning under around £40k a year, you probably don't need to it.
Hi great video 😀I have a question . .can I put my drawings down as a business exspences so say I draw 20k per year can I take 20k off the profits as exspences and not pay tax on the profits that are left after my drawings?
Sadly not! The drawings are really the bit you are getting taxed on in most circumstances.
@@HeelanAssociates thanks for the reply
If you pay yourself a wage.. for tax return/self assessment do I put that under expenses??
No as a sole trader you don’t generally list the money you take in the return. Effectively that’s your profit.
If you put as an expense in the return it will reduce your tax bill incorrectly.
My accountant says just transfer money when I need it. Is this ok? I’ve been doing this for about 8 months now
In short, yup.
I am a sole trader and i heard you mention the part about withdrawing your own money/wages into your personal account. You say to not tick the category wages? Should this be the personal category instead? I am using starling business bank account. Thank you
‘Drawings’ is the one.
Hi Ryan. I am a research manager in Paysend. Would you like to participate in the short (30-60 min) interview? We are developing a new product and keen on understanding what is it to be the UK businessman. This is not for publishing, just user research.
Will be happy to hearing from you!
Thank you I was so confused about this, still am slightly. So I just calculate annual turnover minus buisness expenses? Draw not included in that calculation? Is that right?
In short yes you wouldn’t include your drawings in calc, for example as ‘wages’. The tax return wants to tax you on your profit regardless if what you drew.
@@HeelanAssociates Thank you.
Do you have to do anything if your registered as self trader but made £0 since 2020 - 2021? The automated question system said you did not have to send in a self assessment. But do I have to let them know in some way?
Its worth checking they don't issue you a tax return automatically anyway the other side of 5th April.
If you are registered they often will still issue you one.
Thank you for your videos. Am a sole trader and do subcontract work a couple days a week normally I just invoice him and sort my own tax out at the end of the year he has said wants to go cis how will this effect me and what will I have to do? Cheers
Have you seen this one?
ua-cam.com/video/kGjnnKvudc0/v-deo.html
The short is you will get tax deducted from your money that helps pay your tax at the end of the year.
Main things are to make sure you register for CIS (to get 20% deduction not 30%) - it’s a simple phone call
And
Make sure to get deduction ‘vouchers’ from your contractor each month that shows what tax has been deducted - you will need for tax return.
Thank you for getting back to me will have a watch now thank you for your time 😁
Any bank that does no do bank charges on a business account? can you recommend any?
Some bank charges per transaction! How do I make it possible to have a separate sole trader bank account?
No recommendations but clients have a lot of positive experiences with starling (online) or Barclays (traditional). Barclays does a small monthly charge, starling doesn’t, but can still have fees on certain transactions.
I have just started out as a self employed carpenter, A client has wanted me to supply the materials (LVT flooring) i have ordered the flooring and will be adding the total cost of the floor to my labour cost, Will i just add the invoice of the flooring as an expense? Thanks
Yes so in your books it will go on your invoice (so customer can reimburse you) and then the receipt will go as an expense in your books so you don’t pay tax on it.
If you make a profit on the materials (common) then you’d pay tax on that profit.
@@HeelanAssociates Thankyou! Lots to find out and your vids are a great help!
Is it possible to trade without a bank account of any description. I mean not even using your personal Bank Account. For example If you are operating a business that only deals in cash.
Yes, if you have good records. How practical this is, is a different concern.
Hi just starting as an LGV instructor for a a business as self employed. I want to branch out into driver assessing, but would need a laptop(£300) and attend part on-line and part physical training at a cost of £700, are these tax deductible?
The laptop yes, the training as a self employed person is very unlikely. The rules for training deductions aren’t very favourable for non limited companies sadly.
You effectively are only allowed ‘refresher’ training
i just open LTD, can you recomend me best bank for opening bussines account. hope to do bussines in UK with results... :)
Thanks
All the bank are ok, the issue right now as I type is that many banks aren’t opening business accounts. One that is, does it quick and does it well is Starling.
Mainly start ups we’ve seen over past 6 months have opened a bank with starling.
Are all business accountants the same? Do you have different accounts that specialise in different things. I am looking for a business account who specialises in forex trading businesses. Not sure if that is a thing or not in the uk
Hi Sarah,
The defo can specialise or be more familiar with certain industries. Accountants are certainly not all the same, which is a difficulty when you are looking for one!
Forex is one of the specialisms for sure, and also whether a firm 'wants' to do that type of work.
Hi, great videos. How do I pay self employed employee tax for them ?
Hi Warren, not sure I understand, could you expand some more?
@@HeelanAssociates Hi, thanks for the response. I have 2 employees on a self employed basis and there not CIS registered so it’s down to me to pay there taxes and struggling to work out how I do so.
Thanks
Warren .
Hi
some great tips thank you, one question I have, if you borrow some capital to start a business say 10k can you withdraw this money in the future without getting taxed on it, probably a silly question but as a newbie in the business world I am unsure. Thanks. Jeff
No silly questions!
Yes you can, if you think you (or someone else) has likely paid tax on the money you put in anyway.
In your records you can record as 'capital introduced'.
You will still pay tax on any profit you made, but not specifically on the money you take back.
So for example lets say simple example you paid £10,000 on tax deductible equipment to set the business up. You then get £10,000 income.
You have income £10k, expenses £10k = 0 profit, 0 tax. You could then pay yourself back.
@@HeelanAssociates Thank you very well explained.
potentially stupid question incoming... the bit about saving 25% for taxes... does that mean 25% of each job? So if I get paid £100 from one job today and £100 for a job tomorrow - would I take the 25% collectively or 25% of each one?
Hi Johnny, no stupids questions, none teaches you this stuff!
25% of each job works the same, so whatever is easier to deal with practically.
@@HeelanAssociates that's great, thank you for helping me understand!
Good video! How does drawing this money affect the profit? E.g. if my turnover in 1 month is £1000 and I have £300 expenses, that leaves £700 profit. Of that £700 profit, I then need to pay myself £200. This then leaves £500. Is the £500 the profit then or is the original £700 the profit?
Tax is worked out on accounting profit. So in your example, £1000 - £300 = taxed on £700, regardless on what you took
@@HeelanAssociates yes that makes sense, thank you so much. How do you make records of expenses for fuel costs when driving a car? E.g. if I put £50 fuel into my car, do I just out down £50 as a business expense? Or is there another way to calculate it?
@@sanjeevdass91 You're better off claiming the business mileage instead as that's currently 45p per mile up to 10k miles.
@@sanjeevdass91 are you sole trader? can we show expenses which we done to run our business if person is sole trader?
Hi, how much should I be saving from each month if i earn over 50 a year? It's around 65k and my income varies quite a lot from one month to the next, so I'm not sure how much to save from each one. On top of that I'm paying back a student loan, so have to include that in how much I save as well. I know I should probably switch to being a limited company but I'm waiting until I have a mortgage agreed. Thanks
At that sort of income levels 25% would still give you a decent chunk by the time you came to pay it, but 30% might feel better. Your actual tax/ni rate is probably around 26-27%.
It comes down to when you want to pay the tax really, i.e whether you will wait to the last minute.
@@HeelanAssociates that’s helpful thanks. So you think 30% to be on the safe side. I do have payments on account twice a year so, I try and pay the main tax bill around October. But then have them in January and July.
Ive just stumbled across you. Wow, thanks. Im just about to retire early but have started my own business and believe a sole trader status is right for me. Can you tell me how to connect with you privately to discuss you helping me going forward and the costs involved? Thanks jon hutson
Hi Jon/Dawn & Josh,
Best thing is to get in touch with our team at info@heelanassociates.co.uk and one of the team can arrange a discovery call with you. Good luck with the business!
KR
Hi Dan I have a few questions when it comes to my side hustle when it comes trading on stock markets
How do I pay money towards tax and is it correct that only gonna get 25% no matter what because I already have other job paying all NI and normal taxes and also is it possible to do the Pension Scheme at my money as stock market trading for tax relief
Btw thank you so much
Have you seen this one? BEING SELF EMPLOYED AND EMPLOYED AT THE SAME TIME
ua-cam.com/video/v3T46yqqdcQ/v-deo.html
at the moment I just transfer myself £100 and when it runs out do it again... im too scared to pay myself a proper salary lol. is this a bad thing?
No it’s totally fine :)
are HMRC only interested in business record not personal bills like weekly shopping or stuff for the home
They get interested in personal expenditure in an investigation scenario if they don’t believe you are declaring everything.
It’s very easy for them to demonstrate from someone’s lifestyle/ expenses if they aren’t declaring all their income.
But in terms of self assessment records it’s business records.
@@HeelanAssociates thank you
Hi, im just about to go self employed and the main contractor ill be working for will pay my tax at source through CIS, ill be paying my brother who will also be self employed a wage each month. Will i be able to claim the total amount i have paid in wages to him, back off the tax i have already paid throughout that tax year on my tax return in april? Thanks
So couple of points:
1) your brothers wages will come off your income like any other cost. What ‘profit’ is left at the end is what you are taxed on. If it’s enough to get a repayment of tax, all good.
2) if you are paying your brother for construction industry work (presuming so as you are getting cis deductions), you should operate cis on him. . That will mean registering for a scheme, deducting tax from his pay and handing it over, and doing a monthly return, to name some of the key practical points.
Hope that helps!
Heelan Associates thanks so much for response, i work in the lift industy, completing repairs and modernisation works on lifts. Mostly not on construction sites, is possible that ill work on them sometimes but not all, however they prefer to pay my tax that way.
Great Video! I am registering as a sole trader or Ltd company as non resident in the UK. What would be the best way to pay the lower taxes taking the money out? My client is a UK company. Does the 15000 pounds rule for not paying tax as a sole trader for non resident?
Thank you and appreciate your help. Best regards
Hi Paul, unfortunately its not possible to give direct specific individual advice here due to our professional obligations, particular where non residency is concerned, presuming you mean tax non residency.
Sadly this is something you'd need to discuss 1-2-1 with an accountant or tax advisor because the answers are so dependant on your circumstances and goals. Sorry that's not more aid!
@@HeelanAssociates Hello appreciate your quick response. Do you do that type of service? Thanks
Do you know which business bank is the best in the UK?
They are similar really, but currently, mid coronavirus, most start ups using starling because they open a bank fast and easy.
Traditionally we’d always found Barclays a solid balance of fees and services, but like most banks, depends who getting made redundant this week, then depends on how often you get to access a person now.
Would the tax on your wages be included on the tax for the business?
As a sole trader, no. Your money and tax are outside the scope of the stuff you are entering in the tax deductible expense boxes.
Unless you are talking about any employees you have.
Hi Dan, I love your content. if I make more than £50k combined from both employment and self-employment, how much % revenue do I need to put on the side for tax purposes?
The employment being thrown in there makes it tough to give a %, but aiming for 30%-45% is a good level to provide a provision.
is their a difference between a sole trader and being self employed
No basically the same thing
Please help guy is you do a deal and you make money overseas then they pay you to your account in uk will you get taxed on the money?
Depends if you are uk tax resident. Generally, if you are, by default you are taxable on your worldwide income, regardless of where deal was done.
Can you pay your tax bill from your personal account.
Yes :- )
Is business bank account fees tax deductible?
Generally yes.
if i want to create a web design company would a sole trader suffice?
Sole trader is almost a default really, low barrier to entry, easy to set up - go see if it works and then decide / investigate limited cos.
how d we ask you a question please?
You can ask here if it’s an easy one? If you needed specific advice it’s best to contact our team at info@heelanassociates.co.uk and we can explain process.
Can we register ourselves as a sole trader if we’re on an international study visa?
Check the details of your visa. Practically it can be difficult to do online, as you need to prove who are you which can be difficult without UK ID docs.
@@HeelanAssociates I spoke to some people they did say you can do it on a PSW Visa, also can sole traders get a sponsorship license?
Hello how much money do you need to earn to pay tax
Depends on the year but currently 12,570.
@@HeelanAssociates thanks 👍 also when do register as a self employer and are we sole traders?
Hi your explanation so fast . It has to be slowly to make the listeners understand what you saying.
Thanks
Dan is passionate about tax ;- )
If you were operating as a sole trader and a close family member loaned your business money but Instead of wanting the principal amount paid pack, they instead wanted a share of any future profits as settlement of the debt, if you had no agreement in writing would this legally make your business a Partnership.
Difficult to say without much more detail i'm afraid. It doesn't sound naturally like a partnership, and if that were the intention there are better ways to set that up.
IF i am full time employed and i start a side hustle that i becomes sole trader do i need to pay my self a wage from my business ?
If you are sole trader, you are taxed on your profits whether you take the money or not from your business, so need to to technically pay yourself unless you want to.