Sole Traders Archives - Page 2 of 3

Self-employed Income Support Grants Extended

Posted on March 12, 2021 | by Jade Donno

In line with the further extension of the CJRS furlough scheme for employees the chancellor has also set out further support for the self-employed. We had been waiting for the details of the calculation of the fourth SEISS grant covering the period to 30 April and we now know that the support will continue to be 80% of average profits for the reference period capped at £2,500 a month and can be claimed from late April. There will then be a fifth SEISS grant covering the 5 months to 30 September.

The chancellor has also bowed to pressure to extend the scheme to include certain traders who were previously excluded. Thus, those who commenced self-employment in 2019/20 will now be included provided they had submitted their 2019/20 tax return by 2 March 2021. This is potentially a further 600,000 traders.

Conditions for the fifth grant will be linked to a reduction in business turnover. Self-employed individuals whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £2,500 a month. Those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £950 a month. We are awaiting further details of this fifth grant.

What are the pros and cons of becoming self-employed?

Posted on March 12, 2021 | by Jade Donno

Self-employment is quickly becoming an area of interest for many people. It’s not surprising really when you hear that UK redundancies hit a record of 370,000 in the last quarter of 2020. As the unemployment rate rises to 4.9%, many people are looking at their options and wondering if now is the time to strike out on their own.

While being self-employed does come with a lot more control over your future, it is by no means a walk in the park. Here are the pros and cons of becoming self-employed.

Pros

You can work when you want – you have the flexibility to decide your own working hours. Are you more productive very early in the morning? Then start early and finish early. As long as the work gets done, it doesn’t matter if you want to take Mondays off.
You can work where you want – all you need is a phone, a laptop and a stable internet connection. This means you can define your own work environment, whether that’s at home, at a café or somewhere else in the world.
You can choose the work that you want – you don’t have to work with frustrating clients, be around co-workers you aren’t comfortable with or work on mind-numbing and boring tasks. You are free to take on the work you are most passionate about and to decide who you want to work with.
You could potentially make more money – your hourly rate is going to be much higher than what you would earn in a full-time job. If you’ve got a full schedule of work booked in, you could be making a lot more per month than you would be employed.
You are always learning – running a business takes a lot of additional skills, so you will always be developing yourself. As well as business skills, you can also take more control over your own learning and development.
You could benefit from tax advantages – many things become tax-deductible if it’s purchased for the sake of your business. These business expenses can even include a portion of your rent and house bills if you are working from home and any asset purchases such as cars.
You have more control over your income – if you want to make more money, you can find more clients. Since you are responsible for your own income, this provides you with more of an incentive to work harder too.

Cons

Hours can be long – you may enjoy your time off work less when you think this time could be spent earning. This may mean that you end up working far more hours than you did as an employee (especially to start off with).
Being alone in your work environment – it can be lonely working entirely alone during the work hours for days and weeks at a stretch. Having no one to discuss work with or share victories or frustrations can be very difficult.
You have to do everything – now you’re self-employed, you have to do all of the work, all of the marketing, all of the bookkeeping and so on. This not only takes up a lot of your time, but it can be quite stressful too. Especially since you can’t ask a colleague for help.
There is no guarantee of work (or money) – unlike a 9-5 job, you don’t know what work you will be able to secure when and for how long. This often leads to a lumpy pipeline (i.e. not being able to win a job for months and then landing 3 at once).
You could potentially make less money – being self-employed is difficult and requires a lot of self-motivation. If you don’t have the drive, then you’re going to earn less.
You will have to work for free – running a business takes time, time to market yourself, quote for jobs, invoice clients, and managing multiple clients and your own schedule. This is time that you’re not getting paid for.
You have no employment rights or a workplace pension – being self-employed means no sick pay, annual leave, workplace pension or company benefits (e.g. a company car, health insurance, gym membership etc). Essentially, any time not working is time not making money.

Self-employment isn’t all smooth sailing

Being self-employed may sound like heaven, but you alone are responsible for whether you fail or succeed. You get what you put in when you’re self-employed, and while this could result in more money and freedom, it takes a lot of self-discipline, motivation, and hard work to get there first.

Is my accountant regulated?

Posted on December 7, 2020 | by Jade Donno

Would you trust your life to someone who was not a doctor?

Would you be defended in court without a qualified lawyer?

Of course not. Yet many businesses trust their livelihoods to unregulated accountants.

Why does being regulated make a difference?

To be regulated accountants have to be a member of a professional body. The main professional bodies are:

ICAEW
ACCA
CIMA
AAT

In order to practice as an accountant with a professional body, you have to have a practicing licence and hold professional indemnity insurance. You also have to do continued professional development. An unregulated accountant does not have to have any of this in place.

As a member of a professional body they will be regulated by law under the Proceeds of Crime Act Money Laundering Regulations (AML) with very strict rules to comply with.

How to check if your accountant is regulated.

When you sign up to an accountant, you will receive their terms of business (engagement letter). This will set out the basis of the contract between them and you. In that proposal there should be reference to their professional body and details of their AML procedures. If there aren’t, this should be your first red flag.

Questions to ask your accountant:

What professional body do you belong to?
Can I have a copy of your professional indemnity insurance?
What CPD do you do?

If the accountant isn’t regulated they HAVE to register with HMRC under the AML rules. This is the law. The link below will give you the details and allow you to check if your unregulated accountant is actually registered with HMRC.

https://www.gov.uk/guidance/money-laundering-regulations-supervised-business-register

Our experience

When taking on new business, we always request hand over information from the previous accountant. Normally this is relatively easy, however for one of our new clients it has been far from it. We have been shocked by the quality and correspondence from the previous accountant. After looking through all the information, we have found out that this particular accountant is unregulated. This ultimately meant, our client cannot report the accountants actions to their governing body. Leaving them with one option, legal action.

The client put their trust in this accountant and have been left with extremely messy books, which could result in more tax and potential fines.

Make sure your accountant is regulated, this way if something goes wrong your accountant has certain standards to adhere to, ensuring your finances are kept in order.

What is working from home relief?

Posted on November 15, 2020 | by Jade Donno

Working from home relief = FREE CASH

Due to the current pandemic, many businesses have been working from home this year (ours included). It looks like those who can work from home will be until March 2021 at the earliest.

We have also seen a change in attitude towards flexible working. It has become the ‘new normal’ and many employees may continue working from home in the future.

What many businesses haven’t realised is that they can get free cash from HMRC for working from home. WOW!

So what is working from home relief?

From 6 April 2020 employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home. Employees who have not received the working from home expenses payment direct from their employer can apply to receive tax relief from HMRC.

Find out full details here – www.gov.uk/government/news/54800-customers-claim-tax-relief-for-working-from-home.

In a very interesting twist Martin Lewis has reported that even if you work from home for just one week, you can still claim a whole years relief. This is a very public statement from Martin Lewis and we are certain that he has proof from HMRC. However there may be a caveat when HMRC realise what they have said.

Read his article here – https://blog.moneysavingexpert.com/2020/04/martin-lewis–working-from-home-due-to-coronavirus–claim-p6-wk-/

Our advice for employees

If your employer is not paying the allowance, which they are not obliged to, log into the HMRC portal and make your claim. For basic rate tax payers this is worth £62.40 and higher rate tax payers it is worth £124.80. For 10 minutes of your time, it is worth doing!

Our advice for employers

You do not have to pay the allowance. However as we are coming into the festive season, why not incorporate the £6 per week into a Christmas Bonus? There are no PAYE or NIC deductions for the employer or employee making it a great treat for the end of this turbulent year.

Did your pregnancy affect your claim?

Posted on August 12, 2020 | by Jade Donno

Ask HMRC to verify you had a new child which affected your eligibility for the self-employed income support scheme.

If you are self-employed or a member of a partnership, and having a new child affected the trading profits or total income you reported for the tax year 2018 to 2019, use the HMRC form to ask them to verify that you had a new child.

If you are already eligible for the grant based on your 2016 to 2017, 2017 to 2018 and 2018 to 2019 Self-Assessment tax returns, how HMRC will work out your grant amount will not be affected.

If you are not already eligible you can ask HMRC to check if you had a new child which either:

affected your trading profits or total income you reported for the tax year 2018 to 2019
meant you did not submit a Self-Assessment tax return for the tax year 2018 to 2019

For this scheme having a new child is any of the following:

being pregnant
giving birth (including a stillbirth after more than 24 weeks of pregnancy) and the 26 weeks after giving birth
caring for a child within 12 months of birth if you have parental responsibility
caring for a child within 12 months of adoption placement

You must have been self-employed in the tax year 2017 to 2018 and have submitted your Self-Assessment tax return on or before 23 April 2020.

You must also meet all other eligibility criteria.

Defer Your Self-assessment Payment On Account

Posted on July 20, 2020 | by Jade Donno

Choose how and when you can delay making your second payment on account for the 2019 to 2020 tax year.

You have the option to defer your second payment on account if you are:

registered in the UK for Self-Assessment and
finding it difficult to make your second payment on account by 31 July 2020 due to the impact of coronavirus

You can still make the payment by 31 July 2020 as normal if you are able to do so.

The June 2020 Self-Assessment statements showed 31 January 2021 as the due date for paying the July 2020 Payment on Account. This is because HMRC updated their IT systems to prevent customers incurring late payment interest on any July 2020 Payment on Account paid between 1st August 2020 and 31 January 2021. The deferment has not been applied for all customers by HMRC and it remains optional.

HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it’s paid on or before 31 January 2021.

See: https://www.gov.uk/guidance/defer-your-self-assessment-payment-on-account-due-to-coronavirus-covid-19?utm_source=5d97ee4d-9a24-4553-9a8e-56287f4de9f3&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

SELF-EMPLOYED GET SECOND GRANT FROM GOVERNMENT

Posted on June 1, 2020 | by Jade Donno | Leave a Comment

Sole Traders to get second grant from the Government.

The government’s Self-Employment Income Support Scheme will be extended, giving more security to individuals whose livelihoods are adversely affected by coronavirus in the coming months, the Chancellor announced on Friday 29 May 2020. Rishi Sunak announced the Self-Employment Income Support Scheme will be extended – with those eligible able to claim a second and final grant capped at £6,570.

Individuals can continue to apply for the first SEISS grant until 13 July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.
Applications for the second grant will open in August. Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by COVID-19 in this later phase.

Further guidance on the second grant will be published on Friday 12 June and we will keep you up to date with the details when we know them.

See: https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme?utm_source=95036a42-e8c3-49f3-8f73-6300a69ea34a&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Time to claim your grant if you are self-employed.

Posted on May 26, 2020 | by Jade Donno | Leave a Comment

The portal opens this week to claim your grant is you are self-employed. This is capped as a taxable lump sum of £7500. Once your claim is approved the money will be in your bank account within 6 working days.

To check whether you are eligible for this grant click here. Directors of limited companies are NOT eligible for the scheme.

This is essentially ‘free’ money for sole traders whose business has been adversely impacted by Coronavirus. You will need to confirm to HMRC that your business has been adversely affected by Coronavirus. This could be because you have been unable to work, or Coronavirus has reduced the demand for your services/products.

We cannot make the claim on your behalf. (And that’s HMRC’s decision, not our decision) But we can help you decide whether you are eligible.

To make the claim you will need some important numbers:

Your self-assessment unique taxpayer reference number (UTR).
Your National Insurance Number

Click on this link to go to the portal

HMRC will then tell you if you are eligible, and the date you’ll be able to make your claim from.

If you can claim straight away, then you’ll also need your:

Government Gateway user ID and password (if you don’t have one of these you will be asked to create a gateway account when you check your eligibility)
UK bank details including:
- Bank account number
- Sort code
- Name on the account
- Your address linked to your bank account

At the moment we don’t know whether this scheme will be extended.

If you need any help please email jade@1accounts.co.uk

Have you got a government gateway?

Posted on May 26, 2020 | by Jade Donno | Leave a Comment

The help and advice that is available from the Government is forever changing. This is the latest update we have on how to apply for the self-employed grant.

For those who are eligible, you will receive an EMAIL, not a letter as we had thought. Be aware that there are lots of phishing emails out there, HMRC’s email does not ask you to click on anything.

If you are unsure if you are eligible please follow this link – https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme. Please make sure to put capital letters for your NI number otherwise it will fail. If you believe you are eligible but the calculator is failing, please get in touch and we will try and help.

If you qualify you will be able to claim from the 13th/18th of May. To claim you will need a Government Gateway!

If you do not have one, please follow these steps to set one up. We recommend you do this NOW to avoid any delays.

https://www.gov.uk/personal-tax-account

If you have forgotten your username and/or password you can get these reset with HMRC.

https://www.tax.service.gov.uk/account-recovery/lost-user-id-password/check-email?state=5eb2c2442100008e90c6e413&ui_locales=en-GB

From what we have seen, we will not be able to claim your grant through our gateway. This could change, but to avoid the delays in getting your grant please make sure your gateway is set up.

If you need help applying please email jade@1accounts.co.uk

How to preserve your cashflow during COVID-19 crisis

Posted on April 14, 2020 | by Jade Donno | Leave a Comment

How to preserve your cashflow during COVID-19

As the saying goes, turnover is vanity, profit is sanity and cash flow is king. And never has that saying been ever truer. Use this tips sheet to help you preserve your cash flow so you are ready and able to trade again as normal when the restrictions lift.

Tip 1: Know when you are going to run out of cash

It is really easy to get caught up in hysteria and believe that your business is going to go bust. When we recently spoke with an insolvency practitioner, they told us that only 5% of the calls they are receiving at the moment are for businesses that are genuinely insolvent. If you haven’t already, it’s time to look at how long your cash will last if the lockdown restrictions remain. (If you need help with this, then let us know) When you know how long your cash will last you then you can take sensible decisions in regards to your business.

Tip 2: Make sure your books are up to date

I know we accountants are always telling you to keep your books up to date. But it now more important than ever to know the true picture of your finances. If you don’t know what you owe and what is owed to you then, you can’t take the right decisions. For those of you still relying on spreadsheets or desktop software for your books, now is the time to go onto the cloud. We, as a firm, can’t easily advise you if we are looking at out of date figures. And the benefit of the cloud is we can see exactly what you can see.

Tip 3: Look to take advantage of all the government financial help which is available right now

The best type of borrowing is the borrowing you don’t have to pay back. And there are grants worth £10k or £25k for most small businesses with premises who pay rates or who get small business rates relief. If you haven’t already claimed your grant from your local authority then give us a call. Once you’ve checked this look at the following to see if your business is eligible:

Deferment of VAT payments
Coronavirus Job Retention Scheme
Paid sick pay
Business rates relief
Accessing a Coronavirus Business Interruption Loan

Tip 4: Analyse your business costs and pare it back to the bare essentials

Now is the time to examine your overheads. What exactly can you eliminate or cut back on and still be, either able to trade, or be able to trade when the restrictions are lifted?

Tip 5: Do you have an opportunity to reduce your wage bill?

Wages are often a business’s biggest costs. Which of your employees can you Furlough or make redundant in order to save costs? If you believe you wouldn’t be able to employ your whole team again after the lockdown restrictions are lifted, you may be better off in making them redundant now.

Tip 6: Prioritise actions which are the quickest ways to generate cash

Normally they are in this order:

Chase late payers
Change your payment terms to get paid quicker with current customers or clients
Give long-term customers/clients the opportunity to pay in advance for work (potentially with a discount added?)
Bill any customer/client with outstanding work which can be invoiced
Focus your sales team on your warm leads
Consider what can be your business equivalent of a ‘toilet roll’, i.e. what can you change about the product/service you deliver or how you deliver it which will make it an ‘in-demand’ item?

With all these cash flow tips, we can help you take balanced and rational decisions about what to do to preserve your cash flow in these very difficult trading conditions.

Category: Sole Traders

Self-employed Income Support Grants Extended

What are the pros and cons of becoming self-employed?

Pros