Presented by Tim Wicksteed SWMobile “Going Freelance” 29/05/13

Step 1 - Should I Self-Account? Accountants cost money… BUT It takes time to do your own accounts Is your time better spent working? YesNo Steady work?Unsteady work? Good rates?Not freelancing full-time? Professional accounting £30/mControl freak Genuine interest?

“I’m going to do my own accounts!”

Step 2 – Sole trader/Ltd Company Sole trader means only one tax form to fill in at the end of the year. Limited company is significantly more complicated but there are advantages: Tax efficient Possibility to expand business, take on staff/contractors Limited liability This presentation only deals with the Limited Company route.

Step 3 – Setup 1. Incorporate your company with Companies HouseCompanies House 2. Receive UTR 1 from HMRC in the post 3. Request an Authentication Code for Web Filing from Companies House Request an Authentication Code for Web Filing 4. Register your company with HMRC/Government GatewayHMRC 5. Wait until you start trading 6. Log-in to HMRC and use your UTR 1 to enrol for Corporation TaxHMRC 7. Receive confirmation pin from HMRC in the post 8. Enter pin into HMRC to finalise enrolment 9. Repeat steps 6-8 for PAYE (if applicable) 1 Unique Taxpayer Reference

Step 4 – Keeping Accounts Optional guidelines are in Financial Reporting Standard for Smaller Entities (FRSSE), effective April 2008Financial Reporting Standard for Smaller Entities Make a spreadsheet to track everything at the beginning! Update it as you go along! Use my simple templatetemplate

Step 5 – Paying yourself Option 1 – Dividends and more dividends! Pay 20% corporation tax on everything. Pay additional 25% on any dividends beyond £32,010 (before tax) Option 2 – Tax free salary + Dividends Pay 0% on your salary up to £7696 (2013/14 Secondary Threshold) Pay 20% corporation tax on everything above £7696 Pay additional 25% on any dividends beyond £32,010 (before tax, including the £7696 salary)

PROFIT = GOOD! WRONG! Corporation tax is proportional to profit! Quick recap:

Standard expenses Things your company pays for directly: Salaries Rent Utilities Etc. Step 6 - Expenditure

Reimburseable expenses But wait! Only certain items can be reimbursed by your company as business expenses, see 480 and Key notes: Business mileage in your own car can be reimbursed (without receipt) at 45p per mile (< miles) Business mileage Keep a record of every trip you make though Receipted travel and subsistence (hotels, trains) have to declared on form p11d and self-assessment. Excellent explanation.p11dexplanation Get a dispensation to avoid the hassle.dispensation However for both of these you need to register your company for PAYE. Step 6 – Expenditure (2)

When you buy equipment your company does not incur a loss Appears as asset on balance sheet Hence, does not reduce corporation tax liability Annual Investment Allowance (AIA) for capital expenditure: Equipment Software £ for 2013/14 Step 6 – Expenditure (3)

Step 7 – Corporation Tax Return Decide on your company’s tax year Login to Companies House and change your company’s accounting period to line up with your tax yearCompanies House Wait until the company’s tax year has finished… Login to HMRC and file your corporation tax return – you will have an option to change the dates!HMRC Follow the process through and download form CT600 Use the Joint Filing service to do your Company Accounts simultaneously Your spreadsheet should have all the numbers you need to complete the form Settle up the corporation tax due 9 months later

“I’m going to do my own accounts!”

Questions? Presented by Tim Wicksteed Slides available at: