Self employment - Level 5

Tax, national insurance, legal issues and basic business planning

Tax and national insurance

You can offset business expenses against your tax. Anything you buy, laptops, stamps, equipment etc this will reduce it.

Basics – Income tax
You only pay tax on your net profit not your takings.
You also have a tax allowance of £9,440 (currently) before you start paying tax.
Pay tax in two instalments a year.
Self assessment, done online

National Insurance
Self employment – Class 2 contribution
Annual profits over a certain amount you also pay Class 4 contributions.
Sometime you may be exempt.

HMRC website: Help and guidance

Keeping Records
Everything you spend you have to keep account of, records, account have to  be accurate.
Must include:
Sales and takings. – do it as you go.
Purchases and expenses. – Travel, petrol, equipment.

You or your account can make a whole record of profit and loss, the more accurate the easier this will be.

LINK – SDS time look at what you need to set up

Handwritten: Not as easy to read and sort.
Typed on Excel: a lot easier, move things and order.

Implications when working 2nd Job

Legal and Health and Safety
Gallery, shop etc - Public liability
Disability access depending on type of business

Business Link : Help through phone
Copyright Law
Under18’s – CRB check
VAT: over 75,000 have to vat registered.
Business Plan:
Start to jot down all ideas and clear these – get down onto paper
Needed to request funds.
Reviewed on regular basis – changes to business and see what is happening.

Clear headings and structured plan.
Which markets you want to target.
Clarifies your business to tell others.
Stay on track with targets.

Vision/Mission – what are you trying to achieve.
Executive summary – who will be your customers and why, how are you going to do this?
History – how did you get here, how did you form your ideas, who inspired you, why have you chosen to set up your own business.
Product/Service – what will you sell? What will it do? What problem will it solve? Does it have a USP Unique Selling Point? Who will buy the product/service? Is this a new product?
Market Research – how do you know there is a demand for this product? Field research? What do they want? Focus group? Who are the buyers?
Market – what is the size of your overall market? Growing market? What will your share be after 3 years? Target customers? Competition?
Research and development – what work have you done so far, what work is left to do? Trademarks?
Basis of Operation – Sole Trader, Partnership, premises, equipment, staff, insurance public and employers.
Management – who is involved? Their background and commitment? Qualified and suitable to develop this plan, trusted with the loan and/or investment.
Costs – write down and explain all costs. How much finance are you investing? Funding sources, wherewill you look.

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