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Cleaners: "As a sole trader, do I need a separate business bank account?"

It simplifies your bookkeeping: When you have a separate business account, your money records become simpler. You won't have to search through your personal spending to find your business expenses, or wonder whether the money that just dropped into your bank account was from your latest invoice or a refund for a personal item. Separating funds: Having a different bank account for your business makes it clear which money is for your business and which is personal. This is useful fo...

As a sole trader what records do I need to keep?

If you are self-employed, then you must keep adequate records of your business income and expenses in order to prepare an accurate self assessment tax return. This page explains what business records are and how long you need to keep them. Your accounting record will vary depending on the size and nature of your business...

Can I pay my tax bill monthly?

If you pay tax under self-assessment, it can sometimes be difficult to ensure you have enough money to pay HMRC when the payment deadline arrives. It can be a good idea to put money aside regularly to pay your tax. Here I’ll explain how HMRC budget payment plans work and how these can ease the stress of facing a large tax bill....

How does tax work if you’re self -employed & have a job as well?

Tax when you’re both employed and self-employed can be a bit confusing.As we all know,  employees are paid through the PAYE system, where their tax is calculated and paid automatically. If you make income through self-employment,  this  however, falls outside of that and becomes untaxed income. The duty for paying tax is as follows: Employer: your workplace should calculate and deduct the appropriate taxes for all income related to your salary. This also includes Class 1 Na...

Should I register my cleaning business for VAT?

If all your clients -or the majority- are domestic cleans, then it does not normally make sense to voluntarily register for VAT (though, if you go over the threshold, then you will have to register- see below). As households can't reclaim the VAT, you would suddenly become more expensive.  Therefore, you might potentially lose some customers, as they don't want to pay a higher fee. Commercial cleaning is a bit different. It's quite likely that your commercial cleaning clients are VAT r...

How do pensions work for sole traders?

If you’re self-employed as a sole trader or a partnership, you don’t have to pay into a pension scheme. However, it’s important to consider whether you should start paying into a pension scheme.You could start contributing to a personal pension scheme. These contributions would be made after tax, meaning you contribute directly from your bank account into your pension scheme. You can therefore, claim tax relief from HMRC in relation to the pension contributions you make during the tax year...

As a self-employed cleaner can I employ staff?

Sole traders are always self-employed but being a sole trader doesn’t necessarily mean you have to work alone. As a sole trader, yes, you can employ staff. There seems to be a bit of a myth, that you have to set up as a Limited business to employ people; this just isn't correct!However, it’s important to bear in mind that you carry all the liability as a sole trader (given that you & your business don’t have a different legal identity).You will need to register with HMRC as an employer...

Sole trader: Can I claim for pre-trading expenses?

It’s quite likely that as a new business owner, you’ll need to buy things prior to trading such as:·      Stock·      Maybe a website·      Advertising·      Hardware/ software·      Etc, etc…These are known as ‘pre-trading expenses’....

A self-employed cleaner's guide to claiming mileage costs:

The simple answer is 'Yes". Though, please read on.If you spend the majority of your time working for 1 client, then no, you can't claim the drive from home to that client (and back home again). HMRC might regard this as your fixed workplace, so mileage cannot be claimed.However, if you have multiple different clients, then the answer will be 'Yes' to the above question.The situation is the same if you have business premises & travel from home to there. Your business premises will be cl...

What is a 'simplified' sales invoice?

If your customer requests an invoice, you can only issue a simplified invoice if the total value (including VAT) is £250 or less. However, if the total amount is more than £250, you’re required to issue either a full VAT invoice or a modified VAT invoice, which will show VAT inclusive values (rather than VAT exclusive values)....

What details do I need to put on my sales invoices?

You might see quite a few different sales invoices; some might have a date on, others don't; some have VAT on but no VAT number on them. It’s not surprising that  people get confused, so what should you include on your Sales Invoices?...

How do I pay myself as a sole trader?

As a sole trader in the UK, you are essentially the business (so you do not have a separate legal identity to your business). Therefore, you have direct control over its finances. Paying yourself as a sole trader is very straight forward, as all you need to do is transfer the money to your personal account (assuming you have a separate business bank account). It's important to keep your personal finances separate from your business finances for accounting and tax purposes.You do not need to be r...

What food and drink can I claim for through my business?

When you’re self-employed there are certain situations where you can claim food and drink as a business expense. However, there are a fair few HMRC rules to get your head around first. You can’t claim for anything and everything eaten or drunk whilst working. The things you can claim for fit under three categories:1.    Subsistence2.    Marketing3.    Entertainment...

For sole traders: How much should I put aside for my tax bill?

So you’re following your dreams & you’ve established a small business as a sole trader. Great! Now comes the tricky bit- how much should you be saving to pay your tax bill? It’s often said that you should set aside 30% of your earnings every month to pay your tax bill.  And in lots of circumstances, it is a handy rule of thumb.  The reason for this, is that the basic tax rate is 20% & National insurance for the self-employed is 6% -class 4 NI- (for 24/...

What clothing can I claim for through my business?

  HMRC are very strict when it comes to what clothing you can & can’t claim as a business expense.  There is a term ‘Everyday wardrobe’ which is often used by HMRC. Clothing which you could wear, whilst not working, is usually not an allowable expense. Clothing, like all business expenses, must meet the fundamental rule of being ‘wholly and exclusively’ for business use. ...

Can I claim costs for working from home?

In short, yes you can. However, there are 2 possible ways of approaching this. 1 of the ways is a little complex to work out, but the 2nd way is super simple. So let's tackle the more complex way 1st......

As a sole trader what business expenses can I claim?

As a sole trader you will need to pay income tax on your taxable earnings.If you're self-employed, you need to calculate and pay your own tax via self-assessment.It’s important to make sure that you pay the right amount of income tax. To avoid paying more than is necessary, you should make sure that you’re claiming all your allowable business expenses...

For sole traders- How do I register for self-assessment? When do I need to register by?

You must register for self-assessment with HMRC if you need to submit a tax return & you didn’t need to for the prior year.  If you were self-employed as a sole trader and earned more than £1,000 (before taking off anything you can claim tax relief on), then you will need to file a tax return....

Do I need to pay National Insurance as a sole trader?

In short, yes. Unfortunately, NI is another tax that you’ll have to pay as a sole trader.  As a sole trader, it is a legal requirement for you to pay National Insurance contributions if your sole trader profits are above the threshold set by HMRC for the tax year in question.Prior to the 6th of April 2024, sole traders had to make class 2 & class 4 national insurance payments if they were over the threshold for each type. The government dec...

Sole trader- Is the cost of my training course an allowable business expense?

Training costs might be courses, seminars, webinars or even just reading. Training cost can be categorised into 2 groups:...

What are payments on account & how do they work?

If you pay less than 80% of your income tax at source and your tax bill is over £1,000, you may well be told by HMRC to make ‘payments on account’. This blog post explains what payments on account are & when you need to pay them by...

Does worrying about whether you’re going to get paid on time, keep you awake at night?

... if you want to stay in business. Cash flow is after-all, the ‘heart beat’ of any business.  The National Federation of self-employed & small businesses’ has conducted research, which shows that ‘37% of small businesses have run into cash flow difficulties’. Therefore, unless you are very proactive when it comes to managing your cash flow, it can be a slippery slope. Not only is it a financial burden, but an emotional one as well. ...