Firstly, you will need to register with HMRC! Here’s the link to complete the registration: HMRC register here
HMRC will send out a letter to you with your unique code (UTR). Use this code to set up your HMRC account online
In the meantime, here are some tips to ensure your annual Self-Assessment Tax Return is as simple as possible:
Register online with HMRC (link above) or call HM Revenue & Customs newly self-employed helpline: 0300 200 3504 to advise what date you started being self-employed
Keep all of your expense receipts/invoices for anything you have paid out that you can claim back against your business (for example, if you work from home you can claim back some of your utility bills. For more details: Business Expenses)
Put together an A4 file with plastic wallets in for each month of the year. I just add a label to each one with the month written on them and reuse them for each year.
Add any receipts you have into the relevant months’ wallets. You could keep this electronically if you prefer paperless options. Cam Scanner is an app I’ve used to take a photo of any documents on my phone and save them to my Dropbox (cloud-based filing system)
Print off a bank statement for each month (you could add a reminder to your calendar to ensure you don’t forget), highlight any business items you have paid for (unless you have a business account, then everything on there should be a business expense). Put statements in the plastic wallets (under relevant month)
At the end of each month, tick off (reconcile) any business expenses on the statement (that you will have highlighted) and have the paperwork for. Anything you have highlighted and haven’t ticked off (hopefully all items will be ticked as you have been SUPER ORGANISED and filed the relevant paperwork), try to find or get copies of the paperwork. For more details on what business records you should keep: Self Employed Records
Note a total of any business income (money in) you have received during that month on the bottom of the statement
Put the folder away and forget about it until you have more receipts to file or a reminder telling you to print your monthly statement and reconcile
At the end of each financial year, April. (If you have registered with HMRC, you will receive a reminder from HMRC to file your Self-Assessment Tax Return) Pull out your file, enter the monthly expense totals into an Excel sheet. Plus any income you have received for each month. Total your income minus your business expenses. These are the amounts HMRC will need. Let me know if you need a basic Excel template for this.
Another option is to use an account software package to send out your invoices to clients and record any expenses rather than using excel. I use Xero, some of my clients use Sage or Free Agent. This is down to personal preference.
Once you have your annual totals, login to your HMRC account HMRC Login, click on the tab that will appear to complete your online Self-Assessment and enter details HMRC request in their online form.
One last TIP: Put 20% of each payment you receive aside, in a savings account, to ensure you have a pot of money ready for when HMRC advise (after completing your Self-Assessment Tax Return) how much tax and national insurance you need to pay. (you can also set up a monthly DD for NI if you wanted to, click here for more NI info)
I hope this helps make things easier! Any questions, whether it be now, whilst you complete your monthly reconciliations or when you go to do your tax return, please contact me on 07595 720187 or via email firstname.lastname@example.org as I’m more than happy to help!
If all else fails, give me your pile of receipts/invoices/statements and I’ll sort it all for you – Relax, knowing Kelle’s taking care of your tax 🙂