Newbie to becoming Sole Trader - Advice needed.

[Nerrad Relwal]

Hello All, please could someone help me?

Heres my question: My MD has recently sold the company of which he was MD and I his bookkeeper.

He has asked me to join him in a new venture as a self employed bookkeeper in which I will invoice him for my monthly service (full time).

I need to know what I need to do as the money I will invoice will just be purley for my income ( which will be equal to the salary I was previously on.

i.e ther will be no profit in my business as it will all be paid out to me as salary.

What do I need to do as in NI contributions and how much is the % on profit will I pay?

I do not expect my turnover to be more than 30k per annum.

If anyone could help I would appreciate it.

Many thanks in advance.

Nerrad.

[Ian J]

You need to register with HMRC as self employed and you tax and National Insurance will be determined via self assessment.

If you are going to be invoicing the company for a fixed amount each month and they will be your only customer you may find that HMRC may decide that you aren't actually self employed at all but an employee of your customer

[Nerrad Relwal]

Hi Ian, and thank you for the prompt reply. When you said my tax and National Insurance will be determined via self assessment, when is this self assesment done is it before I start trading or is it ant year end? Also what sort of tax and NI would I be paying? I will be only invoicing to pay me my salary circa 28K.

Ta Nerrad

[Iggy]

Your Tax and NI calculation will be done by those lovely people at HMRC at the end of your first tax year. You will be able to claim expenses for anything which is "wholly and necessarily" incurred for your business, so you may find your total NI/tax bill is less than it would have been as an employee.

However, beware because if you are working for only one person HMRC may decide that you are not business at all. There is some useful information about this in the HMRC website and in their publications (I think one of them is called 'Am I self-employed'). It is worth having a chat with someone there to avoid the pitfalls on these grounds.

[Nerrad Relwal]

Hi Iggy, and thanks for the swift reply....I'm a bit scared because I dont know the calculations at the end of the tax year would be..in a nut shell I will be invoicing a company ( who has several company trading names ) just primarily for my salary of 28k after taxes please can you help?

Ta Nerrad

[fisicx]

Why not contact HRMC and ask for advice or visit the website - it's going to take a while to read everything but all the information you need is there: HMRC - Self Employed

[canny83]

your N.I contribution can be as little as £4 per week reguadless of your income, also with being self employed any monies you will spend on phone calls, broadband, materials and travel associated with your job can be claimed back at the end of the financial year. As for income tax, if you expect to earn aroud 28k then i'd open a seperate bank account and deposit 20% of your income. this was the self employed taxation for the year 2007.

hope this helps