Self Employed

Are you a self-employed freelancer, small business or start-up searching for an accountant? Whether you are a seasoned professional, or dipping your toes into the world of self-employment for the very first time, we specialise in helping people like you.

Our team will help answer your questions, and with our cloud accounting software tools, support you so you can keep on top of your income & expenses with ease for when tax time comes around!

Taking this huge step toward financial freedom is exciting, but it can also be a daunting task for someone who is doing it for the first time. You will have to decide between forming a limited company and being a sole trader or becoming part of a partnership. There are different advantages and disadvantages to each route, and we are here to talk you through them.

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Partnership

A sole trader refers to a single individual who starts out in the world of self-employment. When two or more people decide to go into business together, it is called a partnership. The most common form that a partnership takes is one that shares the profits equally between all of the partners. It would be a good idea to have a formal partnership agreement drawn up that will constitute a legally binding agreement to safeguard the rights of all parties. Typically a partnership cannot hold property or legal liability in its own name, and this is where it would be an advantage to form a limited company.

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FAQs

Q: Will I have to pay Corporation Tax?
A: This is something that only applies to limited companies, not with sole trader or partnership models and is paid annually by the company, not separately by each director. Small businesses with up to £50,000 profit per year will only have to pay 19% corporation tax in 2023 but some larger companies may pay up to 25%.

Q: Can I pay myself a dividend?
A: If you are a limited company, you can, in concert with the other directors, “declare a dividend”. You will have to agree how much and who should receive it. Dividends are taxed at varying rates depending on your own income tax bracket, with the lowest amount being 8.75% and the highest being 39.35%.

Q: What is the UK VAT threshold?
A: Businesses with a turnover of £85,000 or over must be VAT registered. This applies to all forms of businesses, including sole traders, partnerships and limited companies. You will be expected to charge the relevant VAT rate on top of your regular prices once you are VAT registered and can claim back the VAT on business purchases. The standard UK VAT rate is 20%, though there are categories where this is reduced or which are exempt.  

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