Practical Self Employed Tax Tips
Directors of companies are not self employed but employees of that company. In essence anyone who is in business either as a sole trader or part of a partnership and receives income that is not taxed under the PAYE system is effectively self employed. Occasional miscellaneous receipts would not be regarded as self employment and should be entered on the tax return as “All Other Income” however a regular source of receipts would be regarded as self employment income and anyone self employed should register with the Inland Revenue within 3 months of starting trading or risk being fined £100.
Keep a record of all transactions.
Sales turnover is the amount the business earns before deducting business expenses including receipts of any kind for goods sold or work done such as commission, tips, payments in kind, fees and insurance proceeds. Sales of fixed assets are excluded from sales turnover as are Business Start up grants which are entered in a different section of the self assessment tax return. DIY Accounting produce excel spreadsheets to record the sales income and bank receipts. Check the amounts deposited do not exceed the declared turnover which would indicate that you have understated your sales and your tax liability would at the least be increased unless you could provide a solid reason for the anomaly.
Ensure financial, purchase and sales records are compatible.
Compatibility will vary from business to business. Examples if you post 100 EBay items your records should show 100 items of income and 100 items of postage. Buy food for a restaurant for resale at four times cost, some wastage is inevitable but the underlying compatibility between sales generated and purchases should be reasonable. The average number of meals sold from a take-away shop should be compatible with the number of take-away cartons purchased. A taxi driver should not claim fuel receipts during his holiday period and the fuel bills should be compatible with the fares obtained. Unusual and incompatible expenditure declared on the self assessment tax return can and do trigger Inland Revenue enquiries. Many Inland Revenue enquiries result in a higher tax liability due to the scrupulous professional way in which compliance investigations are carried out.
Obtain receipts for everything.
Tax payers lose millions each year by not obtaining or retaining receipts for expenses. If you are claiming fuel costs for a business trip and fill up with £50 of petrol get a receipt. The tax saved by including that receipt in your accounts is £11 at basic tax rates and £20 at higher tax rates. If your business turnover is over the vat threshold of £64,000 p.a. for 2007-08 the receipt is worth even more. £16.81 vat and income tax at basic tax rate and £24.47 at the higher income tax rate. The same is true for all other business receipts. Obtain a receipt for everything. If you lose a receipt then still include that expenditure in your accounting records but if your tax return is enquired into by the Inland Revenue that expenditure may be disallowed unless you can argue and sometimes prove the expense was in fact incurred. May help to note in your records – receipt lost.
Do not mix business and personal.
The general rule is that items solely for business use can be claimed for tax purposes and the business proportion of personal expenditure may be allowed although the rules are applied quite strictly. If you purchase both business and personal items from a supplier the business expenses only can be claimed but if you obtained all the items on a single receipt you would be disallowed the cost of that journey as it was not solely for business purposes.
Claim business expenses incurred prior to trading.
Business expenses incurred up to seven years prior to trading actually commencing can be deducted from business turnover if these expenses were solely for the future business purposes. Enter such expenses in your accounting records as if they had been incurred on the first day of trading but show the actual purchase date.
Claim home costs if you work from home.
If part of your home is identifiable as solely for business purposes then home costs can be claimed. The cost allowed is the proportion of the total area of the home the business area occupies. For example, excluding shared facilities of kitchen and toilet if the home has three bedrooms, living and dining room and one bedroom is used solely as an office then 1/5 of home costs could be claimed. The home costs to claim would be heat and light, insurance, general and water rates and mortgage interest excluding repayment amounts. Where mortgage interest is claimed the revenue might also claim as a capital gain the increase in value of that proportion of the home, such Capital Gains Tax being subject to tapering relief over time. It may be safer not to claim mortgage interest as part of the home costs.
Take care if claiming a partner’s wages against profits.
Partner’s wages can be deducted as a business expense although there are rules which would be applied in such circumstances to ensure the amount paid is both real and reasonable. The business would need to operate a PAYE scheme for the partners’ wages, deducting income tax and national insurance, perhaps using a package such as DIY Accounting have available using Payroll Software to produce all the statutory requirements. The work carried out must be real not invented and the rate paid reasonable for the nature of the work and the time spent. Evidence may also be required that the partners’ wages were actually physically paid to that partner, for example in the form of a cheque.
Claim vehicle costs or mileage allowances.
Vehicle running costs and expenses such as fuel, excise duty, insurance, repairs and breakdown membership may be claimed as business expenses if the vehicle is used solely for business purposes. Travel from home to work is not business use and disallowed. The proportion of vehicle running costs and capital allowances which are claimable are dependent upon the proportion the vehicle is used for business and personal use. Parking fees for business purposes may be claimed. Parking fines and penalties for motoring expenses are not claimable as business expenses for tax purposes.
An alternative to claiming vehicle running costs and vehicle capital allowances would be to claim mileage allowances which at the time of writing are 40p for the first 10,000 miles and 25p per mile thereafter.
Write off expenditure against taxable profit unless the item is a fixed asset.
Depreciation is not allowed and replaced by Capital Allowances for the purposes of calculating the tax payable. Capital allowances are designed to write off the cost of purchasing a fixed asset over the life of the asset rather than in the financial year in which it was purchased thereby spreading the tax relief on the asset over those years. Many assets purchased by small businesses fall into a grey area as whether they are fixed assets or normal business expenses. Generally a fixed asset would be defined as an item that would be used by the business over several years and usually of significant value. 100% tax relief is obtained on items purchased which are not fixed assets.
Avoid fines and penalties by submitting tax returns on time.
Accounting records and Self assessment tax returns should be prepared well in advance of the first submission date of 30th September to enable the information to be checked and verified before submission to ensure all possible claimable expenses have been included. The final deadline for submission is 31st January with late returns and payments being subject to penalty fines and interest payments which should be avoided.
By: Terry Cartwright
About the Author:
Terry Cartwright provides tax efficient Accounting Software at DIY Accounting for Self employed and small companies at DIY Accounting Software and Payroll Software at DIY Accounting Payroll Software
Job Interview Tips – 6 Essentials to Do the Day Before the Job Interview
Directions, Map, Contacts
Prepare the day before to make sure you get to your interview on time. Find out exactly where you have to go and who you must ask for once you are there. Get good directions, look on the map and make sure you know the best route. Work out how long it will take you, allow for traffic and parking time. Have the full name and position of the person you will be seeing and a contact number in case you need to call. Put all this information into an interview folder to take with you.
Conduct Background Research
You have time to search for company information on the internet. Find out relevant details about the employer and use these prepare your interview answers and questions. Having background information on the company helps to set you apart as a prepared and informed job candidate.
Prepare your Portfolio
Another job interview tip is to get all your documentation together the day before. Make a couple of copies of your resume and a list of your references including name, position and contact numbers. Include copies of any written references you want to give the interviewer. You may want to include work samples that are relevant to the position. Include details of the research that you have conducted on the company. Let the interviewer see that you have done your homework! Put all these into a neat, simple portfolio to give to the interviewer. Have a notebook and pen ready to jot down details during the interview.
Review your Resume
Go through your resume the day before to re-familiarize yourself with the information the interviewer has about you. Be aware of any red flags such as gaps in employment or reasons for leaving previous employers that you will need to address during the interview. Highlight these and prepare answers to any questions that may arise.
Practice your Answers and Questions
A couple of days before the interview you will have prepared answers to common job interview questions such as “What are your strengths?”, “Why are you the right candidate for this job?”, “Tell me about yourself?” Go through these answers and practice saying them out loud. You also should have prepared at least five good questions to ask the interviewer about the job, the company and the management, such as, “Please describe the company’s management style and the sort of employee who fits in well with it?” Go through these questions, feel confident about asking them, and include them in your interview folder.
Dress for Success
Find out the expected dress code for the job interview. You can call the company and speak to Human Resources or even Reception. It is usually advisable to dress more formally for the interview than the actual position requires- this shows respect for the interview process.Chosoe the appropriate clothes the day before and make sure they are clean and pressed. Shoes should be polished. Decide on any accessories you want to wear. Lay your interview clothes out ready for the next day. This saves rushing around just before the interview and getting into a spin!
Six simple job interview tips that you can do the day before your big job interview. Make the difference between feeling prepared, confident and in control or anxious and flustered about the interview.
More useful job interview tips and techniques.
By: Julia Penny
About the Author:
Julia Penny has many years experience interviewing and placing candidates across a wide range of jobs. She offers her expertise to help job seekers prepare for and succeed in job interviews at her free website Best Job Interview
Write a Better Resume: 10 Tips
Resumes may inspire fear in the hearts of job seekers, but they don’t have to. Just follow these 10 tips to a better resume:
1) Be sure your contact information is up to date. In this fast-paced era, we often change phone numbers, email addresses, and so on. Make sure that you change your resume to reflect the latest, most current information and to ensure that the employer is always easily able to contact you.
2) State your intentions clearly. You should always start off by stating your career objectivewhat is your goal in terms of your desired position and industry? Explaining this under the heading “Objective” gives the employer a shorthand indication of exactly what you want.
3) Write in your own voice. It’s tempting to use complicated vocabulary to make your resume and application more impressive, but more often than not this ends badly. You may misuse words or give the employer the impression that you are posturing and overreaching, and that’s never good. Stick to a tone and style that you are comfortable with.
4) Don’t be too modest. The resume is a place for you to shine. Explain your accomplishments proudly. Let the prospective employer know what you have to offer, and don’t be afraid to blow your own horn.
5) Keep it to one page. Unless you have a very long or very extensive professional history, you should never let your resume go beyond one page. Keep your background short and specific to what matter most to the employer.
6) Be specific about your qualifications. Even though it may be tempting, you should never just send out the same Xeroxed resume to every company you’re applying to. This may save you some time in the short-term, but it’s not going to win you very many job offers. The more you can tailor your resume to specific employers the better as this will prove how well suited you are for a given position.
Salary requirements should not be listed. Employers often ask for your desired salary, but the resume is not the place to put it. Salary discussions should be left until later, after the interview, when you have more leverage.
9) Get someone else to proof it, too. Two pairs of eyes are always better than one. You are often too familiar with your own resume to be able to view it objective and catch errors; allow someone to proof your resume thoroughly.
10) Make sure your resume has a professional presentation. Thin paper with streaky ink is not a good way to present yourself to the employer. Use thick resume paper with clear ink, preferably printed with a laser printer. Remember, appearances count for a lot!
Remember the 6 P’s: Proper, Preparation, Prevents, Particularly, Poor, Performance.
By: Kenneth Anczerewicz
About the Author:
Ken Anczerewicz is an author and publisher devoted to providing time & money saving resources designed to help students of all ages achieve their financial goals. Learn how to create your own income stream by clicking here now: http://www.resourceriver.com
Job Hunting Tips — What Employers Look For
Awareness of employer’s expectations is essential to finding a job. Older job-hunting techniques focused on “you”, the person. It laid emphasis on your work history, accomplishments, academic background and other credentials. It focused on your qualifications and objectives as well. But that has changed and today, employers expect you to know what their needs are and tell them how you can complement the organization.
Energy
Displaying the right energy and initiative is very important. Energetic people are credited with enthusiasm, vigor and drive and that is exactly what employers want. Most jobs require you to be proactive. Employers can easily evaluate this ability, almost as soon as the candidate enters the room. If you are not an energetic person, you should practice ways to look and act accordingly, in order to make a good first impression. It can make a huge difference; most of the time, job opportunities are won or lost on approach and preparation.
Specific Skills
Every job involves a set of specific skills and education or training, with the required background and experience. Most often, these skill sets are mentioned in the advertisement. If, however, they are not mentioned specifically, find out about the company and its hierarchical structure. This will help you to prepare to present specific abilities and initiative, creating a positive impact on the employer. Your primary concern, once you have the list of required skills, should be to present evidence that you have those skills.
This could involve your academic qualifications, projects and achievements. In addition, you need to project the capability to meet job responsibilities, work experience, voluntary activities and tasks in personnel management. The key is to try to match your skills and capability to the specific requirement of the employer. Highlight the relevant areas, since recruiters usually do not have a lot of time on hand and have to deal with a number of applications. They show interest only in particular skill sets that are required by the organizations that they represent. Make these skill sets noticeable. Precision and brevity are important too, but it is also important to highlight the skills you possess and how you can be an asset to the firm.
Transferable Skills
There are particular skills that most employers look for that have nothing to do with the competencies required for the particular job. These skills indicate the development potential and not the knowledge level. These so-called transferable skills include communication, teamwork, leadership, initiative, problem solving, adaptability, motivation and numerical skills. In addition to this, private sector companies prefer the candidate to have some idea of how the firm operates, current business news and trends and their impact on the organization. The courses completed, work experience and hobbies are of value as well. Be ready to answer clearly if asked at the interview as to how your education has prepared you for a specific job. You should be prepared with a good and precise answer. It is important to plan in advance.
By applying the steps above, you will be well on your way to giving employers what they want and conducting a highly successful job search.
By: Tony Jacowski
About the Author:
Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution’s Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.
Tips for Writing Persuasive Cover Letters
A well written cover letter is crucial to getting attention and I have now made the writing tips available online for no charge through our website: www.sequencestaffing.com. The vast majority of cover letters are poorly written and can cost the job seeker that all important career opportunity.
The cover letter allows you to tailor-make your presentation to the specific job and employer by highlighting critical information from your resume and from your professional background that’s important for the employer to see and to know about. This is your opportunity to underscore the key achievements in your career that match up with the employer’s needs and help you land the job interview.
Job seekers would gain more interviews by customizing their resume and cover letter to address the specific skills each employer is seeking. The employer is always more interested in their needs than yours, so ask yourself what would make you the perfect candidate for this job. Try to find out what they really need and want; then write your cover letter to address these points. I also suggest reviewing the job description or ad for key words and including them in the cover letter.
Of course, at Sequence we also offer our professional cover letter and resume writing services. If you prefer professional assistance, we can help you. Our team of professionally skilled writers will make your cover letter and resume standout in the crowd and will help you get that critical interview.
What makes Sequence standout among other employment job sites offering similar services is our in-depth knowledge of the construction, environmental and light industrial industries, giving us the leading edge in offering cover letter writing tips for those industries. Other leading sites, Monster.com, Hotjobs.yahoo.com and Caljobs.ca.gov don’t have the industry-specific expertise of Sequence.
Sequence, a premier executive search and staffing firm for the construction, environmental and light industrial industries, is dedicated to supporting the core industries responsible for building and maintaining the nation’s infrastructure, natural resources and environment by recruiting and placing field, management and executive-level personnel in temporary, temp-to-permanent and direct-hire positions. For more information, go to: www.sequencestaffing.com.
By: Craig Travis
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