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Help is onhand ––At last!Commencement ofTrade forIndependent SalesAdvisors andContractors
Commencement of Trade for Independent Sales Advisors                            and Independent ContractorsIntroductionMan...
Commencement of Trade for Independent Sales Advisors                                and Independent ContractorsGUIDANCE FO...
PAYMENTS IN MONTH - JULY                                                                       EXAMPLE                    ...
RECEIPTS IN MONTH - JULY                                                 EXAMPLE                                          ...
Becoming self-employed and registering for                                                         National Insurance cont...
Your business continued                                                    VATBusiness partner’s address                  ...
Self-employed people with small earningsIntroduction                                                           Self-employ...
To work out your total net earnings, deduct from gross               Getting a refundearnings any business expenses you in...
Application for exception from liability for                                                                              ...
15   If you work for one or more employers please give                      16   Declaration      estimates for the year b...
National Insurance                                                                                                        ...
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Independent Sales Advisor Self Employment Guide

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Independent Sales Advisor Self Employment Guide

  1. 1. Help is onhand ––At last!Commencement ofTrade forIndependent SalesAdvisors andContractors
  2. 2. Commencement of Trade for Independent Sales Advisors and Independent ContractorsIntroductionMany people who start as ISAs (independent complete. It may be wise to seek the servicesSales Advisors) haven’’t been in business of an accountant to assist you in preparing yourbefore. The tax rules and National Insurance tax return.regulations can appear quite frightening. Payment of tax is made in 2 equal instalmentsThe following is a summary of what you need each year –– firstly on 31 January before the endto do in order to comply with the various of the tax year (5 April), and then again on 31regulations required when you become self July.employed. Self EmployedRegistering as NationalSelf EmployedWhen you become self employed for the first Insurancetime, you have to notify HM Revenue & Self employed people are required to pay 2Customs that you have done so. There is a types of National Insurance.simple form to complete which is called aCWF1 and which is included in this pack. The first type of National Insurance is called Class 2. The current rate of Class 2 NationalThe form asks for the following details: Insurance is £2.50 per week and HM Revenue Name & Customs will start to bill you for this from Address the date that you become self employed. If Date of birth your profits are below £5,315 per annum, you National Insurance Number can claim Class 2 Small Earnings Exception using the form in this pack. Date of starting to trade Type of business The second type of National Insurance is called Class 4. This is calculated as part of your taxYou should register from your home address return calculation and collected in 2and complete the form within 3 months of the instalments as described above. Class 4end of the month in which you start to trade. If National Insurance is charged at a rate of 9%you do not do so, you may be liable to a fine of on profits above £7,225.£100.Self Employed Books andTaxation Records As a self employed person, you are legallyWhen you become self employed, you will required to keep proper books and recordsstart to pay tax through the self assessment tax and we would recommend that you use thesystem. Some time after you have told HM Add Up Book shown on the following pages.Revenue & Customs that you are selfemployed, they will send you a tax return to 1
  3. 3. Commencement of Trade for Independent Sales Advisors and Independent ContractorsGUIDANCE FOR USING THE ADD UP ACCOUNTING BOOKPAYMENTS1) The Add Up Book is separated into individual spreadsheets labeled Month 1 to Month 12 on tabs at the bottom of your screen. You need to rename Month 1 as the first month you began trading i.e. April 2010, and so on.2) The top part of the spreadsheet is named ‘‘Payments’’. In here you should record all your purchases, noting the Date, Supplier, Total spent and then analyse the purchase by placing it under the relevant column representing what the purchase was for. Please see attached EXAMPLE spreadsheet detailing this for month July.RECEIPTS1) The next section is titled ‘‘Receipts’’ and here you should record all Sales (your invoices), detailing Date, Customer Name (who you are invoicing), Total and analyse it into different types of sales. You also record your commission receipts in here.MILEAGE1) In this section, you will need to record mileage for business trips/meetings etc. This information will be used to calculate your mileage for tax allowable motor expenses. 2
  4. 4. PAYMENTS IN MONTH - JULY EXAMPLE Printing, Phone Business Motor Adverts / Travel Meeting Training Sundry Date Supplier / Details Total Purchases Postage & Business Bank A/C Expenses Promotion Expenses Expenses Courses Expenses Stationery Use % Charges03-Jul-09 Ramada Hotel 25.00 25.0003-Jul-09 Train Fare 11.20 11.2005-Jul-09 Post Office - Stamps 3.84 3.8407-Jul-09 Fuel 30.00 30.0014-Jul-09 Products & Carriage 109.95 104.00 5.9514-Jul-09 Literature 18.00 18.0018-Jul-09 BT (£115 @ 30% business) 34.50 34.5020-Jul-09 Table Cloth 40.00 40.0024-Jul-09 Coffee, Tea and Biscuits 7.20 7.2024-Jul-09 Mobile charges 22.50 22.5027-Jul-09 Brookers Advertising 68.25 68.2527-Jul-09 Envelopes 2.85 2.8528-Jul-09 Business Bank Account 12.00 12.0029-Jul-09 Cost of stall at Craft Fair 20.00 20.00 405.29 104.00 30.00 106.25 12.64 11.20 57.00 12.00 7.20 25.00 40.00
  5. 5. RECEIPTS IN MONTH - JULY EXAMPLE Sale of Product Sale of Product Date Customer Total Commission Meeting Receipts Sundry Receipts Retail Wholesale03-Jul-09 Joanne Baker 18.00 18.0003-Jul-09 Tina Stubbs 39.76 39.7605-Jul-09 Diane Sutton 18.00 18.0007-Jul-09 Tony and Julie Shoesmith 28.59 28.5914-Jul-09 Mother 12.58 12.5814-Jul-09 Sharon (Sister) 21.73 21.7318-Jul-09 Annette Taylor 10.59 10.5920-Jul-09 Annette Taylor 15.43 15.4330-Jul-09 June Bonus 12.42 12.42 0.00 0.00 0.00 0.00 0.00 177.10 130.37 34.31 12.42 0.00 0.00
  6. 6. Becoming self-employed and registering for National Insurance contributions and/or taxYou must tell us immediately when you start self-employment so we can arrange to collect Class 2 National Insurancecontributions; you need to pay them to protect your rights to State Pension and other benefits.To tell us about your self-employment phone our helpline for the newly self-employed on 0845 915 4515, or you can completethis form and return it to the address overleaf. To tell us online, go to www.hmrc.gov.uk/selfemployed and select ‘Register asself-employed’.The best way to pay is by Direct Debit. Just fill in the application form and send it to us. Our automated collection process willgive you peace of mind that your future rights are protected.Not paying your National Insurance contributions puts your right to benefits at risk. If you are late telling us about yourself-employment, you may attract a penalty. Please tell us the reason for any delay in the ‘Additional information’ box overleaf.Please complete this form in capital letters, taking particular care to complete the questions with this symbol About you About your business Title – enter Mr, Mrs, Miss, Ms, or other title When did you start working for yourself? DD MM YYYY Surname or family name What sort of self-employed work do you do? First name(s) If you intend working as a subcontractor in the Construction Industry you must be registered with the HM Revenue & Customs Construction Industry Scheme. Your date of birth DD MM YYYY To find out how to do this phone the CIS Helpline on 0845 366 7899. Please tick this box if you are a Share Fisherman. Previous surname (if applicable) Otherwise leave blank. Please tick this box if you are on the New Deal 25+ scheme. Otherwise leave blank. Date of name change DD MM YYYY What is the name of your business? Your National Insurance number Business address If you do not have a National Insurance number please tick the box If you were previously self-employed please tell us Postcode your most recent tax reference. It will be the ten-digit reference (the UTR) in the top left-hand corner on Your business phone number if different from your page 1 of your Tax Return. contact number Your address What is your position in the business? For example, sole trader, partner Do you have any business partners? Postcode No Yes Your daytime contact phone number If you have business partners they also must register. Business partner’s name If you are not a UK resident, and have come to the UK from abroad within the last 12 months, Business partner’s National Insurance number please tick this boxCWF1 Page 1 HMRC 03/09
  7. 7. Your business continued VATBusiness partner’s address Please read the note about VAT in leaflet SE1Thinking of starting your own business. If you would like a VAT 1 Application for registration form tick the box Starting up in business guidePostcode Please tick the box if you do not want us to send you a copy of SE2 Giving your business the best start with taxIf you have more than one partner please write their after you have registered. You can also find it atnames, addresses and National Insurance numbers in www.businesslink.gov.uk/taxhelpthe ‘Additional information’ box.If you are joining an existing business partnership,please provide the partnership tax reference number SignedIf you are going to do all the work for one person or firm,you may be an employee. For more information you can: Date DD MM YYYY• phone the Self Assessment Helpline on 0845 9000 444 or• go to any HM Revenue & Customs office.If you are, or will be, doing all your work for one person Additional informationor firm, please enter their name and addressFull nameAddressPostcodeHow to pay your Class 2 NationalInsurance contributions (NICs)For tax year 2009–10 self-employed National Insurancecontributions are £2.40 per week.To arrange payment of your National Insurancecontributions fill in form CA5601 Application to payself-employed National Insurance contributions (NICs) byDirect Debit.If you are unable to pay by Direct Debit we will arrangeto send you a bill every 13 weeks. These will be issued Please send the completed form to:in January, April, July and October. National Insurance Contributions OfficeIf you expect your income from the business to be below Central Agent Authorisation Team£5,075 for the tax year 6 April 2009 to 5 April 2010 you Benton Park Viewmay not have to pay National Insurance contributions. Newcastle upon TyneIf you would like more information on the NE98 1ZZSmall Earnings Exception (SEE) tick the box. or take it to any HM Revenue & Customs office.Employing someone else For official use onlyIf you are thinking of taking someone on, or already System Action Completeemploy someone else, please phone the New EmployerHelpline on 0845 60 70 143 or tick the box and NIRS TBS SAwe will send you more information. Page 2
  8. 8. Self-employed people with small earningsIntroduction Self-employed and claiming Jobseeker’s AllowanceThis form is intended for self-employed people with small If you are self-employed and get Jobseeker’s Allowance (JSA)earnings and the guidance notes should give you enough you may be awarded JSA credits but you remain liable forinformation to help you make a decision about applying for Class 2 contributions.a Certificate of Small Earnings Exception. But, if your earnings from self-employment are below theIf, after reading the guidance, you decide you want to apply small earnings exception level you can apply for a Certificatefor a certificate, please fill in the attached application form. of Small Earnings Exception. If awarded, you need not payIf you need more information phone the Self Employed Class 2 contributions.Helpline on 0845 915 4655, or go to Special circumstanceswww.hmrc.gov.uk/selfemployed Men reaching or over age 60Why pay Class 2 contributions? If your earnings are low and you are aged 60 or over, or willClass 2 contributions count towards: reach that age between 6 April 2009 and 5 April 2010, it may• Incapacity Benefit/Employment and Support Allowance be worthwhile applying for a Certificate of Small• basic State Pension Earnings Exception.• bereavement benefits If you are granted exception in these circumstances, you will• Maternity Allowance. be given contribution credits automatically to protect yourIf you are only liable for Class 2 contributions, you should basic State Pension and other benefits. But credits cannot beconsider your position carefully before applying for a given if you spend more than 182 days abroad within a year.Certificate of Small Earnings Exception. Caring for someone - Home Responsibilities Protection /If you apply for and are granted exception from Carer’s Credit (from 6 April 2010)National Insurance contributions, you may lose your Home Responsibilities Protection (HRP) can help to protectentitlement to benefits by not paying Class 2 contributions. your basic State Pension and your spouse or civil partner’s right to bereavement benefits if you:For example, if you do not pay contributions for any period, • do not work, oryour basic State Pension may be affected. If you leave a • your earnings are not enough to count forwidow, widower or civil partner he or she may get a reduced basic State Pension.rate of benefit or no benefit at all. HRP will no longer be available for tax years that commenceEven if you receive a Certificate of Small Earnings Exception, on or after 6 April 2010. This will be replaced by new creditingyou can still pay Class 2 contributions voluntarily to keep arrangements that will enable customers qualifying to buildyour entitlement to some benefits. up entitlement to basic State Pension and State SecondIf you want to pay Class 2 contributions voluntarily, tell us Pension by receiving weekly National Insurance Credits. Forat part 14 on the attached application form or return your further information, please go to www.thepensionservice.gov.ukCertificate of Small Earnings Exception with item 1 completed. Small earningsWho pays Class 2 contributions? Do I have small earnings?If you are aged 16 or over and self-employed you must pay You will be classed as having small earnings and may not haveClass 2 contributions, currently £2.40 per week, unless: to pay Class 2 contributions if your earnings, that is money left• you are over State Pension age, currently 65 for a man and after expenses: 60 for a woman, even if you have not retired, or • were less than £4,825 for the period from 6 April 2008 to• you are entitled to reduced contribution liability as a 5 April 2009 and/or married woman or widow, or • are expected to be less than £5,075 in the tax year period• you have applied for and been given a Certificate of Small from 6 April 2009 to 5 April 2010. Earnings Exception for the period concerned. Working out your earningsContributions paid on time will be payable at the rate in Your right to a Certificate of Small Earnings Exception dependsforce at the time the contributions were due. If you pay on your total net earnings from self-employment as shown, forClass 2 contributions more than a year late you may have to example, on a profit and loss account.pay them at a higher rate, which is the highest rate in forcebetween the date the contributions were due and the date You cannot apply for small earnings exception if youryou pay them. earnings from self-employment during the period from 6 April 2009 to 5 April 2010 have already reached £5,075Self-employed in your spare time by the time you apply for exception.You have to pay Class 2 contributions if you are self-employedin your spare time. This applies even if you are also paying If you are self-employed in more than one business, youClass 1 earnings related contributions as an employee, or should add together the net earnings from each so that aoffice holder. But you do not have to pay Class 2 contributions loss incurred in one may be offset against a profit in another.if you apply for and are granted a Certificate of Small Do not count as earnings any income from the New DealEarnings Exception. scheme or from sources other than self-employment.CF10 (2009-10) Page 1 HMRC 12/08
  9. 9. To work out your total net earnings, deduct from gross Getting a refundearnings any business expenses you incurred whilst It is possible to get a refund of Class 2 contributions paidself-employed. For example, you can deduct rent and rates, during a period of small earnings, although you may not haveinsurance, employees’ wages, printing and stationery, applied to be excepted from liability at the proper time.repairs and postage. You should also make an allowance For example, if your net self-employed income (that is yourfor depreciation of equipment such as a vehicle if it is used profit after deducting expenses) earned in the periodfor your business. 6 April 2008 to 5 April 2009 was less than £4,825. You shouldYou should not make deductions for any of your own consider the effect on future benefit entitlement beforedrawings, income tax payments or for Class 2 or Class 4 applying for a refund of Class 2 contributions.contributions payable. How to applyYou should account for the amount or value of any stock you If you think you are entitled to a refund, you not your agent,withdraw from your business for your own use. need to send us: • a signed letter stating that you want a refund, andWhere you also have earnings from employed earner’s • proof of earnings for the relevant tax year, for exampleemployment in the same year and those earnings are shown – business receiptsin the accounts of the business as a business receipt, those – profit and loss accountsearnings can be disregarded when calculating the profits from – some other form of evidence that shows your income.your self-employed business. Form CF10 which is attached to this form, is not an applicationAfter receiving your estimate of what you are likely to earn for a refund.during the period from 6 April 2009 to 5 April 2010, we maytake into account your earnings during earlier years and any Do not delay writing to us as proof can be sent later.changes that have occurred since. The address to write to is: HM Revenue & CustomsHow to apply for Small Earnings Exception National Insurance Contributions OfficeFill in the attached application form and send it to: Self Employment ServicesHM Revenue & Customs Benton Park ViewNational Insurance Contributions Office Newcastle upon TyneSelf Employment Services NE98 1ZZ.Benton Park ViewNewcastle upon Tyne Time limitsNE98 1ZZ. There are strict time limits for refunds. You must apply no later than the 31 January following theWhen to apply end of the tax year (6 April to 5 April) in question.If you can show that your net earnings from self-employmentfor the period from 6 April 2009 to 5 April 2010 are expected For example, a refund of Class 2 contributions paid for theto be less than £5,075, you will not have to pay Class 2 period 6 April 2008 to 5 April 2009 must be claimed aftercontributions. You can apply for exception as soon as possible. 5 April 2009 but before 31 January 2010.Your Certificate of Small Earnings Exception If you are employed and self-employedIf your application is approved, we will send you a Certificate of The law requires that you meet all National InsuranceSmall Earnings Exception. The certificate will show the period it liabilities as an employee in all of your employments and as acovers and will normally end in April at the end of the tax year. self-employed person.The certificate will usually be effective from the date of your If you work for an employer as well as being self-employed,application although it may be backdated for up to 13 weeks. you may be allowed to delay paying some of your Class 2It cannot be issued to cover any week that you have already and / or Class 4 contributions. This is called ‘deferment’.paid a Class 2 contribution. You should only apply for deferment if your net self-employedBut, you may be able to get a refund of the contributions you earnings are expected to be above the small earningshave already paid - see Getting a refund. exception level of £5,075.As a certificate can only be backdated up to 13 weeks, you will If you expect your self-employed earnings to be less thanremain liable for payment of Class 2 contributions for any £5,075 deferment is not applicable and you may qualify forperiod of low earnings not covered by the certificate. We may Small Earnings Exception (SEE). You will need to apply for SEE.decide not to insist on the payment of Class 2 contributions Please complete the attached application form and send it tothat were due before the start of the certificate if your the address given above.self-employed earnings were below the exception limit for To find out about deferring Class 2 and / or Class 4the year (6 April to 5 April) concerned. We will let you know contributions, please contact Deferment Services onif this applies to you. 0845 915 7141.If you make a renewal application and your earnings are still How we use your informationlow enough you will be sent a new certificate. HM Revenue & Customs is a Data Controller under the Data Protection Act 1998. For more information go to www.hmrc.gov.uk and look for Data Protection Act within the Search facility. Page 2
  10. 10. Application for exception from liability for Class 2 contributionsPlease read the attached guidance before filling in this form using capital letters. If you need more information,call the Self Employed Helpline on 0845 915 4655 or go to www.hmrc.gov.uk/selfemployedThis form is not an application for a refund 1 Surname 10 Business address if different from 8 2 First forename 3 Other forenames Postcode Phone number 4 Title (Mr, Mrs, Miss, Ms or other) please specify 11 What is your occupation when self-employed? If you have more than one occupation and need more 5 National Insurance number space please give details on a separate piece of paper and attach it to this form. 6 Date of birth DD MM YYYY 12 What are your expected net earnings from self-employment for the period from 6 April 2009 to 7 When did your self-employment start? DD MM YYYY 5 April 2010? This should be below £5,075. £ 8 Home address 13 If you have been self-employed for more than 12 months, what is the last tax or accounting year for which you have earnings figures? The information you give will be treated as confidential. From DD MM YYYY Postcode To DD MM YYYY 9 Phone numbers In that period what were your total earnings after Home deductions? see page 1 £ Mobile 14 Do you want to pay Class 2 contributions voluntarily? No YesCF10 tear-off (2009-10) Page 3 HMRC 12/08
  11. 11. 15 If you work for one or more employers please give 16 Declaration estimates for the year beginning 6 April 2009. I have read the guidance and declare that the information Gross earnings from employment* given on this form is true and complete to the best of my knowledge and belief. £ Signature Name of employer Gross earnings from employment* Date DD MM YYYY £ Name of employer Tear-off this form and send it to: HM Revenue & Customs National Insurance Contributions Office *If more than £40,040 put ‘over £40,040’. Self Employment Services If you have more than two employers please give details Benton Park View on a separate piece of paper and attach it to this form. Newcastle upon Tyne NE98 1ZZ. Make sure you read the following before you sign and date the Declaration at part 16. Please keep the guidance for reference. You do not have to produce evidence of earnings to support your application unless we specifically ask for it. If we need to see evidence of your earnings, we will contact you. In accordance with the Social Security (Contributions) Regulations 2001, regulation 44 (5)(a), HM Revenue & Customs, National Insurance Contributions Office will revoke any decision not to collect Class 2 National Insurance contributions if a false declaration of earnings has been made and / or conditions affecting this decision change. This means that HM Revenue & Customs, National Insurance Contributions Office will take any necessary action to collect arrears of contributions where appropriate.For official use From To Initials DateApplication receivedManagement inhibition setNIRS amended if appropriateSEE allowed - NIRS notedWaiver allowed - NIRS notedCA6812 issuedManagement inhibition unsetApplication rejectedC2GL0013 issuedManagement inhibition unsetSEE cancelled - NIRS noted Page 4
  12. 12. National Insurance contributionsApplication to pay National Insurance contributions by Direct DebitFOR OFFICIAL USE ONLY DN 1st request from CA5603 started QB completed Yes No Start date - a Sunday LO Serial number bank Start date - a Sunday LO Serial number CA2347 issued QB started1 Are you currently paying by Quarterly Bill 8 Your Bank/Building Society sort code Yes No - - If not, is this a new application to pay self-employed Class 2 contributions 9 Your Bank or Building Society account number voluntary Class 3 contributions2 National Insurance number Letters Numbers Letter 10 Name(s) of account holder(s)3 Surname and first two initials 11 If self-employed enter 2 in this box. If NOT enter 3. If self-employed fill in parts 12 and 13. If NOT self-employed leave parts 12 and 13 blank4 Title (ie, Mr, Mrs, Miss, Ms) Complete the mandate below in all cases5 Date of birth 1 9 12 The name of your business6 Address * * 13 The address of your business. Fill this in even if your * home and business address are the same * * * *Postcode # *7 Daytime telephone number (including the STD code) Postcode # * STD Telephone code number CF351N Do not detach Please fill in the whole form and send to: National Insurance Contributions Office Self Employment Services, Application Processing Centre, Instruction to your Bank or Longbenton, Newcastle upon Tyne, NE98 1ZZ Building Society to pay by Name(s) of Account Holder(s) Direct Debit Originator’s Identification Number Bank/Building Society account number 9 9 1 1 3 3 Branch Sort Code Reference Number (National Insurance Number) Instruction to your Bank or Building Society Name and full postal address of your Bank or Building Society Please pay The Inland Revenue National Insurance Contributions Office Direct Debits fromthe account detailed in this instruction subject to the safeguards T The Manager o: Bank/Building Society assured by the Direct Debit Guarantee. I understand that this Instruction may remain with The Inland Revenue National Insurance Contributions Office and, if so, details will be passed electronically to my Bank/Building Society. Address Signature(s) Date Postcode Banks and Building Societies may not accept Direct Debit Instructions for some types of account Oct 2000 CF351N

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