[Accurate]

I'm a full time Graphic designer...however my outside work freelancing is now mounting up, and I would like to do it properly and legally.

Do I need to set up my own limited business?

[gray]

not limited, just tell the IR and they'll send out self assesment

[sub]

Just as importantly get a good accountant - will make your life and the transition from PAYE to self-employement much easier.

[finbarr]

Originally Posted by subcircle

Just as importantly get a good accountant - will make your life and the transition from PAYE to self-employement much easier.

from what he said he'll still be working a regular job as well as the freelance stuff, so he wont necessarily be switching? But, yes, get an accountant.

[Narate]

Alot of banks wont let you use your personal account for a business also. I would speak to them too

[d*d]

ouch say goodbye to 40% of your freelance income, whats stopping you doing te freelance thing fulltime?

[grafiks]

why 40% my accountant says as long as I keep 25% of each job for tax that that should cover me. Is this right???

[d*d]

not if it's a second job

[Rakan]

Move to Dubai, and save on taxes... hehe 0% over here

[Accurate]

Eek. Looks like I need to seek professional advice.

Surely 40% would only apply if the amount was over x amount.

[Accurate]

Also, if I set up a limited business... I can trade up to 10,000 per year without paying tax.

[top_buzz]

You sure thats right?

[datahound]

This is a huge subject.

Yes you are right 40% only for earning over 35k I believe. So for instance if you are earning 25k at work you can freelance 10k at 25% and all else at 40%.

But you can put petrol for car, going to meetings etc., percentage of cost of PC, broadband costs, telephone bills, wear and tear to home, electric, etc etc as expenses against tax.

Benefits of going Ltd? 10,000 used to apply but I think it changed. If taken out of the business tax must be paid, if left in the business, not.

A limited company involves a lot more rules, regulations, paperwork and legal implications if failure to comply.

Limited company gives you status, makes you look established.

[smallbeer]

you might be a bit confused. you can trade up to something like 56k without having to register for VAT.

[oli]

http://www.startups.co.uk/aBGJ9Jw.html

[datahound]

VAT is a seperate issue, we are talking here about personal taxation.

But you are correct VAT does have a limit at which point you have to register.

You can also register even if below the limit.

This is to your advantage only if buying goods that include VAT for resale.

I would say as a service provider avoid registering for VAT until you reach that limit. That way customers not registered for VAT will not be put at a disadvantage dealing with you.

Also VAT reg is another paperwork issue that requires attention.

[smallbeer]

I was replying to accurate.

[Mr Fred]

does anyone know what they are talking about?

[briljant oranje]

ha ha.

[Luke Redpath]

The simplest thing to do is to register as self-employed. When it comes to filling in your tax return, you will fill in an Employment sheet (along with any details of tax you've paid by PAYE), and a Self-employment sheet.

You can do this all online and it will work out your tax for you.

Also, don't forget, when it comes to your first tax bill, you will be paying all of your tax (if you have any) for the previous tax year, plus half of your estimated tax bill for the following year (this would be in January), then the second half of your estimated bill in July, then the following January you make up the difference if you've paid too little, or get a rebate (if you want...you can leave it on account) if you've paid too much and so on.

If you want a rough idea of how much tax you are gonna be paying up front, speak to an accountant.