Invoicing

[Penguinpandarabbit]

I moved from employed to self employed end of last year but was just going through a freelance site which did invoicing.

Now I've been asked to do some consultancy work and they've asked me to invoice them. Can I do this without setting up as a business? I want to be careful my house isn't classified as business premises for selling so subject to capital gains tax but maybe that's different.

Do I need to register for NI? I paid NI whilst working so no advantage to me to pay more this tax year but not sure if its optional.

Thanks very much.

Thanks - I don't really have any expenses - I just work from home, no travel or purchasing anything involved, just use a laptop I use for personal use too and bills would be same. The freelance site charged fees and vat but that's all totalled. Only complicated thing is its in dollars so need to convert everything to pounds but hmrc publish monthly exchange rates so that shouldn't be overly complicated. I would rather learn to do it myself but think would be worth paying accountant for first one. I have a business bank account so everything is separate and it has a dollar and a pound account.

I think that's a really sensible idea. You can claim for home office if you work from home - I believe it's a flat rate but that's what the professionals are for. Getting them to run through the first one also means you'll be able to copy from it for subsequent years - it's saved in your online tax area.

Chartered Accountant here. You registered as self employed with HMRC last year, so you will need to prepare your first set of accounts from the date when you first starred to freelance until 5 April 2019. Although the filing deadline is not until 31 January 2020, I suggest that you submit your first tax return sooner rather than later, whilst everything is fresh in your mind.

I agree that CGT is not an issue for you. You should not include your UTR on invoices. People working as sub-contractors in the construction industry put this information on their sales invoices, but it doesn't sound to me as though you are within that category.

A sole trader is undoubtedly running a business and is self employed. All of the invoices raised through the freelancing site need to be included in your tax return. If they have charged you for this service, their costs will be an expense which can be deducted from your income.

You can claim expenses relating to your overheads - bank charges, mobile phone bills, ink for your printer, stationery, travelling expenses, relevant professional subscriptions, software etc.

I use QuickBooks for a few clients, but I don't bother for my own accounts and just use a spreadsheet. I really wouldn't bother incurring the expenses. Consider taking out professional indemnity insurance depending on your line of work. You don't want to be sued for negligence by US clients.

Kyles has offered some sensible advice, but please ignore the rest about self employment/sole trade/ running a business from home. A little knowledge is a very dangerous thing!

Thanks very much, very kind of you to help.

Also a chartered accountant here. All good advice from Stickerrocks but some of the advice on this thread from other people is very dodgy. Just using Quickbooks doesn't mean you have all the tax information right, regardless of what Quickbooks tells you. I spent hours amending Quickbooks accounts for someone recently and if they'd submitted a tax return based on what was entered before I reviewed it they would have been likely to have received penalties and charged interest if they had been inspected. You don't need to have stock to run a business, people are getting confused by terminology and just applying it willy nilly. You CAN incur CGT on your principal residence if you're not careful but it doesn't sound like you will in your case.

Honestly, to anyone reading, if you run a very simple business then you don't need an accountant. Anything more complex and it will pay you to get some advice, especially in your first year of trading. I very rarely cost my clients much to do their tax return (especially the first one) due to the fact I can usually save my fee in tax deductions that they didn't realise they could make - and these are very simple, legitimate things.

My "running a business" comments were in reply to the insurance issue. When my home insurer talks about "running a business from home" they are talking about dog groomers, cake bakers, beauticians, counsellors, childminders. They are concerned about the extra risk of clients being in the home property, or there being extra "stuff" in the form of business tools or stock.

My home insurer doesn't class someone working at home with a lap top as running a business in that sense. HMRC obviously applies different criteria.

Thanks very much.

Sorry Penguin, I'm jumping on to get something clarified

My DD works in Performance and she is required to provide her UTR on her invoice as it is an acknowledgement that she will be responsible for Tax & NI as a freelancer not the employer

Should she refuse?

Goodness. Some of the comments on here are very questionable.
Please take the advice of the 2 Accountants who have just posted!!

My DD works in Performance and she is required to provide her UTR on her invoice as it is an acknowledgement that she will be responsible for Tax & NI as a freelancer not the employe

Not a performer but freelance. I have only ever once been asked to sign a statement for a client stating that I was self-employed and paying my tax. That was for a lawyer. I can't see why they would want her UTR. Who is "requiring" it? Have HMRC told her to invoice this way, or has it come from the clients?

Clients - loads of them
Passport, bank details, UTR or no contract

Fine to jump on Katy Plenty of jumping around me already with 2 kids, 2 indoor rabbits and one cat 😎

Sorry Katymac but I can't advise on your DD as there could be specific rules for the industry. I was asked to act as the tax accountant for a friend who played some leading lady roles which I would sing in the shower! I checked my own professional indemnity insurance and ran a mile, pointing her in the direction of a theatre specialist on my way.

Yes - it's complicated I guess

I imagine it's for the companies liability (I told them they were self employed probably isn't enough )

Jumping? We have lots of jumping here too - siamese cat, dancing daughter!

There are special rules for NI for Entertainers, which require the production your DD is working for to account for NI, even though she is self employed I think. You have your own special Statutory Instruments (stand alone bits of legislation).

Thanks - I found this which is useful (I think)

this is what I have been using