Is there anything I need to do with my business before the end of the tax year on 5th April 2017? (UK)
Now this is the time of year accountants and financial advisersget very excited, they are also quite often busy.
It is all to do with Tax Allowances, which I know sounds really boring but it is essentially the government’s way of encouraging us to do things , like savings and pensions and other things like that.
So before you glaze over and switch off. I have made it as simple as possible. So you can start your journey of understanding these things, because they are important and will provide for your financial future.
Let’s face it, most of us don’t get up in the morning going yeah! Let’s sort out our savings and pensions and tax allowances, how exciting!
So simple, so clear, let’s go.
If you bring home to you, less than £11,000, from all your jobs and businesses. That’s £11,000.
Here are my suggestions to consider.
Putting some money in an emergency savings account – you know it is important, well now is the time to create or add to your emergency savings.
To check your eligibility for the state pension, before you go ‘nooo, not relevant’ and dismiss it.
You only need 30 years of national insurance now to be eligible and if you are self-employed, it is actually a really good investment.
One they are probably going to change in a few years, so worth looking at this year.
This is the one thing I recommend you do – get a statement from the government on where you are with your state pension. click here to apply
So check out your state pension as it is a very good investment particularly when you are self-employed.
Married Couples Allowance
I know it sounds archaic but was brought in by David Cameron and not of lot of people know about it.
It will give you £220 a year, so worth considering. You can just apply online.
You are eligible if one partner is earning less than £11,000 and one partner is earning over £11,000.
So the first thing is, because the budget fell on International Women’s Day.
They chucked £10 million in our direction.
Which is a small amount in terms of budget but it is to celebrate the voting rights of women, it is a 100 years. Also to help people get back into the workforce. Good to start with a positive.
The second thing is the most urgent.
If you have premises and you pay business rates or going to being paying business rates, they have done all kinds of reliefs and transitional things and it is a bit complicated.
What I suggest you do is give it 2-3 days and let the journalists and the accountants work through the details.
Perhaps at the weekend or next week, have a look, as the chances are you won’t have to pay business rates, which is really good news.
The other side of that is they have decided that lots of businesses now don’t have premises and we run our businesses digitally, which I must admit I do.
They are going to find a way to tax us to make up the shortfall – so pros and cons there.
The one they are all talking about is the self-employed increase.
The National Insurance increase. National Insurance is used to pay, in theory, the National Health, Pensions and Benefits.
When you are self-employed, you do get to use the National Health and in the last couple of years, you now get pensions but we still don’t get quite a lot of benefits and that is why we pay less National Insurance.
As that evens out, their view is, they want to even out the amount we pay.
Whether you are employed, self-employed or running a Limited Company, you will pay similar amounts of tax and National Insurance, that’s their plan.
From next April 2018, they are increasing the national insurance rate by 1%.
What that meansis when you do your tax return, you pay 20% tax and 9% national insurance.
Next year it will 10%, the year after it will be 11%.
If you are wanting to put up your prices, which is a question I have been asked a lot today.
By how much? Probably 1% is enough, so that is not too bad.
The other thing they have done is increase the amount we can earn before we pay tax.
We still have to do a tax return, if we earn under this amount but it was £11,000 and it has gone up from this April to £11,500.
You won’t start paying 40% tax until you reach £45,000 profit, up from £43,000 too.
Actually they have done it so it will feel like you have got more money but they will still be taking that extra 1% in national insurance.
That’s the thing everyone has been talking about so it is quite simple and there is nothing you need to do urgently.
If you are in the middle of putting your prices up you can add 1% to cover that over the next couple of years.
Anything else? Yes, if you do run a Limited Company they have made that much less attractive so when you do your tax return, I would review that.
They have taken off tax relief on dividends if you know what that is. If you don’t know what that is, talk to your accountant or you will see when you come to do your tax return.
There is nothing you need to do anything about this minute.
The only other thing for women is they have changed Child Tax Credits. David Cameron did this a couple of years ago but it has only just come into effect this April.
From this April, if you have more than 2 children, they will only give you tax credits for the first 2 children.
So if you want to have 7 or 8 children, they are not going to give you tax credits for those, just the first 2. That has come into force this April.
That’s it, it isn’t that complicated and there are some great resources on the internet if you want to find out anymore information.
I just wanted to give you the basics that are relevant to us, as self-employed women.
I am doing…, so it is Dear Money and then say what you are doing. I am feeling…and say what you are feeling. Ask what can you do…what can you do? Dealing with buts, and’s and I want more’s… they will come up so have that as a topic. What can I do now? You don’t have to do it but ask the question. End with a Thank You, that is always a good way to end.
So that is my ‘get yourself unstuck’ little tool so thank you very much for watching.
Next week we are back to practical stuff and it is a Live Q & A on Facebook at 12 noon GMT on Friday 3rd February 2017.
We are talking about now you have done your books, or now you have done your accounts, what now? You can just stick them in a drawer but we are going to provide you with some other useful suggestions.
Thank you for watching.
The best method I have found over the years of motivating both myself and my clients is the method of rewards and consequences.
Little rewards when you complete your books, little consequences when you don’t. This has the effect of associating rewards with bookkeeping, which is a good thing, and also positive emotions.
So I think of bookkeeping as the business equivalent of laundry.
Yes I am talking washing your clothes here, which might seem a bit random! When you wash your clothes regularly, it means you can wear all your favourite things. If you leave your washing for too long, you end up wearing the things you like least, that are left at the bottom of the wardrobe.
Even buying new is only a short term solution.
Can you imagine doing a whole year’s worth of laundry in one go?
Should you have that many clothes. Yet that is what people do with their bookkeeping. Then they wonder why they avoid it, that sounds quite daunting to me.
So my recommendation, like your laundry, do it regularly, it lessens the chore and you might even start enjoying it. You will definitely get better at it.
YourRate.co and in about 10 seconds you can work out what you should be charging per hour.
Obviously there are a number of factors, the most important one is clients can afford to pay your fees. There is no point having this fantastic service if you are trying to sell it to people with no money.
So there are a number of factors to take into consideration, obviously how much your clients can afford and you can change your clients or your service if the ones you want to serve can’t afford you.
But also your skills, your level of professionalism and your service in general and what you offer. So you are trying to get a match between you and your customers.
I have a couple of examples, 2 graphic designers. One was doing a minimum wage job and really loved doing logos and wanted to start a business. With no money at all, no investment, she logged on to Fiverr.com and started offering that service.
She had no experience, no specialist equipment and no qualifications. After a while she worked out she was earning £10 per hour doing it in the evenings and weekends and that was more than she was earning during the day so she was very happy and I am sure her customers were too as they were getting cheap logos and that was what they were looking for.
As the other end of the extreme I had a client who was an incredibly experienced graphic designer, with 20 years experience.
Highly qualified, highly technical, had all the right kit and her customers loved her. She worked mainly for technical companies who where making money and wanted to create an image that both explained and made look appealing their technical parts. That takes a bit of skill and they were happy to per her upwards of a £100 per hour to do that.
So as you can see it does depend on lots of factors.
What I would recommend is it is a bit of trial and error, but if you listen to your customers, both to what they do say and what they never say about you, then that would be a good place to start looking at whether you are charging the right price and if there are things you can do with in your business to make yourself more professional and be a better match for your customers.
You will know when you have got it right as customers will love what you do.
Thank you very much for watching and I look forward to seeing you next week, my name is Jenny Bracelin and I am a Business and Money Coach, thank you.