Self-employment comes with a lot of responsibilities, one of which is paying taxes. As a self-employed individual, you are responsible for filing your own taxes and making sure that you pay the correct amount of taxes. This can be a daunting task, especially if you are new to self-employment. SparkleTeddy talk about and throw in personal financial planning an Taxes. You can expect to see reviews of financial products like mutual funds and banks to random musings on money related matters like tax, budgeting and deal-hunting.
Here are a few things that you need to know about filing taxes as a self-employed individual:
You will need to file a tax return
As a self-employed individual, you are required to file a tax return every year. This is the same as if you were employed by someone else. You will need to fill in a self-assessment tax return form, which you can get from the HMRC website.
You will need to pay taxes
Just because you are self-employed, it doesn’t mean that you don’t have to pay taxes. You will still need to pay income tax and national insurance. The amount of tax that you pay will depend on how much money you earn.
You might be able to claim expenses
As a self-employed individual, you can claim certain expenses against your income. This means that you will only pay taxes on the profit that you make, rather than your total income.
You will need to keep records
It is important to keep records of your income and expenses, as you will need to provide these when you file your tax return. You can use a self-employment ledger to keep track of your income and expenses.
You might need to pay estimated taxes
If you think that you will owe more than 1,000 in taxes, you will need to pay estimated taxes. This is where you make regular payments throughout the year, rather than paying all of your taxes in one go.
Filing taxes as a self-employed individual can be a bit daunting, but it is important to make sure that you do it correctly. By following the tips above, you can make sure that you pay the right amount of taxes and avoid any penalties.