Bridgeman Mendes and Co

An individual Freedom Day

We can work out our individual Tax Freedom Day if we are employed or self employed.

In 2009 suppose Andy, who is employed as a Manager earns a wage of £25,000 and spends £10,000 on VAT chargeable expenses ( This will exclude food,books and newspapers which have a 0% Vat rate. )

Let us say that Andy's partner Betty has the same financial circumstances which are exactly the same except that Betty is self employed as a mobile hairdresser

Andy's Tax Freedom day is April 17

Bettys Tax Freedom day is March 24

THE BENEFITS OF SELF-EMPLOYMENT

The above example shows that Taxation Law benefits the self employed as the rule regarding expenses are different.

Andy cannot charge any expenses against his wages

Only expenses that are incurred wholly, necessarily and exclusively in the performance of duties can be claimed against earned income. So, for example, Andy using his home phone can only claim the cost of business calls as allowable ; but private calls and the line rental are not allowable."

Betty however can charge some of her expenses such as petrol ,motor repairs, phone calls attributable to her business if the following rules are followed

In all cases an expense is allowable only if
1) it is not excluded by regulations and
2) it was reasonably incurred and
3) it was wholly and exclusively

3.1) incurred for the purpose of the business or
3.2) spent for the purpose of the business and

4) it was

4.1) relevant to the assessment period or
4.2) spent in the assessment period

WHAT HAPPENS IF I AM MADE REDUNDANT

Losing a job is always a distressing and emotional trauma. It usually comes without warning and the future might feel bleak. This is only natural but let us reassure you that most self employed traders did not have self employment as a lifestyle option when they were young . No thay wanted a steady job with a cheque in the bank at the end of the month whatever was happening in the economic world . It can be a false illusion that the route of employment provides security when the employee's future is dependant on the skill of the people on the bridge steering the ship through the economic waters. Self employment is more secure as YOU are on the bridge ,YOU can see the storms coming and YOU can take evasive action to avoid the shipwreck of your business.The Credit Crisis of 2007 is evidence of the false illusion of employment as secure even in the blue chip company. We would even suggest that in certain circumstances self employment provides greater security.

SELF EMPLOYMENT PROVIDES A "SKY IS THE LIMIT" MOTIVATION WHILST EMPLOYMENT CAN BECOME A DEPRESSANT AS OVERWORKED AND UNDERPAID

If you are employed but feel that your life is slipping away ina dead end job and if you have a skill or can offer some service why not consider starting a business on a self employed basis working in your leisure time and developing the business whilst the job covers your personal overheads . Once you have built your business you can jump ship and become fully self employed

2 facts to remember.

1 You can have as many sources of income at the same time

2 You should register your partime business with the relevant authorities and complete the compliance regime

Please contact us if you have any thoughts on the matter that you wish to share ,so that we can exchange views on your best course of action. Our help line is open 24/7 for you 0845 263 4121 or email bmendes@ntlworld.com. anytime

It is not uncommon for clients to find their way in the new world of self employment ,having been catapaulted out of a job, but still had the skill they exercised when they were employed and found a way to harness it.

New businesses have been built up from the remnants of a liquidated business based on knowledge of the product, its profitability, the network and contacts of customers and suppliers etc etc.

ENTREPRENEURIAL EXAMPLES

Examples of our clients who created successful businesses out of loss of employment are to name but a few : graphic designer, taxi driver, manufacturing and retailing of live bait for anglers, IT Consultant, Printer for airport information sheets with regular business for 24 up dating printing, garden services, patio paving construction, bricklayers, carpenters, electricians, plumbers, property developers, estate agent, fireplace franchise expanding into central heating, music school franchise, taxi franchise ,secretarial services, mobile hairdresser, computer typsetter for publishing firm ( technical copy which cannot be sent to Asia), computer maintenance,disco jockey,research services for CEOs and other managers,

.Every problem has given these clients an opportunity which they grasped with both hands positively

I NEED AN ACCOUNTANT NOW LIKE A HOLE IN THE HEAD

This is the first natural thought of a newly born entrepreneur

Clients usually appoint us after they have launched their business and have treated the paperwork as a low priority. Whilst it is a natural reaction ( mostly from fear of incurring accountants fees) it is a self delusional trap for the unwary. It is not long before all the compliance rules are not met probably due to ignorance of them and draconian penalties are incurred on a regular basis, creating unnecessary worries which divert attention away from running the business efficiently. It is only then that it seems a good idea to seek professional help.

Our advice is to make arrangements with us early on and plan your way through the compliance maze. Our policy is to inform the client of the problems ahead , plan for them in an orderly way and allow the client to progress his/her business in a highly motivated entrepreneurial fashion,devoting all their energies to profit making

We shall be please to discuss with you what you should plan to do and give some form of support and guidance whilst you get your ducks in a row

We look forward to hearing from you on 0845 263 4121

CALL NOW No Obligation 0845 263 4121 24/7 anytime