We’ve smoothed out our pricing policy, meaning great value complete accounting can be yours for low monthly fees, every month, even if you join part way through your financial year. Great!

For example, if Bob’s monthly fee is £30, and he joined us in month 4 of his financial year, he will need to pay for months 1-3 as well as month 4 onwards. Previously, we typically added all prior months into the first invoice. That would be a bill to Bob for £120. We didn’t like it, we don’t like lump sums here at Farrant Frost and All Beans Counted, but we couldn’t think of a better way.

A cup of tea later, we’ve made it so much better! Now, if Bob joins us, we will invoice him £60 for the first 3 months he’s with us, then £30 per month thereafter. This gets all of his financial year done, with a much smoother cashflow. And there’s still no contract or tie-in!

We like it. We hope you will too.

Have a look at our ABC site to see if affordable, simple to use, “we-do-it-all, you-don’t-have-to” accounting and bookkeeping is for you.

And while you’re here, please vote for us in the Progressive Practice competition. Thanks!

We look after everything - down to the last bean

We want to make number 1!

We can only do this if you vote for us. It only takes a minute.

Our All Beans Counted service is a complete, low cost accounting service that keeps the tax man happy and puts you in the picture with your business finances every month. No spreadsheets, no entering your transactions on an online interface, just give us your paperwork (in a provided envelope or electronically) every month and let us look after everything for you.

This is due to our innovative service All Beans Counted and the way we’ve streamlined our systems to mean we can provide a premium accounting service for a great low fee.

The final 5 competitors will be put to a public vote – we hope you will support us!

We will be posting a link to the competition as soon as it’s launched.

~Jenni

Before you buy

We operate a scheme that we call All Beans Counted (ABC).  ABC offers clients an all in one solution.  All a client has to do is place their paperwork in the provided envelope each month, post it to us and we do all the bookkeeping and year end accounts. Alternatively you can email information to us, or a mixture of the two. We’re flexible!  Click here to find out more.

This is the main service that we offer to clients, but we can also provide services to businesses that keep their own books on Solar.

If you wish to use our ABC service then you don’t need to buy any software, we look after everything for you. However if you wish to keep your own books on Solar, please follow this link for our 20% discount.

Get in touch today to discuss which option may be better for you and your business.

If you’re self employed, you are legally obliged to keep records of your business transactions.

You must keep these records for at least five years and ten months after the end of the tax year to which the records relate (so, you can get rid of your 2003-04 records on 6th February 2010).

Self employed individuals aren’t required to complete a balance sheet (a statement of your assets, liabilities and equity) although it’s a useful management tool to have.

This means that, at the most basic level, you can simply keep a record of your income and expenditure as detailed on our self employment article.

• Class 1
• Class 1a
• Class 2
• Class 3
• Class 4

Current rates of NI can be found on HMRC’s website.

Class 1

Primary: Payable by employees on income earned through employment. Deducted by the employer and paid over to HMRC on the employee’s behalf.

Secondary: Payable by employers on top of the employer’s salary. Calculated by the employer and paid over to HMRC.

Class 1a

Payable by employers on taxable benefits provided to employees. Paid to HMRC once a year.

Class 2

Payable by self employed individuals, currently at £2.40 per week. This ensures their NI contribution record is kept up to date.

Individuals making less than £5075 profit per year can apply for a Small Earnings Exception by completing form CF10. This means they don’t have to pay the Class 2 contributions – but it also means they aren’t contributing to their NI record, unless they are paying another form of National Insurance, such as Class 1 from a job.

Class 3

Voluntary contributions payable by individuals unable to keep up their NI contribution record any other way. Currently £12.05 per week.

Class 4

Payable by self employed individuals. A percentage of profits paid, like income tax, by 31st January following the end of the tax year and calculated on a tax return. Currently 8% on profits from £5715 to £43875 per year and 1% on profits above this.

What do I need to do?
How do I register?
What records do I need to keep?
What tax do I pay and when?
What are payments on account and why must I pay them?
What’s involved with a Tax Return?

Do you have a question about self employment that’s not listed here? Please ask us via our contact form.

What do I need to do?

If you’re starting self employment, you need to register with HMRC within 3 months of starting to trade. Usually, you start to trade the day you open for business to the public, or make your first sale. If you leave registration until after 3 months, you may be liable for a fine.

Registering for self employment will make you liable for National Insurance and also to complete a self assessment tax return.

How do I register?

Details on how to register can be found on HMRC’s website here. You can register online, by phone on 0845 915 4515 or by post.

What records do I need to keep?

It is advisable but not obligatory to keep business transactions in a dedicated business bank account. This keeps things simpler.

You should keep a record of:

• Your sales (turnover)
• Your expenses.

Expenses that are wholly and exclusively for business can be offset against your turnover to reduce your taxable profit:

• Costs of goods bought for re-sale or goods used
• Car, van and travel expenses
• Wages, salaries and other staff costs
• Rent, rates, power and insurance costs
• Repairs and renewals of property and equipment
• Accountancy, legal and other professional fees
• Interest and bank and credit card etc. financial charges
• Telephone, fax, stationery and other office costs
• Other allowable business expenses

Note certain expenses are not allowable against tax (despite them being business expenses). Notable examples include client entertaining, ordinary clothing (even if it’s a suit you’d only wear for work; specialist protective clothing is allowed), the private use proportion of your motor expenses (for example if you use you car for both business and domestic/pleasure purposes).

Keep a record of how much you spend on each expense category; the total amount for each goes onto your Tax Return.

For a low cost, complete accounting service that looks after all of this for you, look at our All Beans Counted service.

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What tax do I pay?

Self employed people pay Income Tax and National Insurance.

You are taxed on your profit.

Profit is Income (sales, turnover) minus allowable expenses.

Income tax is currently (2009-10 tax year) nil for the first £6475 earned in the tax year, then 20% on earned income up to £37,400. Earned income above this is taxed at 40%.

National Insurance is payable in 2 parts.

• Class 2 NI – currently £2.40 per week.
• Class 4 NI – payable, like tax, on profits. Currently 8% on profits from £5715 to £43875 per year and 1% on profits above this.

For more detailed information see our National Insurance article.

Income Tax and Class 4 National Insurance are both payable by 31st January following the end of the tax year. They are calculated when you complete your self assessment tax return.

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What are payments on account and why must I pay them?

If the tax and and class 4 NI you owe from your tax return is over £1000, you will need to pay payments on account. This can be a bit of a shock in the first year – as well as paying the tax due, you will be required to pay 50% of this on top, a ‘payment on account’ for the next tax year. You then have to pay the same again by 31st July of the same year. While at face value this sounds quite unfair, you are not actually paying tax in advance.

Payments on account can be a little tricky to understand, so here’s an example:

Example 1
Tax year 2008-09. Tax and Class 4 NI due £1200
Payable by 31st January 2010 – 10 months after the end of the tax year.

Tax due is over £1000 so 50% payment on account is needed for tax year 2009-10: £600

Total Payable 31st January 2010 £1800 (£1200 + £600)

Total payable 31st July 2010 £600

As these payments are for the tax year 2009-10, they are still payable in arrears; by January 2010 you will be paying £600 towards profits earned in the 10 months since April 2009. By July 2010 the 2009-10 tax year has been over for 4 months.

Come 31st January 2011, your next tax return needs submitting. For the sake of simplicity, let’s say the tax due is £1200 again.

Example 2
Tax due is over £1000 so 50% payment on account is needed for tax year 2010-11: £600

Total Payable 31st January 2010 £600 (£1200 – £1200 already paid, + £600)

Total payable 31st July 2010 £600

After the first year, payments on account make things much more manageable.

As it’s unlikely the tax due will be an identical amount in subsequent years, here are two examples of how its works if the tax due is higher, or lower than the previous year:

Example 3
Tax year 2009-10. Tax and Class 4 NI due £1600

Tax due is over £1000 so 50% payment on account is needed for tax year 2010-11: £800

Total Payable 31st January 2010 £1200 (£1600 – £1200 already paid, + £800)

Total payable 31st July 2010 £800

Example 4
Tax year 2009-10. Tax and Class 4 NI due £1000

Tax due is over £1000 so 50% payment on account is needed for tax year 2010-11: £500

Total Payable 31st January 2010 £300 (£1000 – £1200 already paid, + £500)

Total payable 31st July 2010 £500

If you think your profits for the following year will be less than the previous year, you can apply to reduce your payments on account via your tax return. However, if you underestimate the tax due and it ends up being higher than the payments on account paid, you will be liable to pay interest on the excess.

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What’s involved with a Tax Return?

A tax return should be issued to you for the tax year in which you registered for self employment. So, for example, if you register as self employed on 1st May 2009, that’s in the 2009-10 tax year and so you will be issued with a tax return to complete shortly after 5th April 2010. It will need to be submitted by 31st January 2011 (if you file online; paper returns must be in by 31st October 2010).

You will have to put all your income for the tax year on the tax return, not just your self employment. If you file online, it will calculate your tax for you. If you file on paper, you may have to calculate your tax yourself.

Examples of other income that needs to go on the tax return includes:

• Employment income (figures come from your P60 or P45)
• Interest income from banks/ building societies
• Taxable benefits such as Job Seekers Allowance

Income that doesn’t need to go on a tax return includes:

• Interest received from ISAs
• Working Tax Credits

If you plan on completing your own tax return, please have a look at the form well in advance of the deadline to make sure you’re happy with completing it yourself. If you aren’t, why not ask us to help? We can look after everything for you with our All Beans Counted service.

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Do you have a question about self employment that’s not listed here? Please ask us via our contact form.

About us

Contact

Testimonials

Privacy Policy

Legal info

Farrant Frost and All Beans Counted are trading styles of:

Farrant Frost Ltd
Registered in England and Wales, company number 6511056

Trading address:
1 High Street
Pewsey
Wiltshire
SN9 5AF

Tel: 01672 564370

Registered office:
3 Oxford Cottages
Alton Barnes
Marlborough
Wiltshire
SN8 4LD

Ethical Guidelines

We will observe the ethical guidelines of our professional bodies.  Jenni Frost is licenced and regulated by the AAT to engage in public practice in accordance with licence number 5059.  David Pickin is licenced and regulated  by the IFA to engage in public practice in accordance with membership number 212682.  Licence details are available at 1 High Street, Pewsey.

Professional Indemnity Insurance

Our insurers for professional indemnity are currently Beazley Syndicate 623 at Lloyd’s, Plantation House South, 60 Great Tower Street, London, EC3R 5AD.

From 01/09/2010 they will be HCC International Insurance Company Plc, Walsingham House, 35 Seething Lane, London EC3N 4AH.

Anti Money Laundering Legislation

All accountants must comply with the onerous duties imposed by the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Money Laundering Regulations 2007 (the “Anti Money Laundering Legislation”), which are intended to inhibit the activities of terrorists and other criminals by denying them access to technical expertise. If we fail to perform these duties we risk imprisonment. Before taking on any client we must obtain satisfactory evidence of identity.

We assume that our clients are honest and law abiding. However, if at any time there appears to be ground to suspect (even if we do not actually suspect) that your affairs relate to ‘criminal property’ we are obliged to make a report to the Serious Organised Crime Agency (SOCA), but we are prohibited from telling you that we have done so.

‘Criminal property’ is property in any legal form, whether money, real property, rights or any benefit derived from criminal activity. It does not matter who carried out the criminal activity or how removed the property is from the original crime. Even if you are honest in your dealings, if your property represents a benefit  from someone elese’s crime, we must still make a report.

Activity is considered ‘criminal’ if it is a crime under UK law, no matter how trivial. For example, tax evasion is a criminal offence but an honest mistake is not. We will assume that all discrepancies are mistakes unless there is contrary evidence.

We will not be liable for any loss suffered by you or any third party as a result of our compliance with the Anti Money Laundering Legislation or any UK law or at all.

We will never sell or otherwise exchange your details to anyone for advertising or other purposes, unless you give us your express permission.

If you have any queries, please contact us using the form provided.