What is Reddit's opinion of
Freeagent?
From 3.5 billion Reddit comments
➔ Freeagent website
By popularity on Reddit, this Service is:
31 reviews of this app found across Reddit:
https://www.thetimes.co.uk/article/we-would-remain-in-eu-now-say-small-companies-s02ktw73n
56% of small business owners want to remain, 32% leave according to that poll.
63% want a second referendum according to this one.
Running a ltd co is more expensive (accountant fees) and there are more legal requirements on you, but it can also be more tax efficient.
https://www.freeagent.com/guides/small-business/sole-trader-or-limited-company/
In your situation, I'd probably choose based on how confident you are about the extra clients and the longevity of the income.
1 or 2 clients, earning you circa £25k is probably simpler to stay as a sole trader, you'll stay below the higher rate tax threshold (assuming a modest pension contribution) and paying accountancy fees would probably be roughly equivalent to NI contributions as a sole trader.
More clients than that, consistently, I'd be thinking about a ltd co though.
I believe there are 3 different questions here:
1) What is an allowable expense to claim back from your company 2) Of (1), what is a valid expense attracting corporation tax relief? 3) Of (1), which elements can have their VAT reclaimed?
It's my understanding that the answers are:
1) "all of it", so long as you're claiming (and being paid) the actual costs (see https://www.gov.uk/expenses-and-benefits-entertainment/what-to-report-and-pay and https://www.gov.uk/employer-reporting-expenses-benefits/dispensations) 2) none of it, which means this expense doesn't reduce your corporation tax liability 3) none of it (see https://www.freeagent.com/guides/expenses/entertaining/)
I'd be very interested in more knowledgeable folks' corrections, here!
Also there's another question around this: if I go out for dinner with a client after a day working with them, I'd have been claiming the cost of my dinner even if I'd been out, alone. So can I just pay the entire amount, and only claim back the true cost of what I ate&drank ... and get the VAT (and CTax) back for that amount? I hope so!
Unless I am misunderstanding something, if you just started in August 2018 you are not late yet.
Your tax return covers the period August 2018 to 5th April 2019. It is due for submission by 31 January 2020. Loads of time.
There is a great article on how to claim use of home expenses here: https://www.freeagent.com/guides/expenses/working-from-home-expenses-limited-companies/
I would keep all receipts for everything (you can scan them and keep them digitally if you prefer)
Claiming travel - you can claim business miles travelled at 45p per mile, EXCEPT for your journey to and from the office (as that is essentially your daily commute, so not claimable)
Food - you can't claim this if you are just working from home or from their office.
Phone bill - yes you can claim. Assuming it is your personal phone, I would claim 50% of the cost (or whatever percentage you think is fair, depending how much you use it for business compared to personally)
> If I were to use a dog as a deterrent for than thieves, would this be tax deductable?
Google would suggest no. Or possibly partially.
https://www.morganjones.co.uk/2020/02/canine-tax-relief/
> The real problem arises when a dog provides guarding services during the day when the premises are open but is a family pet at night. In these circumstances, there is a dual-purpose element, which will generally preclude relief.
https://blackandwhiteaccounting.co.uk/is-your-best-friend-tax-deductible/
> The fun comes somewhere between a Rottweiler and a Chihuahua, especially where the dog is both a guard dog and a family pet. Some may look to apportion costs between work and personal, but this could be difficult to defend with HMRC. If asked would you consider your dog to be a guard dog or a family pet?
https://www.freeagent.com/guides/expenses/animal-care/
> If you have a pet dog that also carries out some guard duties, for example, guarding a home office at night, then you may be able to claim a proportion of the dog's food, vet fees, insurance, etc. as business costs.
FreeAgent, or a similar app like Quickbooks or Freshbooks. I've been using online accounting apps for nearly ten years, and they're fantastic - Saves me about three days a month on invoicing, expenses, and financial admin, and makes tax prep much easier. I used to use a spreadsheet and document invoices, but FreeAgent automates all of it - Honestly, you'll wonder how you did without it.
All the online accounting apps have similar functionality, but FreeAgent is well tailored for UK based freelancers.
FreeAgent is an online business accounting tool, and has functions for producing and submitting your company tax returns and statutory accounts; I've not used them, but I know they exist, and they looked fairly straightforward. I'm fairly sure that includes handling a director's loan account and also automatic syncing with a Starling business account.
You can pay FreeAgent for an account, which works out cheaper (but obviously more effort) than paying an accountant to do the work for you. Alternatively, if you open a business account with Mettle instead of / as well as your Starling account, that comes with a free FreeAgent subscription.
I could be wrong but the "trading allowance" is meant for sole traders. Like if you earned £500 from dog walking. It has nothing to do with trading shares.
I spent 20 years IT contracting in the UK - it can be done without an accountant but TBH I'd suggest get one (the only person I know who's not an accountant who's actually managed long term without paying an accountant did so because he's married to one).
More recently, if you can find an accountant using FreeAgent I'd recommend it, it's a slick and easy to use web-based piece of software, it'll reconcile your bank statements (pulling in transactions from bank feeds) and expense claims etc and it was the easiest experience I had.
It's aimed at the "accountant supporting a freelancer / micro-company" and it can be free if you bank with the appropriate people. I can recommend an accountant I used for a number of years if you like... PM me as I'm not sure of the etiquette.
If you bank with NatWest, RBS, or Ulster Bank you can get a free FreeAgent account: https://www.freeagent.com/pricing/free-accounting-software/
(Full disclosure: I work for FreeAgent but I’ve also been a customer for over 12 years and I think it’s great 🙂)
9 hours travelling time + onward travel (to / from train station to meeting) + the meeting itself.
Put it this way, your working hours are what, 9 hours? So the least he could do is cover your expenses and pay for a hotel!
Stuff like this is claimable anyway as a business expense, so the guy is a joke if he's not covering you for this!
I'm not affiliated to this website, I couldn't find a .gov.uk that covered this information - https://www.freeagent.com/guides/expenses/travel-and-accomodation/
Righto, nice one. Couple more thoughts:
- Could you just target roles where a salary is provided?
- Consider redacting your CV and pasting it here as an image gallery (e.g. via imgur) in a new top-level post.
- Have a look at remote-friendly companies, such as FreeAgent. I am not affiliated with them, but I would probably apply for Senior Backend if I decided to quit contracting. Mid-level to £55k and senior to £90k. They sound like they are happy to retrain, so I'd see if they would take my PHP/TypeScript and convert me to a Ruby dev; for you, perhaps you could show them what you do on the FE and they would look to make you full stack.
- Would you be willing to travel once a month? I saw a job advertised in a private channel the other day, requiring on-site in Birmingham 1-2 days a month. That's probably 70-80 miles from your location.
Sure - no problem at all :)
Out of interest - what are you using at the moment and why isn't your current solution doing what you want?
If you don't need extensive analysis but you're looking for a solid system, FreeAgent is a great shout https://www.freeagent.com/ which is super user-friendly and cheap.
Has built-in iXBRL functionality and you can submit accounts, corporation tax returns, VAT returns, run company payroll and submit your own Self Assessment tax return from within the software (after your accountant does a review of course ;))
If you guys are looking to scale up over the next year or two, getting the correct accounting & financial infrastructure in place sooner rather than later is really important and will save you a lot of time and cost when you'll eventually need to switch.
I would still recommend Xero though if you want the best infrastructure - if you're VAT registered with 5 employees I'm guessing your turnover is probably in the range of £250k so Xero would be ideal and can scale with you.
I just worry a bit as I've never heard of anyone using Odoo in UK, probably since it's primarily a US-based company.
The other redditors have answered your question but I just wanted to say that software can greatly help you keep track of things. I would recommend using something like
(you can get it free with a Natwest or Mettle business account).
The US element is not something I'm experienced with so I'll have to let someone else with better knowledge answer on that element (if there is any double taxation or anything).
I can help with the other parts of your question though, pension contributions would indeed be tax free as usual, and the most efficient way to utilise them would be with an employer contribution to a SIPP.
Employers NI would be due if a high enough salary were paid, but the custom is usually to minimise this by paying a lower salary and taking the bulk of income via dividends instead. The accountant you find will help explain that.
I'd recommend looking into FreeAgent to help with the accountancy side of things. You can get this free with a Natwest or Mettle business account and once you get the hang of the annual accounts (perhaps after paying for accountancy services for a few years), you can consider ditching the accountant entirely.
I'm not an expert, but as I understand it you're the person referring others that could be taxable as income (if you're getting £50 to sign up yourself that's a non-taxable inducement). I couldn't tell you if that forms part of the trading allowance or should always have tax applied on it as part of your normal income.
You can't claim business expenses under the trading allowance, but you might still benefit from it with expenses if you're over the threshold. But you would still need to declare this.
https://www.freeagent.com/glossary/trading-allowance/
How much you could claim for the MacBook would depend on whether it was solely used for this business or not I think.
Hopefully someone with more practical experience will chime in.
I spoke to an accountant about it as soon as I'd signed my contact as I needed to figure out what I needed to do. I use FreeAgent for my book keeping and they have a good directory of accountants you can contact. My accountant does everything remote so they don't need to be local to you.
Natwest give you access to https://www.freeagent.com/ for 2 years for free if you open a business bank account. You can also sign up to with https://www.crunch.co.uk/ to get FreeAgent + online accountants who'll help you with any questions and help you with tax returns (approx £400 a year).
I picked one local to me with decent reviews from the Free Agent directory. Expect to pay around £100 pcm +VAT. I pay a bit more which includes insurance, free agent access, personal tax returns and an annual wealth management review. They're contractor specialists so may not be suitable for you.
Agree with everyone here that you'd be best getting an accountant to help you with this. But even with an accountant you're going to need to keep good records of your income and costs. There's no point paying the accountant to do basic bookkeeping (data entry) when you can easily do it yourself using some decent software.
I like to recommend FreeAgent (https://www.freeagent.com/) which is super straightforward for a beginner. People also tend to recommend QuickBooks although I haven't used it myself.
I also recommend setting up a separate business bank account so that you can clearly separate business transactions from personal ones. Starling are great for this and can have you up and running in a couple of days.
I'm 22 and have LTD company and do my own taxes because the internet has everything. You only need to keep 19% of profits for Corp Tax.
Since you have been paying yourself a salary without doing a payroll/RTI, I think you've messed up alot.
The only way to save yourself right now is to assume EVERY bit of money you have taken out the business is a DIVIDEND. Althought you should of had dividend vouchers each time you withdraw them. Because if your salary is above £8,300 (aprrox), you will start paying NI + loads of income tax.
But you will only pay like £2,500 tax on £41,000 of dividends.
And you also need to register yourself as an employer before you start paying yourself.
​
https://www.cheapaccounting.co.uk/blog/index.php/salary-and-dividends-for-202021/
www.freeagent.com - you can go through your bussiness bank statements and create divdend vouchers. Also tells you how much profit you can take out + the amount of Corp tax you have.
You would next to register for VAT when you hit the VAT threshold, which is currently £85,000.
I'd you are also spending money abroad, you may need to look into how the reverse charging mechanism works:
https://www.freeagent.com/glossary/reverse-charge/
If you're getting anywhere near that point, its probably worth looking at becoming a limited company and getting an accountant, unless you're in London, this shouldn't usually cost you much more than £1,000/year (though it depends on the complexity of your business).
https://www.freeagent.com/guides/expenses/working-from-home-expenses-sole-traders/
Take a look at that, it's a simple infographic detailing a step-by-step calculation.
It’s great - I use it for invoicing, estimates, tax owed, tracking money, etc. Basically everything I could ever want to do with my business. The website will tell you more about it than I can. I haven’t used any of the other platforms but I’ve found FA to be really good
Actually OP can get £26 per month which is £6.5 per week which is pretty wank as well.
https://www.freeagent.com/guides/expenses/working-from-home-expenses-sole-traders/
I work from home and worked out my expenses: rent, utilities, whatever and thanks to my really cheap rent (northern hurrah) it's actually better for me to claim the £26/month flat rate.
/u/Harrydd71
>I have heard that to expense my rent I would need to have one room (an office) solely dedicated to my work
That isn't true, have a read of the link I posted.
If they pay you directly, via a personal bank account, you’ll need to register as a sole trader. This is worth a read. https://www.freeagent.com/guides/small-business/sole-trader-or-limited-company/. Liability is a important thing to consider depending on what you’re doing.
IR35 is definitely a factor here though. If you and the company’s plan is for you to work there for 2 years exclusively, in perm like conditions, then it will probably be safest to just have a perm contract now. If not, you are on dodgy grounds and are doing exactly the sort of thing that IR35 is designed to catch.
Remember from a personal perspective too, contracting means no company pension, no/little sick pay, and usually a very short notice period. A decision to do this shouldn’t be taken lightly imo
If you stop freelancing now, no. If you carry on at that rate, you’ll make £5000 profit this year so yes (if the laptop is your only expense, just use the trading allowance. If you have other expenses wholly and exclusively for your freelancing, ignore the trading allowance and claim your actual expenses against your freelancing profits)
Ok,
​
doesn't that just apply to sole traders who earn under £1000 after expenses?
You only have to pay class 2 NI if your profits are above a threshold (I believe currently around £6200 per year). You also have to pay class 4 NI at 9% on profits above £8,424 - so it sounds like both of these will not apply to you.
And yes, you will pay 20% tax above your profits if your personal allowance is already used up by employment (assuming you will be earning less than £50k overall so you won't have to worry about higher rate tax)
The tax year runs 6 April - 5 April. So if you started tomorrow, the end of your first tax year would be 5 April 2019, and you have up until 31 Jan 2020 to do your tax return and pay the tax.
Yes you can claim back expenses for working from home. There is a good guide here on how to calculate it. Or you can just use the flat rate of £4 per week, no calculations or evidence required.
There is Free Agent but its for general accounting and I don't think it will give you scanning capabilities, although I think they are more worried about HMRC audits than is necessary, naming scanned reciepts and invoices by date is enough. FreeAgent is £19 per month for sole traders.
Personally I run two properties via google sheets, drive and a document scanner. I used a property accountant to get started with my first Self Assessment about 5 years ago and have only need their help with one other SA since and that was for a non-property issue.
I'm moving the properties to a LTD and not much will change in terms of how I record income and expenses, I'll just rely on my accountant more.
Not op but the rules seem pretty clear on this, I'm not sure why you are struggling to understand them. If a tux is needed as part of uniform, e.g. restaurant staff, it's allowable. If it's for an awards ceremony then it's not.