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How To Handle Your Finances As A Newly Self-employed Builder

Setting out on your own? Keen to get your finances straight ready for your first self-assessment? We’ve got all the information you need to handle those stressful money matters as a newly self employed builder.

It can be intimidating getting started with your own business, but keep your records straight and understand what information you need to record, and you’ll be well on your way to becoming a regular self-employed tax payer! Here are a few helpful tips and resources to help you get started…

1. Register for self assessment tax

This is the first important step. Registering for self assessment with HMRC will give you the ability to submit your online tax return at the end of the financial year and keep track of all your payments and obligations.

2. Record everything

Making sure you keep clear records won’t just help you to stay on top of who owes you what, it will also help you out should HMRC ever ask to see your finances – which is entirely possible.

There are lots of free apps you can use to record your payments, but a simple Excel spreadsheet with a separate page for payments and expenses will do the trick just as well. If you want to be able to access your spreadsheet on the move, consider using Google Drive’s Google Sheets for spreadsheets you can open and update anywhere, from any device. Remember:

  • Clearly label every invoice you send with a unique invoice number and record this
  • Record the date on which you sent the invoice and when you received payment

3. Understand your expenses

Now that you have a great system in place to help you record your incomings and outgoings clearly, it’s time to establish exactly what you can claim on your expenses. There may be more ways to claim back cash from your tax bill than you think.

From petrol for work related journeys, to a percentage of your broadband bill if you’re working from home, make sure you know exactly what you can claim for to ensure you make savings where they’re due.

4. Be prepared

When your tax is due, you won’t just be paying the tax you owe. You’ll also receive a Class 2 NICs (National Insurance Contributions) payment request and, if you’re paying off a student loan, you may find yourself with a bill from the Student Loans Company too.

With this in mind, it’s a good idea to put a percentage of your earnings away throughout the year. If you save too much, you’ll have a nice little windfall once everything’s been covered. Most self-employed people recommend popping around 20% of your monthly earnings into an ISA throughout the year to make sure you don’t find yourself in trouble once the tax deadline rolls around.

Have you recently set up as a self employed builder? How did you find your first tangle with HMRC? Do you have any tips for anyone just getting started? Let us know below…