Wage's what can i take

[Ryan]

Ok for example

you turn over £1000 a month

your costs including everything are around £300

so thats £700 after you payed for insurance petrol NI ect

ok so my question is out of that £700 thats left over how much would actually be yours to spend would i need to keep a bit every month for tax at the end of the year or anything like that.

id prob keep a bit of it for next month and take about £500 out for my own personal use

How do you guys go about working how much wage you can have ??

for me for the last few weeks i dont acually take anything out of the window cleaning money just keep it and save it up rdy for my new van lol but live of my morning job for now.

 

[windyman]

There was a thread about this a few weeks ago...worth looking out.

Basically it's not a 'wage' if you're self employed, as all that you earn - expenses is taxable (although I know what you mean), it's called drawings.

Up to you how much you need really. I always like to earn more than I draw for personal use, so that money starts to build up in my business account.

So, going on your example, WEEKLY (I take drawings weekly not monthly) accounts would look something like this (ideally):

Income: £250

Costs: £75

From the £175 left over, I'd draw £125 for personal use, Leaving £50 in the kitty.

That's an example obviously. I couldn't get by on £125p/w!!

Hope that helps.

 

[Ryan]

Ya i did start a thread but was in chat and this would be better to get peoples views on it as the subfourm seems to be a bit dry lol

Ah i see as i work part time and do windows i do my windows income monthly atm as i live off what i get from my part time job. just a bit eaiser for me as i havent got a big round yet.

So how do you keep money to pay the tax man come end of the year just stick it in a separate account rdy for D day is it ?

i'm only asking because this is the first time iv been self employed so not massively experienced on the subject.

if i go with keeping say 25% of my takings after costs i should be ok for any costs and the tax man along the way.

 

[windyman]

Yea up to you how you want to do it really. I've set up a Direct Debit with HMRC (do it on their website when you log into your account) & X amount comes out every month for my tax so I'm not left with a big bill at the end of the tax year. Some folk don't like to do this, but I think it's a great idea, even if it takes the edge off what you owe at end of the year.

If you're unsure on all things tax, then HMRC do an online course (interactive so you can ask Qs etc) which is designed for the newly self employed. I'd highly recommend it.

 

[Paul]

That's a pretty good idea paying a set amount each month to save a big bill at the end of the year, do they have a calculator to work it out or do you guess?

 

[windyman]

Just estimate from previous years. Or if you're a new business, try to work out your end of year profits, 20% of that is your tax bill, then divide by 12.

Even if you start of with paying £30 a month, it will help take the edge off!

 

[Ryan]

Ya i like that idea but not for my first year really

i'll just wait now till next year and pay it all when it comes to it but the year after i may do what your doing

20% tax man :[

 

[Podrikk007]

What happens if you pay more in than your bill will be? Do u get a refund?

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[windyman]

YOu can get refund or carry credit over to next yr.

 

[lewdboy]

Don't forget your personal tax free allowance. £7000 pounds-ish. If you make £10k in one year, you only pay tax on 3k. £600 tax bill.