Hi John
You have come onto a forum which is for discussions between fellow Bookkeeping and Accounting professionals. What I can suggest for your wife to find out more is for her to have a look at the Gov.co.uk website or telephone the newly self employed helpline. Or HMRC do run various webinars on such things. Although the best advice I can give if she is newly self employed is to get an Accountant on board early- she might think she can't afford one, but most Accountants end up unravelling such messes on a daily basis that most really can't afford not to.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
the reasoning behind Joannes guidance for non accounting people is that without knowing the full picture it is easy to take comments made here out of context and I think that all of us here have been faced by the results of that.
Generally the query in this area is over class 2 exemption rather than class 4. Have you also considered that?
Anyway, once a question has been asked here the post remains as a reference for others so...
There is also no liability to class 4 if trading income does not exceed the lower profits limit (£8,060 for 2015-16).
... And there lies your problem in that the question that you asked about class 4 exemption makes me think that you may miscalculate the trading income which could cause you grief (i.e. class 4 liability is calculated on agregate trading income for the period after adjusting for capital allowances & trading losses but before pension contributions. Do you understand the link between depreciation of assets and capital allowances?
It doen't take much of a mistake for fines, penalties, surcharges and interest to outweigh the cost of an accountant.
As Joanne states, your best approach would be to get a good (#1) accountant on board from the outset. You will sleep better at night having a professional on board and knowing that your financial reporting is being handled correctly.
I wish you both the very best of luck with the new venture.
kindest regards,
Shaun.
#1 Good does not necessarily mean the largest or most expensive. Ask other local business people who they use and whether the accountant takes a genuine interest in their business. The best accountants really care about their clients businesses.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Not specifically aimed at John but for many small businesses an accountant is looked upon as an unnecessary cost, particularly in that first year when most are anxious to keep costs to a minimum.
Most accountants will be more than happy to let you pay a monthly fee and spread the cost. By doing that you can call on the accountant when needed and at the end of the financial year it's not as painful because the majority of fees will already have been paid. A good accountant will be worth their weight in gold and it's likely that the savings will outweigh the initial costs.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
