There are a significant number of benefits to becoming self-employed, either as a sole trader, a partnership or a limited company. One of the main reasons a person chooses the option of self-employment is the freedom to work for themselves. Being able to work when and where you please is liberating, in addition to the flexibility you have when self-employed.
Self-employment brings along greater choice of how many clients you work for at a time, the hours you work for them and how much you can charge for work completed. Depending which industry you are in, you may be able to command exceptionally high rates of pay. However, at a time when the economy is experiencing difficulties, pricing of a job can make the difference of whether your contract is accepted by a client. When economic times are difficult, it is essential to maximise any allowances and tax reliefs you are entitled to while self-employed.
When you are self-employed, you are entitled to claim tax deductible expenses for your business, on expenditure that you may have incurred anyway. Most of your business expenditure can be deducted from your gross income, as long as it doesn’t include any private expenditure. Relief can be claimed for one off expenses, like machinery, computers and even business premises. Not all capital expenditure attracts tax relief and special rules apply.
You can apply for tax relief on business expenditure as long as it’s ‘wholly and exclusively’ for business purposes. Business expenditure can be deducted from income from your business to calculate profits due. Entertaining is believed to be classed as business expenditure, but this expense is not allowable by HM Revenue & Customs. You can claim for anything which is used entirely for the business, like stationery, stock, repairs, professional fees and repairs.
Claiming tax reliefs and allowances when they are due maximises income from a business, increasing revenue. Although self-employment doesn’t always offer the security of being employed, income can be maximised by claiming all available reliefs and allowances. If you run a business from your home, you can claim for a proportion of household maintenance bills, which includes heating and lighting bills, rent and insurance. The cost of administration can also be claimed as a legitimate expense, as you pay for postage costs, stationery, telephone and fax bills, and the cost of any journals or professional subscriptions which are required for your trade or industry.
Being able to maximise your income in self-employment is a huge benefit, but there are other benefits of being self-employed. The financial independence and flexible working opportunities will help you to fulfil your life, spending more time with people who are important to you and doing the things you love, rather than spend all day working for someone else. You can also maximise your talents and abilities, fulfilling your potential. Being self-employed brings a number of benefits which include financial freedom, flexible working, significant tax reliefs on business expenditure and choosing your working hours.
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