Whatever reason you are trying to make extra money, just remember you have to declare it to the taxman. It sounds scary, but it’s really not. There’s a lot of great advice and tips available online, however if it is scaring you, I would suggest sitting down with an accountant. Many will offer a free consultation in order to understand your circumstances and how they can help you. You might decide that the consultation is enough for you to understand your commitments, or you might decide to take the accountant on to help you. I myself have gone down this road. There is a lot more to the process than I appreciated and whilst I think I probably could get my head around it, I would rather spend the time on my business. I also don’t want to be worrying that I’ve done something wrong and will end up with a giant tax bill on a year or two.

The important thing is to keep track of all your income and outgoings. This will enable you (or your accountant) to successfully file your tax return. You can use a spreadsheet, journal, or an accounting package. Just do whatever works best for you, but that is easy to understand when you or someone else comes back to it. I use a spreadsheet which has different tabs for different months. I also have a designated email folder for all business related purchases. By starting with good habits, and whilst you don’t have a massive income, it will appear a lot less overwhelming when your income is sky rocketing! You will understand the process more and what is needed and therefore you will be less likely to have mistakes. Start as you mean to go on and you will find the process so much more straightforward than you can imagine.

Remember that if you earn extra money – you must tell HMRC.

Categories: Money Education

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