I really don’t know how relevant this question will be in this community, but thought it worth asking anyway
I work as a self-employed gardener on a very part-time basis (6-8hrs a week) for a few local clients.
The tax regulations here in the UK for sole traders are fairly simple, however I’m starting to think I would benefit from an online system to keep track of expenses (receipts, both email and photos of paper ones) invoice for clients, and tax returns at the end of the year.
There’s several names that often get thrown around like Xero, Q uickbooks, etc. but I prefer to know a bit about the company (ethical values, at least enviromentally are important to me if at all possible).
A new complication is that the HMRC in the UK has recently introduced MTD (Making Tax Digital) which means if earning over £30k per year one must use a platform compatible with their system.
At present my business is nowhere near that, however compatibility would be a bonus in case of future expansion or, possibly more likely, a further roll out of the laws to cover smaller businesses as well. As far as I can tell, not many FOSS options cover this aspect…
I am only starting to research this, but thought the community might just have some valuable advice!
At present I simply use a couple of spreadsheets and a template for invoices, and an email folder for receipts, with all data transfer done manually - which is fine, but it could definitely be streamlined!
I have used Q uickbooks before and it is perfect for small business, non-profit and charities. It will have more than you would need.
The issue is that its website’s country selection menu does not list the UK, only Canada, US and India.
There should be established definitions to businesses in your country. Here in Canada, there is no such thing as “smaller” businesses. Small business means 1 to a certain threshold of people with a dollar cap. All these values are way beyond what I would consider small. From a regular individual’s perspective, small business is quite large and one rarely goes into medium business territory. This surprises a lot of people who are not aware, including myself.
I would say that following MTD would benefit you greatly, not just for compatibility, but also for a service provider who actually takes the effort annually to become compliant with government policy. That shows that they can be a reliable partner subject to the land’s laws.
There is nothing wrong with spreadsheets, templates and email. You could automate much of that if you have a good workflow. Two questions you need to answer is whether you want to keep the legislative and technical parts of the process in-house or just enjoy your self-employment and leave the system maintenance to another.
I do not really need to go into why it may be inadvisable to give people your information. Two examples I can think of from the top of my mind are confidentiality and service continuity. Either of those can be compromised within a second.
Lastly, as a business owner, you will have to do the spreadsheets, etc., and know and apply tax and reporting laws anyway as part of healthy record keeping and accountability.
I worked freelance for a good number of years and looked after my accounts and tax submissions myself.
It sounds like you don’t have many transactions to deal with, and it might be some time before you need approved software. The world will change by the time you hit the 30k, so I would put off the hassle of buying and learning new software for now. And it doesn’t much help with expenses where the main problem is collecting the receipts/invoices and remembering to enter them!
I’m sure you will be streamlining things with invoice templates for example.
Re. self-employed tax returns, I would focus your record keeping around a spreadsheet that closely follows HMRC’s submission process, so the annual chore is kept as easy as possible (or is it more frequent these days?)
Good luck. I suppose gardening work won’t be replaced by AI!
I am a huge GnuCash fan. I use it for personal finance only, so I don’t have experience using its business features. However, from the looks of it, the business features seem fairly capable.
Alas, according to the GnuCash wiki (updated June 2022), “GnuCash does not support the VAT MTD API, nor the corporation tax API.”
Hi Steven,
the best solution might depend on how competent and experienced you are as a bookkeeper. When I had my full time photographic business in Australia I keep my tax records including profit and loss sheets as simple spreadsheets using formulas. I only switched to MYOB when I started using an accountant and he suggested that I would save money as it was what they used. It wasn’t any better than my spreadsheets but the information transferred to the accountant very easily.
I now am retired but do some photography classes and have returned to using LibreOffice spreadsheets to keep my records for tax. But I am confident at keeping good records without much stress.
I have to file Making Tax Digital quarterly earnings starting this fiscal year. I’ve used a free online version that was one of the 45 options (!) that HMRC recommends.
It’s called My Tax Digital.
It’s part of this group.
There are a series of videos (with a bit of an uncanny valley AI tutor) and explanations on how to use the service.
So far it seems to have worked ok. I filed my first quarter and it was accepted onto my HMRC account. I had a bit more trouble when I tried to file some other freelance editing income but I sent an email to them and was surprised that the response was within a day or two and genuinely useful. (Turned out that income didn’t need to be reported on a quarterly basis as I’m still in the two year grace period since I started doing it, which was confirmed by a call to HMRC).
Early days but it seems to be working. HMRC won’t issue fines for late filing or other cock ups in the first year.
HMRC also holds live web calls and recorded seminars on the new system though they tend to be overly complicated for me, I think, as they have to cover proper businesses as well as just people doing some freelancing, like me.
Edit: You do need to use one of those 45 recommended options - which I think includes most of the biggies - as your software has to be verified by HMRC and then you use it to file straight into the government revenue service.
