Going Self Employed

What is the primary responsibility of a self-employed person?

• Paying taxes through PAYE

• Working as an employee for another business

• Managing every aspect of their business's finances

• Receiving employer pension contributions

Answer explanation

The primary responsibility of a self-employed person is managing every aspect of their business's finances, including budgeting, invoicing, and financial planning.

Which of the following is NOT a benefit of being self-employed?

• Freedom to run the business

• Variety in work projects

• More job security

• Potential for higher earnings

Answer explanation

The correct choice is 'More job security' because self-employment typically involves less job security compared to traditional employment.

What must you do when you become self-employed?

• Register with HMRC

• Apply for a company car

• Sign up for employer pension contributions

• Enroll in a corporate health insurance scheme

Answer explanation

When you become self-employed, you must register with HMRC to comply with tax regulations.

What is the deadline to register as self-employed with HMRC?

• 5 October in your business's second tax year

• 31 January after the end of the tax year

• Immediately upon starting your business

• At the end of the financial year

Answer explanation

The deadline to register as self-employed with HMRC is 5 October in your business's second tax year, as per the correct answer choice provided.

Which type of insurance is NOT mentioned as a necessity for self-employed individuals?

• Public liability insurance

• Professional indemnity insurance

• Pet insurance

• Employers' liability insurance

Answer explanation

Pet insurance is not mentioned as a necessity for self-employed individuals, unlike public liability insurance, professional indemnity insurance, and employers' liability insurance.

What is the purpose of Making Tax Digital introduced by HMRC?

• To reduce the amount of tax self-employed people pay

• To phase out digital businesses

• To increase the tax for digital businesses

• To make tax affairs digital and easier to manage

Answer explanation

The purpose of Making Tax Digital introduced by HMRC is to make tax affairs digital and easier to manage.

What can self-employed workers claim to reduce their tax bills?

• Company car expenses

• Employer pension contributions

• Paid holidays

• Utilities bills and travel costs

Answer explanation

Self-employed workers can claim utilities bills and travel costs to reduce their tax bills, as these are legitimate business expenses.

What is the VAT registration threshold for businesses as of April 2018?

• £75,000

• £100,000

• £85,000

• £50,000

Answer explanation

The correct VAT registration threshold for businesses as of April 2018 is £85,000.

Which of the following is NOT a type of business structure for the self-employed?

• Limited liability partnership

• Sole trader

• Employee-owned corporation

• Limited company

Answer explanation

The correct choice is Employee-owned corporation because it is not a type of business structure for the self-employed.

What is the main disadvantage of being self-employed?

• Less job security

• Automatic enrollment in a pension scheme

• Guaranteed paid holidays

• Access to more job opportunities

Answer explanation

The main disadvantage of being self-employed is less job security, as there is no guaranteed income or benefits like paid holidays.