If you are near that VAT threshold and a sole trader, if you take most of the classes and you have teachers, you need to split that income. In turn, if you are a limited company, as soon as you reach the £85k threshold, then you have to become VAT registered. VAT thresholds are also something to be considered if you want to become a limited company.
Tax Digital changes coming in 2024?
There has been talk of making tax digital for quite a long belarus rcs data time now. And there is encouragement for both limited companies and sole traders to make the shift to digital. The prospect was to do that in 2021, but now, due to many factors such as COVID, this deadline has been pushed back to 2024.
Having your records online on accounting software makes everything so much easier. I still have clients who bring a stack of paperwork and we have to put all that into an Excel spreadsheet – the whole process is so taxing! It’s just a case of having a look around at accounting software and moving from manual records into the world of online accounting software.
It is important to start looking at accounting software even though the final switch will occur in 2024. Have a look at software such as Xero and Wave; the first is very user-friendly and ideal for bigger schools, while the second is good for smaller schools.
Should I be worried about IR35?
HMRC has a tool you can use to see if you should be worried about IR35, but if you are a subcontractor, working for more than one place, such as is the case with dance teachers, I don’t think you need to worry about it.