Tax Advice for Self Employed Pet Sitters

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Self Employed Pet Sitter? Here is our tax advice guide just for you. Whether you are starting out or just want to understand more about allowable expenses, here are some useful tips specifically for self employed pet sitters.

How to Become a Self Employed Pet Sitter

If you would like to become a pet sitter, then going self employed is the easiest way to get started. When you are self employed you are responsible for your own taxes and national insurance (unlike if you were employed in a job and issued with a payslip each month showing your pay and deductions).

The simplest way to register as for Self Employed is to visit the HMRC website and register online. The process can take 10 days to complete upon which HMRC will post you a UTR number (Unique Tax Payers Reference). Keep this safe as you will need this code to file your Self Assessment Tax Return.

From this point you must then:

  1. Set up a bookkeeping system that keeps a record of all your income and expenses, as well as filing all your receipts;
  2. Complete a Self Assessment Tax Return by 31 January each year summarising your business income and expenses;
  3. Pay any Tax due by 31 January each year (and payments on account by 31 January and 31 July each year).

Your tax return submitted by 31 January covers the previous tax year (a tax year runs from 6 April to 5 April). So for example, your tax return due by 31 January 2018 details your earnings between 6 April 2016 to 5 April 2017 and this will detail your income from pet sitting as well as any other earnings you may have (such as from other rental income, bank interest or dividends).

Here is a sample Tax Return and Sample Self Employment Section which would need to be included for Self Assessment.  These are samples, you will need to submit your own Tax Return online.

Tax Return Sample

Self Employment Tax Return Section Sample

It is also worth noting that if you already complete a Self Assessment Tax Return, for example because you collect rental income or have savings interest, that you need to complete a Form CWF1 to notify HMRC that you have a new form of income you need to report on.  Again, you can do this online here and you will need your Unique Tax Payers Reference.

When Should You Register with HMRC as a Self Employed Pet Sitter?

You must register with HMRC as self employed as soon as possible after starting work as an Pet Sitter but HMRC rules are that you must register by 5 October in your business’ second tax year.

However if you are newly self employed and expect that your gross income will be less than £1,000 in your first year, you may be entitled to the £1,000 Annual Tax Allowance for traders meaning you don’t need to register and declare your income. Check the criteria to understand your eligibility and whether this allowance is the most tax efficient solution for you here.

Next: How Much Tax Do You Pay >>

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Now Available, my simple bookkeeping spreadsheet and guide designed for self employed dog sitters.

How Much Tax Do You Pay being Self Employed?

When you are self employed you pay tax based on your profits of your work (all your income less all your costs) and the amount of tax you pay depends on how much profit you make.  Self employed individuals are also required to pay Class 2 and Class 4 National Insurance, which is again dependant on your profits.

How to Work out Your Profits

You need to add up all your income from Dog Sitting and Dog, which includes all cash payments as well as bank transfers, then deduct all your expenses as a dog sitter.

Self Employment Expenses for a Pet Sitter

You are allowed to deducted expenses from your income before working out your tax – these are known as Allowable Expenses.  It is really important that you keep a note of all your expenses because you don’t want to miss out on any since they reduce your tax bill.

Here are some typical allowable expenses for Pet Sitters:

Equipment

Even though you are pet sitting at home, you may need to buy some additional equipment to cater for pets staying in your home. You may need spare crates, food bowls, leads, treats or storage units for hamster cages. This additional pet sitting equipment will more than likely be fully tax allowable or attract Annual Investment Allowance, which is another way of making tax savings. So keep all the receipts for everything you buy so you can discuss deductions with your accountant.

Computer & Printer

You may need a computer or iPad to take bookings, research, learn or share photos and videos with pet owners missing their loved one. You may need a printer to produce flyers to win new work. Your Computer & Printer will attract tax relief either in full or as a proportion as an allowable expense or under the Annual Investment Allowance rules for business use.

Website

A website is almost like a marketing brochure now and gives you a chance to tell potential customers what services you offer, show real life photos and detail your rates. Your Pet Sitting website is an allowable expense as well as the hosting.

Phone & Internet

The cost of a business phone (landline or mobile) and internet is an allowable expense, however if there is personal use then only a proportion of the costs relating to your business can be claimed.

Branded clothing

If you have a ‘uniform’ with your branding that you wear while you walk dogs for example, then you should be able to claim for this cost. There are also some circumstances where you can also claim the cost of some basic outdoor clothing if you are out walking dogs such as rain coat and wellies. Normal clothing is not allowed and unfortunately the cost of washing your clothes at home is not either.

Mileage

Picking up and dropping off pets to their owners may be part of your services you offer as a pet sitter. If so, keep a note of the mileage you travel. Record your miles to and from your destination since you can claim 45p for the first 10,000 miles of driving and 25p thereafter.

Use of Home

There are rules that will allow you to claim an amount for the running costs of being a self employed pet sitter from your home as a portion of your household bills such as gas, water, electricity or rent. Make sure you have an idea of your household running costs to discuss with your accountant at tax return time as they will help you work out how much you can claim against your taxable income.

Pet Sitter Insurance

If you have taken out an insurance policy to cover loss, damage negligence etc you will be able to claim this cost as an allowable expense.

Treats, Pet Food and Toys

You need to keep your house guests fed and watered, so keep your receipts for any of these costs so you can support your claim for ta relief.

Marketing/SEO/PPC

Any marketing you do, flyers, business cards or paid ads are also fully allowable expenses so make sure you download your receipts ready for tax time.

Accounting & Bookkeeping

Keeping accurate business records will help to avoid missing any entitlements or tax relief that you may be eligible for. If you buy an accounting spreadsheet then the cost is fully tax allowable. Then, if you choose to use an accountant to complete your self assessment tax return, again their fees will be an allowable expense. It is worth noting that keeping your business records in good order will help keep your accounting fees at a minimum.

Bank Charges

It is advisable to open a business bank account and keep your business and personal expenditure separate. The bank charges you pay on your business bank account will be treated as an allowable expense.

Recording Your Business Transactions

You will typically be paid in cash bank transfer or by card if you choose to offer a card payment service like Sumup. Like any self employed sole trader, it’s important to keep accurate business activity records and store receipts that support all your business expenses. Doing so will make life easier when the time comes to completing your self assessment tax return and claiming for any allowances/reliefs that you are entitled to. Incomplete or inaccurate records will demand more time and hike up any accounting costs and can result in fines from HMRC.

When you are self employed using a spreadsheet to summarise your income and expenses is a straightforward, HMRC compliant way to record your business transactions especially with the introduction of making tax digital from 2019.  Making Tax Digital will require most self employed individuals to maintain their bookkeeping digitally and report on their earnings quarterly to HMRC.

Next: How Much Tax and National Insurance Will You Pay When You’re Self Employed >>

My bookkeeping spreadsheet contains a easy to understand dashboard which estimates the amount of tax you need to pay as well as automatically summarising the numbers that matter to you and your business.  It’s simple to use and an affordable way to keep track of your business’ profits and automatically estimate tax you need to pay.

Bookkeeping Spreadsheet Cash Business

Anita is a Chartered Accountant, turned blogger and creator of the ever popular free Go Self Employed Email Mini Course, which has been completed by hundreds of attendees all over the UK. Using her 10 years experience in accounting, tax and operations for Small Businesses, Anita is on a mission to make finance simple for the self employed, so they can stop stressing about tax & finances and focus on building profitable businesses which will give them the lifestyle they dream of.