Choosing to work as a self employed taxi driver has many perks. You can keep your own hours and work as often as you like to make sure your bills are paid. The slightly more difficult elements of self-employed include money management, insurance and taxes.
Managing all these aspects of your business may seem difficult if you’ve never faced them before, which is why we’ve got these tips to help you along your way.
Put a System in Place
Our top tip for managing your money as a self-employed taxi driver is to have a system. It can be extremely simple, but you need to ensure you keep details of your fares and tips you’ve earned in separate places.
Any crossover can get complicated. So to help you there are automated systems which will keep tabs on your receipts and tickets. Without a system it’s hard to know if you’re coming or going, and you need to be sure what you receive matches up with what you’ve charged so that you’re paying the right tax to HMRC.
Separate Tips and Fares
When it comes to your tax return tips and fares will be treated differently so you need to record them separately. Your fares add up as your income, which means you need to pay income tax and National Insurance on this amount whilst tips, as a voluntary gift from the customer, are only liable for income tax.
Have separate places for both and you’ll be in a better position when tax return time comes around.
Stay Insured
As a taxi driver you need more than simple vehicle insurance. You are providing a public service and therefore your taxi insurance should include other elements such as public liability insurance. You can even include additional extras such as health insurance or personal accident cover.
The level of insurance you choose will affect its cost but remember, like many other expenses, it may be classed an expense and therefore tax deductible.
Note down Expenses
As well as making money to maintain your business as a taxi driver you will also need to spend some too! So in the same way that you ensure you have a note of your income, you should also note down all your expenses as well. Almost all your expenses can be deducted from your income, therefore reducing your tax bill.
Keep accounts of everything including fuel costs, taxi insurance premiums and incidentals such as toll fares.
Choosing to become a taxi driver can be a profitable career, but only if you keep your finances in check.