If you’re planning to start as an independent taxi driver soon, there will be many aspects that are new to you. At the very least, it will be necessary to maintain your administrative records. This might seem complicated at first, but if you think ahead about what’s involved, you can keep things manageable for yourself.
Your Own Taxi Business, What Should You Consider? Thankfully, it doesn’t have to be overly complicated, but there are matters you need to contemplate or take into account.
In this article, we explain what you need to think about and pay attention to when starting your own taxi business.
What Licences and Declarations Do You Need for Your Taxi Business? When you begin as a taxi driver, there are several licences and declarations you must have.
These measures have been introduced to regulate the market and ensure a certain standard.
You should consider the following:
Criminal Record Declaration The criminal record declaration is essential for applying for your business licence. If you have drivers working for you, or if you employ other freelance drivers, they will also need a criminal record declaration.
Taxi Transport Licence You need this licence to transport passengers. It assures passengers they are dealing with a trustworthy transporter/driver. Your compliance with the requirements is checked periodically.
Driver’s Card/Diploma (taxi badge) To work as a taxi driver, you must have a valid driver’s card, also called a taxi badge. This card is used, for example, to record driving and rest times in the onboard computer.
Taxi Inspection Certificate A car used as a taxi must meet several requirements. It should have blue number plates, an onboard computer, and a taximeter. The DVSA conducts the taxi inspections. The taximeter must then be inspected annually.
In What Capacity Will You Operate as a Taxi Driver? If you work as a taxi driver as an independent entrepreneur, you have to decide how you want to do this. You can either rent yourself out as a driver to an existing taxi company or start your own company with your car. Below, we will mention the pros and cons.
Taxi Driver Renting Out Services to a Taxi Company In this form of entrepreneurship, you rent out your services to another company. You then make arrangements about your hourly rate and potentially driving hours. However, you need to meet the professional competence requirement, which is part of the taxi transport licence you must have.
Advantages of Renting Out Yourself as a Taxi Driver You can start a business without much capital. No high monthly costs. You can drive for multiple taxi companies simultaneously. Disadvantages of Renting Out Yourself as a Taxi Driver It resembles employment, as the taxi company might dictate your working hours. The contract can be relatively easily terminated. Starting Your Own Taxi Company Of course, starting your own taxi company is also an option. You would then purchase your car to drive. To start your own taxi company, you are required to obtain a recognised professional diploma for taxi entrepreneurs.
Advantages of Having Your Own Taxi Company You’re your boss, so you decide your working hours and the direction of your company. If you purchase a car and use it for more than 90% as a taxi, you can reclaim the vehicle tax on the car’s purchase. It’s possible to expand and employ drivers yourself. Disadvantages of Having Your Own Taxi Company Owning a company brings responsibilities like managing administration, obtaining licences, etc. Initial costs are higher than driving for another company. Keeping Track of Work Hours and Ride Registration Whether you’re driving the taxi yourself or managing a group of taxi drivers from your company, you need to keep a clear record of driving hours and ride registration. This used to be done manually in specific work folders, but it’s now integrated into the mandatory onboard computer.
You can only log your rides, driving, and rest periods in the onboard computer once it’s installed in the vehicles and once you have a driver’s card from the Kiwa Register. Note: you remain responsible for your records. If the onboard computer fails, you still need to keep track manually. You’re free to choose how you do this; you can still use the old work folders.
5 Accounting Tips for Taxi Drivers We’ve compiled some accounting tips for taxi entrepreneurs. Follow these for maintaining as accurate and comprehensive a set of books as possible:
Regularly update your accounts. Use a comprehensive, user-friendly accounting program. A system like DigiBTW offers clarity in your accounts and helps prevent mistakes due to its ease of use and consideration for freelancers. With DigiBTW, you can also send your VAT return directly to HMRC. Additionally, DigiBTW is the only program in the UK with a module to file your income tax return directly.
Business Bank Account Get a business bank account to separate your company’s revenue and expenses from your personal account. This simplifies your accounting obligations and helps you get your books in order quickly. With a program like DigiBTW, your bank transactions can be easily incorporated into your accounts; much of this happens automatically.
Fuel Card To avoid losing receipts and thereby not being able to claim back VAT on fuel costs, it’s advisable to get a fuel card. You can pay with it just like a debit card when you fill up, and you receive an itemised invoice at the end of the month.
Benefit-in-Kind If you also use the taxi for private journeys, you’ll have to pay a benefit-in-kind tax at the end of the year. This is considered when you file your income tax return. If you drive fewer than 500 private kilometres, you won’t have to pay a benefit-in-kind, but you must be able to prove this during an HMRC audit. Private trips can be logged separately throughout the year. With a system like DigiBTW, you can also record your trips and mileage.
Save As an entrepreneur, there are often expenses that you need to pay later. This is the case with tax returns, for example. VAT is usually settled every three months; depending on the revenue and expenses, you either receive a refund or have to pay. Income tax is only after a year; you should have set aside money for this. The same applies to the benefit-in-kind if you want to drive the taxi privately. Additionally, as a taxi entrepreneur, you might face (unexpected) car maintenance costs. Therefore, it’s recommended to set aside money monthly in a (business) savings account.