Report on Home Based Childcare Level 3: Self-Employment and Assessment

This report, designed for a Level 3 childcare course, provides an in-depth analysis of home-based childcare businesses. It begins by explaining the two primary categories for UK registration: sole trader and employer models. The report details the advantages, disadvantages, and responsibilities associated with each, including tax obligations and legal requirements. The report further explores the self-assessment process, crucial for childcare providers, outlining the steps involved in identifying required skills and knowledge and assessing individual competencies. The report emphasizes the importance of self-assessment for enhancing skills, ensuring quality childcare, and meeting regulatory standards, providing practical insights into the operational and evaluative aspects of home-based childcare businesses.

Home based child care
level 3

Table of Contents
INTRODUCTION...........................................................................................................................3
2.1 Explain how home based self childcare employed as a self employed as an employer...3
2.2 Explain self assessment process.......................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Childcare industry gives great amount of opportunities to run their own business as a start
up. If someone is passionate regarding love abs care for looking after the children then it is the
best industry as they can start their business such as home based childcare houses as it can be a
great choice for the individuals. Level 3 course will provide insights regarding work in home
based childcare as it will offers fun, financially lucrative ,rewarding childcare business. Present
Report focuses on Home based self childcare employed as a self-employed and an employer and
Describe self assessment process (Kalenkoski. and Pabilonia, 2020).
2.1 Explain how home based self childcare employed as a self employed as an employer
It is necessary in UK to register home based child care under two categories. this is
because it is a type of business in which services in offered to people. So, there are certain laws
and regulations which needs to be followed. thus, in home based child care it is defined as
Sole trader - It is known as simple business arrangement where one individual runs as
well as owns the whole business as it is also known as a sole proprietorship. Also, it is
considered as the simplest business structure as well as comparatively inexpensive and easy to
set up. It is also legally accountable for all the aspects regarding business. It makes all the
decisions regarding beginning and running the businesses as well as employ people. Thus
various people registered as a sole trader may only have owner and also it may consists of
additional employees and owner. They are the one who do not have a separate legal existence.
Within the eyes of law owner and business are similar. As an outcome for the debits of firm
owner is personally liable as well as at the same time might pay losses that can be made through
business. It is also known as unlimited liability. (Liu, 2018)
Advantages
 it is very easy to set up as well as operate
 It also enables to utilise individual tax file number ( TFN) to submit returns of several tax
 An individual is not consider as a worker for their own business as well as they do not
have to pay worker's compensation, payroll tax on income draw from their own business.
 It is very easy to change their business structure as if someone's wish to wind-up things
as well as if there is an increase of the business.
 If there are any losses happened within their business
Disadvantages

It has unlimited liabilities that means person's all personal assets are prone to risk if things are
not going well.
It is also little opportunity regarding tax planning as it can split business losses and profit
alongside family members as well as liable personally for tax paying regarding on all the income
of their business. (Fløistad,2018)
Responsibilities
As a sole trader the income from their business is counted within personal income as it means
that an individual is not a part of before but also require to pay complete assessment tax returns
within every year detailing within expenses and tax. They all have to pay it to HMRC.
Class 4 NIC's within 2020 – 2021 as these are the profits around 9% between £9,500 and
£50,000 and 2% on profits above £50,000. Income tax based on your taxable income;
Class 2 national insurance contributions (NICs) – at a fixed rate of £3.05 per week in the
2020/21 tax year, unless your annual profits are less than £6,475.
Sole trader's other responsibilities
 As a sole trader ,one should maintain its accounting records that able to follows standard
accounting practice also provides a fair picture and a true picture of the business. But also
unlike several other firms there is no requirement to maintain accounts as per the
particular structure.
Alongside there is also require to keep all good records regarding expenses and sales incurred,
such as these are considered as invaluable when an individual finish its annual self assessment
tax returns. Also there is no requirement of filling the confirmation statement like other firms.
Burt at the same time there is also need to full fill the needs that implies to the several types of
business, such as assuring the right insurance keeping health safety needs of child (Engelen,
2015)
Registered as a sole trader
Specified people are needed to register as a sole trader with HMRC as one of the most common
reason regarding registering for a sole trader is earning £1,000 from self employment within
years. There is also required to be registered as a sole trader as if someone wants to be self
employees such as if someone requires to claim childcare of tax free or also if someone wants to
make tax payments that aids to quality for several benefits.

How to registered as a sole trader
it is unlike the limited firms where there is a need to follow a process knows as incorporation as
well as there is no particular process regarding for sole trader registration. Rather than that if
someone wants to registered themselves as a self-employed then they can registering themselves
for self Assessment. It is consider as the most common way to register for self assessment and
that can be done directly by the website of HMRC. It is also recommended that if someone wants
to registered themselves as a sole trader than they can registered themselves as soon as possible
as no later after 5th October within business's second next year and if not then they can fined. (De
Henau, 2019)
Sole traders and taxes
A person will liable to becomes paying for various number several taxes such as
Income tax- that is considered as a tax paid on several types of incomes.
National insurance- A sole trader will pay class 4 and class 2 national insurance.
Through yearly self assessment tax return , both these national insurance and income tax are
calculated and assessed as well as paid.
Sole traders and VAT
It is noticed that sole traders can or cannot registered for VAT. Person may needed to registered
for VAT as if they have around a taxable turnover regarding threshold of VAT
An employer-
In an employer the person provide employment to others to provide child care services.
so, for that there are some laws and regulations to be followed in it. An employer in UK needs to
be registered under companies act 2006. Besides that, it needs to be registered under HM
revenue and customer (HMRC). in this staff is recruited for it. so, here reference number is
provided to be an employer. this can take up to 5 working days to get employer PAYE reference
no. Moreover, there is need to register business before 2 months to start paying for people. it is
not a separate legal entity as employees are working in it. this require change in act as all
company rules are followed in it. the confirmation letter is to be fulfilled by employer in it. It
makes all the decisions regarding beginning and running the businesses as well as employ
people.
Advantage

In this there is no such long procedure which is to be followed in it. so, here business is easily
registered in it.
the tax paid is low as compared to sole trader. thus, it allows in ease in registration process. the
tax is automatically deducted as per tax laws.
Disadvantage
the tax paid is high as compared to sole trader. this is because in that tax depends on sales and
profits earned.
As employer is it is difficult to manage and handle entire company. also, the owner liability is
limited in it.
the salary and wages are given to employees which results in decrease in overall new profit.
Responsibilities of employer:
There are several responsibilities of employer in it which are defined as :
As employer needs to give details of company registration number and maintain proper safety
environment. Besides that, it required to manage account and hold responsibility of entire
company.
apart form it, to keep record of all employee personal info and data and ensure that they are not
shared with any third party.
2.2 Explain self assessment process
Self assessment can be defined as a Process to look at oneself in order to analyse aspects
that are important for one’s identity and enable oneself to identify their capability regarding their
respective job. Self assessment plays an important role in self evaluation self verification and self
enhancement. Home based childcare are employed on their own and this is one of the reason that
they are required to to undertake self assessment in order to analyse their competency for the
work they are doing (Yan and Brown, 2017). This is important because this enables them to
enhance their knowledge and skills required for child care. In an organisational setting
organisation take responsibility of assessment of its employees but when individual is self
employed they need to assess themselves. Individual many self employed required to assess the
skills and knowledge when child care is self employed they need to ensure that they are able to
take care of the children. There are several benefits of self-assessment as this allows to get the
basis for one in which they are able to understand and identify the needs for improvement. This

is equally important as employee assessment is for an organisation. The process of self
assessment is as follows-
Identifying required knowledge and skills
This is first step of self assessment for child carer. This stage can also be considered as setting
context for the assessment. This is the answer to question that why individual is assessing
themselves. This means identifying knowledge and skills that is required for the job of child
carer. This is first stage because this stage plays important role in becoming a basis for for the
evaluation of knowledge and skills. There are several skills required for a childcare and before
starting the self assessment one needs to identify this skills. Some of the skills are patience
physical stamina and ability to adapt the situation which is frequently changing. These are some
of the skills along with this there are so many other skills that are required for the job of achild
carer (To and Panadero, 2019). In order to identify the required knowledge and skill one requires
to undertake practices like observation review of literature and getting assistance from those who
are senior in a particular field. In order to identify required knowledge and skills of childcare one
will require to get assistance from those who are senior in childcare. Along with this they can
also go through established literature regarding skills and knowledge that is required for
childcare and one can also developed knowledge of skills and required for child care while they
are working.

Identifying Individual Skill and Knowledge
This means identifying knowledge and skill that are possess by skills and knowledge.
This is very important because self assessment is all about identifying what are the skills and
knowledge that are possessed by individual. This is identifying what are the skills and
knowledge that one possesses. There are some of the ways through which one can identify their
knowledge and skills. This can be analysed through observation, and by taking feedback from
others. Observation includes constant observation of presentation of skills and knowledge in
different situation. Child carer can analyse their skills and knowledge in context of different
situations when they required different knowledge and skills (Thawabieh, 2017). They can ask
for feedback from their customers and as they are child carer they can ask for feedback from the
parents of the children. Through these ways child carer can identify their knowledge and skills.
They can also take feedback from the seniors and other professionals of the field regarding
identifying their knowledge and skills.
Analyse skills and knowledge against required knowledge and skills
This is another stage in which individual is required to analyse their own skills and
knowledge against knowledge and skills required for child carer. This is important for analysing
compatibility of individual for the job of child carer. This is important stage of the self-
assessment as this enables individual to understand and get knowledge of whether they are
competent for the job they are doing or not. This means that child carer will get know that from
the skills and knowledge they have and those are required for the job. Whether they are able to
perform or not and this will give them idea regarding what are the processes and areas where
they require improvement. This stage is similar to performance appraisal when actual
performance is analysed against standard performance (Warrington and et.al., 2018). This will
involve analysing and assessment of individual knowledge and skill and experience against
required knowledge, skill and experience.
Analysing strength and weaknesses
The above stage of identifying individual knowledge and skills and analysing them
against required skills and knowledge for the job of child carer will be followed by identifying
and understanding strength and weaknesses. Identification of knowledge and skills is important
because identification and knowledge of one’s strength will help them in adding value to their

performance and weakness will allow them to identify what are the areas and aspect of
knowledge and skills of one’s personality that requires improvement.
Strength
This means what are the skills that are important for the job and can help in improving
performance. Strength is important and is known as some important elements that add value in
individual performance and skills and knowledge of individual.
Weaknesses
These are the elements of individual skills and knowledge that create barrier for individual
performance and effective performance of individual. Weaknesses are not desirable and create
barrier in performance (Wanner and Palmer, 2018). For example, an individual with a short
tempered nature will not suitable for the job a child carer and this becomes a weakness for the
individual in child care services.
CONCLUSION
From report it is summarised that in UK to register home based child care under two
categories. They are employer and sole trader. in sole trader there are various types of
responsibilities which is to be followed. They are maintaining its accounting records and to
records regarding expenses and sales incurred. For employer they are to maintain data and info
of all employees and responsible for entire company. A self assessment process is to evaluate
business in terms of profits. There are several steps which needs to be followed. it is useful in
evaluating value of services offered.

REFERENCES
Books and journals
De Henau, J., 2019. Employment and fiscal effects of investing in universal childcare: a macro-
micro simulation analysis for the UK (No. 83). IKD Working Paper.
Engelen, E., 2015. The Dutch Childcare Heist: the Financialization of State-Near Sectors.
In SASE mini-conference on the Foundational Economy, London, 2nd-4th July.
Fløistad, K., 2018, January. Article 29 [Social security for workers and self-employed persons].
In Agreement on the European Economic Area (pp. 385-391). Nomos
Verlagsgesellschaft mbH & Co. KG.
Kalenkoski, C.M. and Pabilonia, S.W., 2020. Initial Impact of the COVID-19 Pandemic on the
Employment and Hours of Self-Employed Coupled and Single Workers by Gender and
Parental Status (No. 13443). Institute of Labor Economics (IZA).
Liu, S., 2018. The Autonomous State of Childcare: Policy and the Policy Process in Britain:
Policy and the Policy Process in Britain. Routledge.
Thawabieh, A.M., 2017. A Comparison between Students' Self-Assessment and Teachers'
Assessment. Journal of curriculum and Teaching. 6(1). pp.14-20.
To, J. and Panadero, E., 2019. Peer assessment effects on the self-assessment process of first-
year undergraduates. Assessment & Evaluation in Higher Education. 44(6). pp.920-932.
Wanner, T. and Palmer, E., 2018. Formative self-and peer assessment for improved student
learning: the crucial factors of design, teacher participation and feedback. Assessment &
Evaluation in Higher Education. 43(7). pp.1032-1047.
Warrington, A and et.al., 2018. Finding value in the process: Student empowerment through self-
assessment. English Journal. 107(3). pp.32-38.
Yan, Z. and Brown, G.T., 2017. A cyclical self-assessment process: towards a model of how
students engage in self-assessment. Assessment & Evaluation in Higher
Education. 42(8). pp.1247-1262.