Single mum - new business - Inland revenue

[donnamarie2uk]

Hello all

Im new to the forum, been reading through some of the messages and you all seem so friendly and helpful.

Ive been crafting for a couple of years now, I do all sorts card making, Scrapbooking, Cross stitching, Wedding stationery, Done a bit of Quilting and now Im thinking about trying Jewellery making.

Anyway Im a single mum with a 6 year old daughter, I work part time so dont pay any tax or NI and I get help with my rent and council tax and also get working tax credit.

Could anyone tell me if they have been in the same situation as me and then started their own craft business and became self employed? How will it affect my benefits/credits? All im wanting to do to start with is sell on ebay and at craft fairs, but I want to do it all by the book, dont want to get caught and fined!

Hope someone will be able to help me.

Donna

[peggyprints]

Hi Donna

I'm afraid I can't help with any of your questions but I just thought I'd say welcome to the forum (welcome) and good luck with your crafting!

[annnoble]

Hi Donna,
You will need to inform the Inland revenue and also housing benifit.

Housing benifit will then ask you to fill out a self employment form stating your finances with your business, this will need to be filled out every three months or so!

Also in my experiance this will then make payments delayed untill they can get off their bums to do the work AHHH:mad:. Its very fustrating!!! Housing benifit will also take/deduct for every £ you earn.

Most of them, housing benifit staff, will be happy to help with any answers.

But be warned, I have had them come back to me many a time because they do not understand the difference between Gross and Net profit and there is usally a big difference!! In my opinion they do not understand how a business runs. But that could just be my council!

I hope this helps and doesn't put you off to much, just be prepared to tackle a lot of red tape.

Ann

[ilovecrafts]

(welcome) to the forum
Sorry i cant help with your questions,but it sounds like you might have to tread carefully,and find out what it would cst you(ie what youw woud ose) before you start, as getting any benefits back would be a nightmare I should think!

[Poppy4lee]

Hello & (welcome) from me too.

Ann's right, you'll have to infor the Inland Revenue & Houing Benefits. It all gets so messy and complicated when all you want to do is earn a bit of cash, so much form filling etc. I hope it all goes as smoothly as possible for you :)

[0103media]

Always with tax is a sliding scale..

e.g. its not worth earning more the say £7,000 a year until you hit £12,000 and so on..

However if your self employed it helps as you can buy things to go against tax and reinvest in the business.. I worked on 100% reinvest on some sites thus it make zero profit and I've paid no tax on it, once you feel it can make some cash then you can say half the reinvestment making 50% profit etc..

Hope that makes sense..

[craftyjan]

hello and welcome if you go to the job center they might give you some help on what you need to do good luck(welcome)

[creativeclare]

This might not be anyone elses opinion but I`d hold fire on informing the Inland Revenue etc.....


I`m not trying to suggest that you do anything illegal but unless you`re earning from your business right now, I would keep accurate records of your expenditure and earnings, keep your receipts from purchases that could be business related. Perhaps try and save up from your earnings incase of a tax bill.

Like the previous poster, I`d go to the job centre and "enquire" what would happen in the event of becoming self employed. I seem to remember that the Benefits Agency will continue to pay Income Support and your NI for a number of weeks whilst you trial your business.

Perhaps when the sales are coming in and you`re earning from your business then notify everyone you need to??

[Ifor-Jones]

I understood that if you became self-employed - which you will be if you are selling anything - you had to notify the Inland Revenue within a limited space of time.

[woollysheep]

You have to inform the Inland revenue with in 3 months

[urbanfairy]

hello donna and welcome to the forum!

i'm in a similar situation in that i'm a single mum and work part time, and have just done the biggy - gone self employed! i dont get help with rent or council tax though, and as others have mentioned, these things would probably get considered/altered depending on your earnings. the best advice i could give is speak to the inland revenue and tax credits as i did before starting up. i explained to them what i was considering in doing, and discussed what my current situation is and what possible earnings if any, i expected. they were both extremely helpful, and individually gave me great advice so that i was able to do what suited me and also benefit me. in other words, for now i'm not loosing out as it were. whether i'm able to actually sustain myself in the future i'm yet to find out! but its a great feeling to know i'm doing something for myself and i have that little bit more control. nothing ventured, nothing gained in my book! i wish you the very best of luck, and by the way..................... i would never have thought in a million years i would ever be in this position, it was what 'other' people did, clever people in the know. arent i daft!!

[donnamarie2uk]

Thank you all so much for your advice. I shall give the Inland revenue a call and get some information off them.

Thanks again
Donna :)

[Craft Pic&mix]

Hi donna... it can be very confusing but if you go to your local civic centre and seek free legal advice they can help you step by step and also the first year is TTTTAXXXX FREE i love those words xxxx

[Carpe Diem]

What about giving your local business link a call. They do courses and give advice to people starting up in business and its also free..

I have a friend who started up a business, she was a single parent and was on housing and tax benefit and she has an exemption from tax and NI for I think it was 3 years. She had to send her accounts off to the council for the housing and council people every 3 months if I remember but as she was ploughing everything back into the business her benefits stayed the same as her accounts backed up the fact that she wasn't making a profit.

I hope this helps some...

Oh yes good luck. You are braver than I am - I would love to be my own boss but at the same time I am a big coward when it comes to having the confidence to do the paperwork side of it.. So I just sit here feeling envious of you brave peeps that are fulfilling your dreams.

[bigbird842]

Hi
I am a single mum and set up in business 4 years ago. Check out your local area for Business enterprise agencies as they can be very helpful with accounts courses and form filling. When I registered with the inland revenue they sent out a very nice lady who explained all the paperwork I needed to keep and what i could claim as a business expense which includes 40p per mile for all business related trips that includes shopping and travel to craft fairs. If you are selling at fairs it's worth getting market traders public liability insurance and only costs about £50 a year. I don't know where you are in the country but craft people 2000 are very good craft fair organisers and it doesn't cost the earth to book a table.

If you work it properly and claim for everything possible against your tax you wont pay very much tax and it shouldn't affect your benefits that much.

[urbtaf]

First you have 3 months to tell the tax man that you are starting a business, but I would phone them now as they will send you a load of helpfull info.
I was a single dad with 2 kids for years (it seemed a lifetime:o) and 2 years of that my business hit rock bottom. I claimed working tax credit, houseing benifit, and anything else I could.
The tax people are not a problem as long as you keep a proper day book they will be very easy to deal with.
Houseing benefit is very strange, every council has their own rules, and they are daft. A friend of mine tried to claim it and was told that they would only allow him to claim a third of his fuel bill for business the rest is personal use. OK except he was a HGV driver and spent about £1000 a month on derv, which added £600+ to his earnings.
Join the National market traders fed. (their on the net) £75 a year , it gives all the insurance you will need + if you have any tax problems in the future they have a free advice service.
Good luck and go for it Ive never looked back, even in the bad times

[nutty tigger]

my own understanding is that you have to inform the IR within three months of registering your business.. as others have said, keep any receipts to cost against your tax and keep a log of all sales, this will then show your profit margins, also account for time spent and allow yourself an income against this...all of this can then be deducted against income, which will look a poor income after all of the deductions but this is for the tax man ...right?....lol

If you go to your jobcentre, they will point you in the direction of your local business initiative centre, although mine werent much help unfortunately...

Dont forget, if selling on-line, you can account for the cost of your computer etc...it all mounts up when you start with outgoings and thinking about all of the little costs incurred which are so often ignored or not taken into account...

one good bit of advice is to deduct around 33% of anything you make from sales and place this into a seperate bank account, as this will pay for your tax or NI bill at the end of the year if you miscalculate...believe me this saves a lot of trouble and is easier to do than working out each thing...you may even have some left over at the end, but better that than owing money to the tax man...

Hope this helps?