hobby v business

[alisoni]

hi
i am at a bit of a loss to know when i should be thinking of my jewellery making as a small business (and thus would presumably need to register as such etc) rather than a hobby. if my products are to be sold in a gift shop, even on a sale or return basis, should i be thinking along the lines of running a business? sorry if this is a stupid question, but i have only ever been employed by the NHS before so know next to nothing about such things!

[beadsbydesign]

"you should register with the Inland revenue if you are exchanging for cash or goods"
The IR don't bite and will give advice!
I would say it sounds as though you need to register, but don't worry that doesn't mean you'll have to pay any tax (unless your earnings are over a certain figure)

[Tip Top]

It's better to be safer than sorry!;)

[caketopper]

I was thinking about this too, I havent registered yet but will do shortly

[EMEvans]

Just be warned you only have three months to register or you may get a penalty.

[caketopper]

Yes Im going to do it ASAP

[alisoni]

ok dumb question here but how will they know? would it be by any reciepts you have?

[swirlyarts]

ok dumb question here but how will they know? would it be by any reciepts you have?

If you have been trading for longer than three months? They can look at recipts etc - I'm sure there are other ways tat they can find out too. If you are selling on ebay etc then they can and will have a look at what you are selling there - they apparently have a team of people looking into what people are selling. Best to register now.

[Donster]

I know this sounds stupid though but if you are someone who sells a few odd bits on ebay does that mean they expect you to register? Or if you run a full shop? I suppose I'm not sure what the difference is with someone who may sell a few odd bits as a hobby, or someone who could be accused of running a business.

[candles by lisa]

You would probably be best to check with the IR - you could either go on line or phone. However it would probably be best to register because you really wouldn't want a tax investigation. Also if you are making very little (and in this case of the useless craft fairs we have all had lately - making loses!!) they wont take anything off you or ask you to fill in a tax return.

Cheers

Lisa

:D

[alisoni]

ok thanks, will look into it sooner rather than later.

[Ballerinacaz]

If you are just selling on Etsy or simelar (I can't spell I know) does this count as a small business or not?

[Katianne]

Yes! If you sell your crafts it counts as a business and you are classed as self employer (even if you are also employed - e.g. in another job).

[Ballerinacaz]

o ok how do i do that

[Katianne]

You need to contact the Inland Revenue to register as self employer - you can do this either online or by phoning them. You need to register within 3 months of starting your business.

[Shipbuilder]

If you make anything to sell, or buy things to resell, then as far as the authoriteis are concerned, you are a business. If you just let the tax people know, that is all that is required. The good part is that anything that you buy for the "business" may be claimed against tax, but you must keep the receipts. The hardest part to bear is that the customer seems to have all the rights, but the seller none. If you send anything by post, then you are responsible for it getting there safely & must make good any losses or damage. That is OK on small things as very little gets lost, but on larger or more expensive items & delicate items, it can be an expenisive problem to the seller if something gets lost or damaged. As far as I know, you can't insure jewellry & certain other items & in my case, it is very difficult to insure scale models against damage. Another thing is, that you must display your name & full postal address on your own website or on your Ebay page if you are a business. I am uneasy about this for security reasons & at present it has forced me to rethink about carrying on. (The rules are about to be enforced). I only found out about this from Ebay recently!
Bob

[wyattbean]

In fact you may get a tax rebate if you pay tax on other earnings. So can be useful
Sue

[Shipbuilder]

The tax people told me that I could offset losses (craft) on other earnings, but when I tried it, they said I had been wrongly advised. The losses from a craft business can be carried forward to the next tax year etc, but cannot be used to offset other earnings (interest on capital, full time job etc).
Bob

[Beadservice]

Any income from any sales, however small should be declared.

There's no such thing as a 'paying hobby' , once you start selling you're in business as a sole trader and need to register as such with the Inland Revenue.

If you are already in employment you still need to register, and you will receive a Self Assessment form, onto which you will transfer the info from your P60 i.e. your income and tax paid. You then go to pages referring to 'self empolyment' and add the figures from your business, and then the 'tax office' will calculate the rest, or you can input it all on line, and the calculation is done immediately.

There can be a scenario where you pay tax on your income from employment but made a loss in your business, and in doing a 'self assessment' form would mean you would get tax back.

Debbie

[Shipbuilder]

Hi Debbie,
That is what they told me, but when I filled in the form for my losses to be set against tax I had paid on my other incomes, they told me that I could not do this (although it was on their advice in the first place!). I could only use it to offset eventual profits on the "hobby" type business. When I began making profits again, that is what I did. With all these Distance Selling Regulations, it is no longer worth carrying on anyway. Because my models are quite high value & most have sold overseas, I can no longer take the risk of them sustaining damage in transit or even of the buyer deciding that they do not want them once they get them (So far, this has never happened). Insurance is virtually impossible for scale models in transit & if you do find a courier who will offer it, they will usually try & wriggle out saying "inadequate packing!" The fact that DSR insists that safe delivery is the responsibility of the seller, I am no longer prepared to take the risk. In order to avoid DSR, I can now only sell face-to-face in the UK! It seems that the buyer has all the protection, but the seller has no rights whatsoever.
Bob

[saraeden]

When i set up my business i went to the business link and got loads of help from them !! They can help with all the legal stuff plus they know how you may be able to get funding !!

Sara x