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  • Setting up

    Hi for Christmas I made all my family and friends mdf plaques and hearts and some beaded but and bobs too.
    If I sell my plaques I could make £5-9 on each plaque and beaded items £1-3 on each one. It's not a lot but I'm a stay at home mum and any extra income would be great. I'm willing to work hard to get it up an running.
    What do up need to do first? If I earn £1000 a year how much will I be taxed ?
    I have a lot of questions as very new to all this. Will I need insurance?
    I'm worried all extra costs will mount up and I won't make any money?
    How's everyone else doing?
    Thanks

  • #2
    If you register as self employed, you will probably loose no child tax credit, and you may be able to receive working tax credit. Best to contact HMRC. In my experience, HMRC are very helpful indeed. They have never been anything other than perfectly civil and helpful.

    You will be able to earn close to £10,000 before income tax kicks in. That is your personal allowance.

    It may well be worth contacting an accountant who will be able to give you proper advice. They know how to offset x against y to minimise your tax liability and maximise your income.

    Keep good records!

    When I was last self employed, I did all my own accounts. Probably a mistake as I didn't claim for electricity, heating, or phone, which I could have done. I think this time I will be hiring an accountant!

    As for insurance, I can't answer that. I never had any when I was self employed before. I suppose it's probably wiser to have some.

    Lenny
    ~~The old ways are the future~~

    Comment


    • #3
      you can earn up to your personal allowance without being liable to pay any income tax - and that income is after deductions for materials and expenses connected with earning the money (and insurance)
      Your items seem very cheap - don't under price yourself but there again, be realistic about how much you are going to sell and whether your stuff is good enough in the big wide world of real commerce (don't rely on nice comments from family. talk maybe to your local nice things type gift shop for a realistic assessment)

      Comment


      • #4
        You have your own personal allowances and assuming you have no other jobs you can earn £7475 before having to pay tax on any profit after that. Remember that is profit - so after your materials, stall fees, insurance etc. chances are you won't reach the tax threshold unless your sales are over £3000 per month! You do need to register as self employed however with hard and complete accounts and self assessments annually.

        for the first year or so you could do this yourself - I believe hmrc and/or business gateway run accounts courses.

        in my opinion insurance is a must - it can be about £50 or just over for public liability. (Just in case someone sues you for getting a splinter!). Many fair organisers require proof of insurance. You can of course take the cost of this off your income for tax purposes.

        go for it!
        Elin
        xx
        Come and say hello at:
        My blog - Elin's Cards
        My website - Cards by Elin
        My facebook page.

        Comment


        • #5
          Personal tax allowance
          £7,475 is for 2011 -2012 so maybe Elin will be working with that number, or £8,105 for 2012 -2013 but if Kimmiejohn can wait until April before selling they can earn £9,440 before paying tax.
          Remember that's profit not takings.
          When looking at insurance look for product liability as well as public liability. I can imagine splinters on the plaques and beads choking babies. Also, consider joining an organisation as they'll give you perks like free legal advice as well as your insurances when you join.
          How are you going to sell - web? Fairs? You'll need some money for a site, advertising, a table or stall and petrol.
          Look at the prices of your goods. I'm finding a quarter of my selling price disappears into funding these things you don't think of straight away.
          But don't let any of this put you off.
          Give it a go. It's all positive - handling a learning curve, adding to your knowledge and skills - you don't know where it's going to lead......

          Comment


          • #6
            Originally posted by Kimmiejohn View Post
            I'm worried all extra costs will mount up and I won't make any money?
            How's everyone else doing?
            Thanks
            There is a very real chance it will end up costing you more than you make. That is the honest answer.

            I would keep it very low key maybe try a stall at the school fair and see how that goes and ask double the price that you were thinking of.

            Ignore tax and all the rest until you are starting to make proper money.

            I wrote a quiz for people to score their chances of their craft business succeeding its here http://handmadelives.wordpress.com/2...oyed-creative/
            Helping UK craftspeople make a living http://handmadelives.wordpress.com relaxing reads, quizzes, mentoring, profiles

            Comment


            • #7
              You can do the maths. Take the profit you will make on a plaque. Add up all those starting costs. Work out how many plaques you need to sell before you really start to make money. Does that sound like a reasonable number? Does it look doable?

              Or.....if you like making them........just say aw shucks and get out there with them. Listen to customers comments. Duck and dive. Swip and swap. Come up with new ideas. You might hit on something that sells like hot cakes.

              Comment


              • #8
                Originally posted by Handmade Lives View Post
                There is a very real chance it will end up costing you more than you make. That is the honest answer.

                I would keep it very low key maybe try a stall at the school fair and see how that goes and ask double the price that you were thinking of.

                Ignore tax and all the rest until you are starting to make proper money.

                I wrote a quiz for people to score their chances of their craft business succeeding its here http://handmadelives.wordpress.com/2...oyed-creative/
                i wouldn't advise ignoring tax and all the rest.....if you're caught selling without registering you can get a fine x
                Sarah x

                ~ The Lilac Dragonfly- Handmade Jewellery ~

                ~ Facebook Page ~




                Comment


                • #9
                  Certainly register as self employed not worth a £100 fine and have known spot checks on fairs in particular those held at schools. The other thing you will need is public liability insurance several posts re this on the forum.

                  Comment


                  • #10
                    If your efforts do end up costing you more than you make, that is not necessarily a disaster - it can be very good as you can set that loss against any other income to reduce your overall tax bill.

                    Comment


                    • #11
                      Originally posted by Handmade Lives View Post
                      There is a very real chance it will end up costing you more than you make. That is the honest answer.
                      Yes, innitially. If you were to set up a 'proper' business, you realistically plan to break even after the first 3 years. Statistically most businesses fold within the first 3 years, mainly because of cash flow difficulties. So, if you can't afford to loose money on something don't spend it. But sometimes you have to outlay large amount to start (equipment, insurance etc.). Honestly, that's not to scare you, just beying realistic. On our scalle, if you just control how you spend your money and spend it wiselly, that's a good start.
                      Passionate about all things handmade...

                      Proud owner of WowThankYou - stylish and affordable way of selling your crafts and makes


                      Friendly advice and coaching for small businesses

                      Cocoa & Heart Website

                      Comment


                      • #12
                        Indeed. If you have picked this as a business and started up that is one thing , but often the business grows from stuff you would be doing anyway - it is a hobby which suddenly you look round and think 'oh!'
                        Not as if you are buying a big warehouse, hiring many staff and supplying everyone with company cars.
                        I think we are talking organic growth here

                        Comment


                        • #13
                          Originally posted by Caroleecrafts View Post
                          Certainly register as self employed not worth a £100 fine and have known spot checks on fairs in particular those held at schools. The other thing you will need is public liability insurance several posts re this on the forum.
                          Yeah, fairs do seem to be inspected once in a while. Register and be confident you have nothing to worry about. It is a nice feeling .
                          Check out my page on various paracord projects you can make!

                          Comment


                          • #14
                            Ignore tax and all the rest until you are starting to make proper money.
                            I'm sorry to say that I think this is foolish, not to say dangerous, 'advice'.

                            By all means a starter may make a considered judgement to try one or two low-key events before contacting HMRC, but they should never ignore 'tax and all the rest' - that way sows the seeds of disaster in more than one field, and shows an irresponsible attitude. What else is being ignored if one's possible financial responsibilities are so easily dismissed?

                            Ignoring HMRC, or expressing one's personal opinion that 'proper money' has not been yet been made, will cut no ice with a taxman on the warpath!

                            Even if a starter makes a considered (and, I have to admit, IMO understandable) judgement not to register as self-employed for a couple of months while they 'test the water', they must surelykeep appropriate financial records - how else can they expect to see whether or not the water is suitable for swimming? - and these records can then be made available to HMRC if and when they may be required.

                            Personally I think the earlier rule where one was expected to register as self-employed within 3 months of starting a business was far more appropriate for starters in the craft world and similar small businesses, but I do understand why the rules were changed to cope with a changing business environment.


                            Comment


                            • #15
                              I agree with Eena, particularly in light of the government's recent announcement that they intend to tighten up on tax avoidance. Realistically they ought to start with unnamed coffee shops, search engines, and online booksellers, but it's best to assume evrything will get scrutinised a bit more.
                              Besides which, it IS how we pay for society in general. We can hardly get outraged about big corporations not paying tax and then try to avoid it ourselves. Personally I don't mind paying tax, it's the poor way it's spent that winds me up! Of course if I ran the world things would be a lot better! I'd ban all this snow for a start!
                              paul
                              (Sorry, couldn't help being daft at the end there. It's my default position I'm afraid)

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