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Hmrc helppp!

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  • Hmrc helppp!

    ok so ive been doing my jewellery business for a few weeks now, im aware i need to register and sort out taxs with hmrc etc but i was told it needs to be done within the first 3 months of your first sale, aparently thats not true and it needs to be done straight away.

    I am stupid when it comes to stuff like this.. Ive look through the hmrc website and none of it makes sence to me.. i need a dummy guide!!

    I have done a spreadsheet since i started of 4 forms:
    Customers (name and what theyve spent in the month - more for me then for hmrc)
    Sale (with date, name of person, item sold, price)
    Spendage (with date, where i brought, items brought, price)
    Profit/Loss (date, sales, spendage, postage spent, event sales, prof/loss for the day - then i will total it up at the end of month)

    So i will do that month by month, that bit i can do.
    I buy EVERYTHING online, through ebay and facebook pages mainly.. so i dont have paper reciepts as all payments are made via paypal
    I also sell online... so all prof of sales are on my paypal.... HMRC says i have to keep paper reciepts of everything.. how can i do this if everything is done online?

    and how do i sign up as a business? and are the forms super complicated?
    I have a 25 hour a week job that i already pay tax on.. I live at home with my parents (im 21) and im not on any sort of benefits..

    Hope someone can help this confused girl! haha

  • #2
    Well, if necessary you can print out the end of year accounts from paypal. But I don't have anything on paper apart from a few receipts here and there and HMRC and my accountant are happy


    • #3
      Sounds to me that you've got nothing to worry about as you're being super-organised which will make your self assessment forms a complete doddle when you come to do them

      I think the 3 month rule only changed quite recently so don't panic, just phone hmrc and tell them you've started a business and need to register as self employed.

      As for the paper rule, I'll hold my hands up and say for sales I don't keep paper records but do back my database up every day so would always be able to print them all out if requested. For any purchases I make I'll print out the invoice if it's sent electronically, I think with ebay you always get something emailed to you if not you can download your paypal history so will have a printable record here. The downloadable history is also very useful to check for sales/purchases you may have forgotten to record.
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      • #4
        thank you both. nattynetty thats really helpful, just looked at the form online and it looks super complicated though!

        is that all i have to do is ring them up and tell them ive started a business, and they will sort it all out over the phone with me? what details will they ask me for? (so i can have them all on me when i ring) and has anyone got the number handy?? (dont worry if not ill search the web for it tomorrow)


        • #5
          Hiya - yes, ring them up and tell them when you made your first sale. IF your first sale was more than a month ago and IF it was for a large sum (like thousands large) then you would be liable for a fine. You won't get fined, or at least I don't think you will. They are not interested in chasing someone with a very very small business.

          You'll also need to tell them how much you think you might make in profit.....just guess a figure at this stage (let's optimistic and say £500) because what they are really interested in is your figures come tax return time.

          Do not worry about anything. When it's time for a tax return to be filled they will let you know. Do it online and it's super easy - you will have earned under £15,000 so you'll only have a few questions to answer. You won't even need to offer the full breakdown you'll have from your own spreadsheets, you'll just have to tell them how much you spent out and how much money came in. IF because of any other work you do you're unsure of how to answer ring them up. They are very helpful.

          Hope that helps
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          • #6
            Thank you deb will ring them first thing tomorrow (call into work today!)


            • #7
              When you do your self assessment online you can use a option that removes almost everything you need to fill in and is basically a profit and loss submission..

              I do this for my other half and only takes about 20mins as her assessment is really easy.. For me I have an accountant do mine as he know all the %'s for use of car, rent, power, heating etc.. He fills out the full on forms but for most people you will not see the benefits in doing this...

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              • #8
                It's easy to get paper receipts if you're still worried about that. Whenever you use Paypal you get an email with the details, right? Just print that out and file it - that's what I do.

                And don't worry about doing the tax return - at first glance it looks scary but like everyone says, most of the questions won't apply to you so it should be fairly easy to do. Mine is. And HMRC are really helpful and friendly.



                • #9
                  Can I hop on this thread and ask a related question?

                  - The electronic invoices, can they be in your personal name or do they have to be in the business name?


                  • #10
                    Invoices can be in your own name, as a self employed sole trader you 'are' the business, and just have a 'nickname' if you like, as a trading name.

                    However, for any invoices, whether in your name or to your business name, you may need to 'prove' that they were for the business, so as long as it's clearly written on the invoice what it's for you should be fine

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                    • #11

                      i found the best and easiest way was to be a ltd company and get an accountant to do my accounts, i do a profit and loss and keep all reciepts and he does the rest as and when required for a very low price, i did this as i was strugling to do it on my own the first year and just so happens i have had a bill and fine for corp tax as i didnt pay £171 from my first year so now have to pay £100 and 10% fine


                      • #12
                        Originally posted by PolkaDotPearle View Post
                        Can I hop on this thread and ask a related question?

                        - The electronic invoices, can they be in your personal name or do they have to be in the business name?
                        It doesn't matter for any type of business you run. As previously mentioned, as long as its a purchase for the business its fine. I run a VAT registered Ltd company and I buy printer ink on my husbands ebay account because its cheaper that way. Its usually from a business seller so they can send a receipt, if not a paypal invoice is fine.

                        I'm just about to open a sole trader business (vintage china rental) and I've got a lot of items from charity shops or private sales. I asked my accountant about not having receipts for these purchases. He said as long as we have stock to prove we have the goods and the price reflects where we got them then its fine.

                        Just noticed previous post....

                        I wouldn't advise being limited if you think your business will always be small in annual turnover. Producing the year end accounts for a ltd company means it costs a bit more for your accountant. You can still get the accountant to look over your figures once a year and giving advice for a much smaller fee if you are a sole trader or partnership.
                        Last edited by Incognito 1; 26-01-2013, 01:38 PM.


                        • #13
                          My understanding is that when you tell HMRC about being a sole trader ( becoming a limited company opens up more complications and costs as suggested by Craftychez) they will ask you to fill in some forms which also cover National Insurance. which you need to pay from day 1 (this is one reason why they require you to register straight away). The level of payment (there are two) will depend on your level of profit and kick in before the the level of personal allowance is reached. However, if you profit is going to be below £5k then you can get an exception but depending on what contributions you have made it might be worth paying the NI even if your income level is exempt. Get yourself on the HMRC courses if they still run them (they were free 2 years ago and told us then that the 3 months grace was a myth!) and seek some financial advice about your own circumstances.
                          Pat Murphy



                          • #14
                            As an doddery old white haired grandma who's been a sole trader for 1. 2. 3 ....15 years now (and has always done a bit on the side...what are those ancient words?...a hobbyist making a bit of money? It was an OK thing in the old days) I'd say it's really worth paying NI stamps. It's to do with being sick and getting your pension. Build up those contributions now while you are strong and healthy. They so give you peace of mind when you need them.
                            I know people are moaning about the new pension rules but they have sorted out carers and sole traders who used to fall through the pension net. You do not want to be in that place where you have to chose between eating and heating.......or wrecking you children's lives because you can't afford a care home. having a pension is brilliant.

                            If you are a bit bedazzled by the terms sole trader, partnership, ltd company, vat registered......
                            if you are self reliant, not borrowing money, starting small, not making massive sales, ploughing money from sales back into buying materials to make more ........the simplest thing to chose to be is a sole trader.
                            I'd say start like that. If you grow and want to work with another person, then look at what being a partnership entails. If you grow and want to borrow money - if you go bust the bailiffs can confiscate your personal belongings, including your house, unless you are a limited company. Then they are only allowed to take your business stuff. So that's when you might want to be a Ltd Company. If you get to selling shed loads of stuff the tax man will tell you when to be VAT registered. There are some situations when it might be advantageous to register for a simplified version of paying VAT (I don't know much about it but my artist son does it). If there comes a time when the tangalated rules start blowing your mind, that's when an accountant can save you money. To start with, the rules for sole traders are kept pretty simple........but expect to go "you what?" over some of the questions on the tax form.....and look them up in the help guide, on google, or ask on here.


                            • #15
                              He said as long as we have stock to prove we have the goods and the price reflects where we got them then its fine.
                              Hi Crafty. Is that so? I've always wondered where I stood with stuff I buy from children, markets and some corner shops and some charity shops. Receipts are not part of their lives. I print out pretty looking memos and write down those purchases on them, hoping that'll be OK.
                              Then how does that work? Is you accountant saying show the tax inspector you stock (you sell it as you go along so it might be gone) or is s/he saying it should show up on your stock sheets? (Oh dear, one of the joys of working for myself is my stock taking goes along the lines of that box is nearly empt, time to fill it up .) (I hate stock taking .)

                              To everyone else - I teach the children how to produce receipts for me.
                              'Fraid I don't want to upset the market and shop staff by critizising them and I'm usually a copartner in the forgetting thing as we are usually chatting about grandchildren or dentists at the time and receipts are the last thing on our minds. Also as a seller I know the last thing you want to be doing at a fast selling market , is writing receipts. It holds up the queue. You've got their money, they've got your toy. Fairs fair innit?