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help please all in a muddle

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  • help please all in a muddle

    Hi can anyone tell me when selling cards changes from a hobby to a business.
    I have been making and selling cards to freinds and on ebay for a while now.I spend much more than I make and would love to make it into a proper business .I contacted business gateway who told me I had to register as a business.I then went to my local jobcentre as I am on longterm incapacity and applied for permitted work tosell my cards they told me I shouldn[t need to register.I am so confused I sent my first tax return and was -350 pounds and it cost me 22 pounds . This time I tried yo do it online I did it last minute and couldnt get access to the form and spent three days by the phone trying to get through on the helpline I have been ill recently and hadn't really sold anything so was about 400 pounds of a loss.I couldn[t understand the formand I ended up having to put in a paperform because I missed the deadline for online.I sent a note explaining and asking if I should be sending it in the first place.I have just got a bill for 100pounds for being late and no clue as to whatI should be doing. Idont even make any money in the first place can anyone advise me is there anywhere I can get help I am housebound and I really enjoy making cards and I would love to have a proper business but I dont want to do anything wrong. please can anyone help me sorry for going on but I am just so worried it is making me ill.

  • #2
    I think it would be a good idea if you got a book keeper and got an accountant to file the tax return for you. I do the books and tax for a friend as well as my own and know they can be difficult when you know what you are doing. It may also be worth ringing the tax office as believe it or not they are very helpful when you are starting out, explain that you have made a loss and they will let you know about tax records and the returns. Re the £100 late penalty I don't think there is much you can do about this as the deadlines are quite clear.

    Re the business thing once you start selling you are then self employed and have 3 months in which to register that fact with the IR, you mention disability you also need to check whether any of this impacts on your allowances as well. There are often conflicting advice from different departments and I think IR would advise you best re tax etc, or you could ring the CAB and ask if there is anyone there who could help iron the rules out for you first.


    • #3
      Pooor you.. you sound so stressed and nobody needs stress at the best of times..

      Firstly, "when" does a hobby become a business" - as someone (or 5) on here has said before, the moment you sell one card, you are a business...

      If you charge for goods or services, you are required to declare it to the tax man, even if you make a loss - which it sounds like you do.

      I would advise keeping a basic "book" for your business, even if it is just a list of income and expenditure - and keep your receipts and details of your payments received - the Tax people are sometimes bored.. and small non profitmaking businesses can on rare occasions make them suspicious in case you are fiddling a loss.

      As for proper advice, first stop is a free advice service for small and start up businesses - they have a local rate phone line on the website if you find it easier to speak to a person rather than read a website.

      They can put you in touch with a local advisor who should be able to explain what you have to do, and when, and give you help with other advice not just tax returns..

      Oh, and with regard to your £100 late filing fine, I would write and challenge it, stating that you were unable to access the website.. I believe a large number of people had the same issue and the fines have been waived for many this year as a result.

      Hope that helps for now!


      • #4
        Thank you so much for your help it makes me feel a it better I never realised that it was so complicated. They did send me an appeal form with the bill so I will definitely be writing to explain and hopefully get it sorted as it is such a lot of money when I am not making any money but I do get a lot of pleasure from making them .I have lots of cards made in boxes but it's not so easy to find places to sell them. I will contact the website you suggest and let you know how I get on. Do you know where I would get an accountant and how expensive that would be especially as I am not making any money.


        • #5
          It would be best to see someone at CAB and/or a Disability Employment Advisor as there are various rules relating to earnings from Permitted Work this is a quote from the application form:

          How your earnings may affect your benefit
          Permitted work will not affect your Incapacity Benefit, Severe Disablement Allowance or your right to National Insurance credits. It will affect your Income Support, Housing Benefit or Council Tax Benefit if your earnings are more than your earnings disregard. You should ask the office that deals with your benefit for more information about how earnings affect your benefit.

          If you start permitted work, you may be liable to pay tax on your extra income. We will let HM Revenue and Customs know when your permitted work has been agreed, so that they can calculate any tax due and arrange, as far as possible, that you pay the correct amount of tax during the tax year.

          Two websites which give information are:
          Jobcentre Plus
          ElaineJ soap and other stuff


          • #6
            Originally posted by paulinespassions View Post
            Do you know where I would get an accountant and how expensive that would be especially as I am not making any money.
            Easiest option is the yellow pages or Thompson Local directory.. just look for ones close to home. Most Accountants will do an initial consultation for free, but then you pay for anything you do.

            As with most professionals, you pay hourly (or proportion of) for their time, though many offer a comprehensive small business package where they carry out the basics for a set fee

            Obviously the more you do yourself, the cheaper it is..

            If you know anyone who might use an accountant, word of mouth is always the best reccomendation..

            Can I also suggest, you sound a bit in awe, and perhaps a bit vulnerable after your recent experience, I don't think an accountant would "take advantage" of you, but they are in this for money it is thier livelihood after all; so perhaps wehn you go for your free consultation take a sensible friend or neighbour with you?? just a bit of added protection so you dont rush in and sign up for far more than you really need!


            • #7
              I agree with Elaine, try to get an appointment with the CAB or Disability Employment Adviser as they will be able to clarify/advise about any implications there may be regarding your benefits.

              Also you may find that the CAB can help with the appeal form for the £100 fine, if not then it's worth trying your local Business Link.

              As for accountants, it may make more financial sense to attend a free course on tax and accounts. I know the Inland Revenue and Business Link do free half day courses on this quite regularly around here so I'd imagine there would be something local to you too - again contact Business Link. Your accounts shouldn't be too complicated and after attending the course I'd imagine you'd be able to tackle them yourself more confidently, however if you do decide to use an accountant please do ask around for recommendations rather than pluck one from the Yellow Pages.

              And finally try not to stress too much about it all (easier said than done I know) just write down a list of who you need to talk to and what you need to ask and try to tackle it one step at a time.

              Good luck
              Visit Natty Netty for a huge selection of Iris Folding supplies


              • #8
                Hi can I say thanks for all your help I have been on the phone most of the afternoon being sent from one dept to anotherhowever I have been told to pay the fine and then appeal against it in writing and since I dont pay anything it will be reduced to whatever I am due so hopefully it will be sorted.
                As for the rules about permitted work after a few nervewracking phone calls
                it seems that I am able to continue as I am not really earning anything the
                most I can earn per week is 20 pounds before it affects income support.They have asked however that I send them a copy of my income/expenditure so that they can check that it doesn't affect my benefit.
                All in all I feel a little better


                • #9
                  Do not pay the fine if you have sent in a late return and you don't owe any tax then the fine is void .
                  Read the fine print it says something like the fine will be no more than the tax owed. Mine was late because of illness.
                  I finally did it on line then phoned the tax office they said the penalty would automatically be canceled.
                  "You've Got to Keep Your Mind Wide Open" - AnnaSophia Robb
                  my Folksy shop Goldy'sclearoutblog debaynewebdesign


                  • #10
                    well, iv just registered as a sole trader with the Inland Rev. It was a 2 min phone call.

                    I was advised by business gateway to buy a big desk diary, with one day per page. Everytime you buy or sell something, staple the recipt in that page. Apparently its easyer then to keep track of everything. Also, if you think you are going to earl less than 4K per year, you can choose not to pay National Insurance. BUT, if you are on incapacity, then you HAVE to pay the £2.30 per week NI or it will affect your benefits.

                    Also, next time, get onto business gateway to help you with your tax. They told me that it was straight forward to do it online (if youhave kept the diary) but if i had any problems, they would help me with it.

                    Best of luck!




                    • #11
                      Just an idea - but if you are finding it difficult to get out to sell your cards have you thought of asking one of your 'competitors' for help?
                      I'm thinking of someone else who makes cards who could put some of yours on their stall with the agreement that they get a cut if they sell any.
                      Eg one of my friends gives me boxes of pottery, which I sell on one side of the country. She sells hers on the other. She let's me keep one third of what I take on sales.
                      The only draw back is keeping tabs on what has been given and sold, not getting cross with the other person for losing the plot and having a clear agreement about who pays for stock that gets spoilt (in my case breaking a pot or 3).
                      The above advice is because we have experienced the above but both being ditzy and laid back our business relations have been rather blurry. Fortunately, none of the above has spoilt our friendship as overall we are both making money out of our joint venture and each year we make more.



                      • #12
                        what a good idea I never thought of that it could work