What tax?

[littlesnuggler]

I've just recently launched my website to sell my items. Before this I only sold on Ebay and to friends, etc. I haven't even thought about registering my business as I have just really been testing the market. Can anyone please advise me on what I should do regarding my business, i.e. at what point do you have to register it, what are the advantages, etc.

Thank you

[Cloverst]

Hi helen,

You are supposed to register your busines for tax with in the first 3 months of trading. Not doing do is against the law and can result in a hefty fine. You also need to register for national insurance contributions. There are two types of these one at a fixed rate payable by direct debit and one based on earnings like tax.

You can get more info from the business link website and you should contact your local business link who should give you 2 years free business startup support and advice. It is well worth contacting them.

They can also provide you with more info one the insurance you will need on start up and whether or not you need to register with the information commisioner.

Hope this helps!

[Katianne]

What if you are not making any money, do you still need to register within 3 months? I haven't sold anthing as yet. I have been keeping a record of what I've spent and saving invoices.

[Cloverst]

'fraid so.

You have to register 3 months from the start of trading profits or not.

The idea is that if you are operating at a loss (i.e. your outgoings are more than sales) then you will not be taxed at the end of the year.

See here:

Income Tax & National Insurance

If you do not pay your national insurance throughout your life, including time spent at home looking after children (you can apply for it to be paid by the government as 'home responsibilities') you will not get a full state pension upon retirement.

Interestingly I was also reading that if you put aside one room of the house solely of use for your business than you are legally obliged to pay business rates on that room as well as council tax on the rest of the house plus you will be subject to capitol gains tax for that room should you sell you house!

It's worth looking into these things so you don't get bit on the butt later on...

[Sparklez]

Also worth noting that if you may NI through PAYE (if you already work) you can get a NI exemption certificate for your business if you don't make that much from it - off the top of my head, I think the threshold is around £4000. Best thing to do is give the tax people a call. They're actually really helpful and it's not as scary as you think.

Carol.

[littlesnuggler]

Thank you all for your information, looks like I've got some homework to do.

[Bowed Over]

Yep 3 months is the limit. After that you will get charged £100 for each month you are late declaring your tax status.

You can get the small earners exemption certificate (which means you wont need to pay national insurance if you earn under £4,000 I think it is) on the inland revenues web page.

They are actually really helpful despite what people say.

[Katianne]

Ok, have had a look at the site is it the 'Becoming self employed form' I need to fill in?

[Bowed Over]

If you want to declare you tax status you can do that over the phone with the Inland Revenue it only takes a couple of minutes to do. However the National Insurance must be done on the form and I think it is call something like self employed small earners or something like that.

It asks for the usual details, company etc and at the end will ask for projected earnings. This will only be a guess just now as you have only started up.

Hope this helps.

All the best.

Lisa

[Sparklez]

If you call the Tax people they'll make sure they send you all the correct forms for the NI exemption, and will arrange to send you lots of other useful info. I found this the easiest way as I didn't find the web site all that clear. They really are a helpful bunch, even if they steal lots of my wages

Carol

[nattynetty]

I've just recently launched my website to sell my items. Before this I only sold on Ebay and to friends, etc....

Hi there littlesnuggler

As t'others have said you HAVE to register within 3 months of starting and the InRev really are quite helpful.

When you fill in the form stating when you started might be an idea to bend the truth a little so you don't get hit with a fine - however, if you do this remember not to claim for any business expenses you incurred before this date (sound obvious I know but I have heard of people forgetting and then having to explain themselves to the tax man).

Not that I condone anyone lying to the taxman cos it's a very bad thing to do

[Cloverst]

The best thing really to remember is that the government want people to become self employed, it's good for the economy, and because of that there is plenty of help out there. Much of it involves picking up the phone but if you have a query start with business links helpline. They are wonderfully helpful and can arrange for an advisor to deal with all your queries.

Interestingly there are also plenty of grants out there for small businesses which they can advise you on.

[Samm]

This is great information, thanks for everyone that posted here. I got in a bit of a state about it all and spoke to the Business Link, they run a number of new business FREE seminars, so I've signed myself up to one of them in May. I also got the number for the HM Revenue to declare myself, its 0845 154515 incase anyone needs it!

[littlesnuggler]

Quite agree Samm, there's some really helpful info here. I've registered and still waiting to hear from IR. At least I've done the right thing.

Business Link are great too, very helpful.

[EMEvans]

I registered with the IR over the internet in February, phoned them this week as i hadn't heard anything - suprise suprise my registration hadn't been logged. Now i'm going to receive a penalty but they did say as i earn under the threshold to send it back to them with a covering letter explaining this, more work again!! Had to register again over the phone.

If you have registered over the internet i would give them a call to make sure they're dealing with it.