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  • Really Really Confused

    Ok, so before I set out and but materials and get get craking on the making, I am trying to do all my research first.
    As I am really confused I need soem help, although many of my questions have probably already been answered ion other posts.
    I and a big "worrier" and want to make sure I do things right, so here goes. What I am going to is just kind of list my thoughts and confusions and if anyone can help that would be great.
    • I already work full time (before tax about £16,000 a year)
    • I intend from the start to sell the items I make (if they sell that is)
    • Obviousy I would start keeping recipts and records of sale from the start, right?
    • Because it is going to be a hobby/job do I need to register from the start?
    • Who do I register with and as what? I am guessing self employed, but what about Tax and VAT and stuff (told you I was confused)
    • Is there an "ideots guide" as to how I layout my record keeping books?
    Just some of what I can think if and need some help with. I could probably work it out for myself but I really lack to confidence and self belief to do so (lol, need my hand held a little).

  • #2
    Hope I don't sound patronising when I say that I think you're going about things the right way by asking the questions first so you're properly prepared

    Don't worry about already being in full-time employment, some of the others in your situation will be able to advise you better but from what I remember you register as self employed with the InRev and also complete the NI exemption form so you're not having to pay NI twice.

    By registering now before you start you'll safely be within the 3mth limit that you have to register by. Remember to keep records of everything you buy and spend, including your milage to the shops etc right from the start. Also keep a record of what you sell and at the end of the tax year, you'll then have a simple profit & loss sheet (some of the other members here work in accounts so will again give you more detailed advice I'm sure).

    Chances are you'll spend more than you earn at the beginning which is actually a bonus in a perverse way as you'll be able to off-set your losses against your employed earnings and therefore will probably get a tax refund

    And don't worry about VAT - you won't need to register for that unless you want to and probably best not to if you want to keep things simple.

    Hope that helps a little
    Visit Natty Netty for a huge selection of Iris Folding supplies

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    • #3
      Not patronising at all. I always think it is best to be prepared rather than go in with my eyes closed.

      So register as self employed and get forms so I don't pay tax twice. So is the self empoyed bit about the NI tax?

      What is VAT all about? ow does that all come in to in?
      I have tryed looking on the net but everthing is written in any way but simple. Giving me a frazzeled brain.

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      • #4
        Originally posted by Enchanted Charms View Post

        So register as self employed and get forms so I don't pay tax twice. So is the self empoyed bit about the NI tax?
        Not exactly, you'll have to complete a tax return form every year for your 'hobby' business and once you start making a profit you'll have to pay tax then but until then you should get little refunds every year . The NI exemption forms will ensure you don't have to pay more NI than you need to as you already have another job where you pay that.

        You have to be VAT registered once your turnover is over about £60,000 a year. You can register from the start (I think a few members on here have) so you can claim the VAT back from anything you buy but you also have to pay VAT (17.5%) to the taxman on anything you sell. My dad (a chartered accountant) advised me not to register yet as he knows how bad I am at leaving my accounts to the last minute and you need to be soooooo much more organised when it comes to VAT.
        Visit Natty Netty for a huge selection of Iris Folding supplies

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        • #5
          Originally posted by nattynetty View Post
          You have to be VAT registered once your turnover is over about £60,000 a year.
          hehehe, can't see that happenng anytime soon. Although would that just apply to the "hobby job" or would it include what I earn in my current full time job as well.
          Either way I can't see me even getting close to that amount.

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          • #6
            Morning
            I would advise you to just make a phone call to the inland revenue, you can get the phone number off their website.
            You just need to explain what you've just told us, and they will send you the exemption form to opt out of paying NI on your extra earnings. You also give them a date of when you became/become self employed and that is you, registared.
            Then you just fill in a form that they send you at the end of the tax year which tells them how much you've earned, and how much you've spent, and they tell you how much tax you need to pay them (or not hopefully if you have spent more than you've earned!!)
            It's more simple than you think... but it is really essential as basically every penny that you earn, whether it is from your employed work or your 'hobby' needs to be declared to the nice tax man.
            That one phone call will be the first step...
            It only takes one 'off duty' tax man to go to a craft fair that you have a stand at and they could investigate you.. and you really don't want that
            http://icecreambird.blogspot.com/

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            • #7
              So on declaring at the end of te tax year I have to tell them what I earn in my full time job?
              Do they not already know that?

              Sorry for all the questions, but it is a quite scary step to take to self employed (well for me it is).

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              • #8
                Nop not scary at all..

                Don't worry .. Just phone them up and once you get the form its will tell you what you need to fill in...

                You normally get a book from the IR with how to do book keeping and so on..

                If you only buying/sell tiny amounts say a few things a month then the IR have a mini tax return form which might be worth considering..
                .


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                • #9
                  So to start with, if I wanted to get a few items of materials and produce soem thing to see if I can actually see if I can make saleable items do I still need to register?

                  I know you have to register within three months of starting? But what if I try and find it is not going to work?

                  Could I "work" a couple of months before registering?

                  Sorry, I know I can phone them and ask, but I would rather ask to start with people from "this side" who have had to go throught the setting up procedure.

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                  • #10
                    Message of thanks

                    Dear all,

                    I just wanted to say thanks to everyone who has contributed to this thread. I'm just starting out and have found this information invaluable. I've now printed the form from the IR website for registering myself as self-employed and the NI exemption forms are in the post to me as I speak. I feel reassured now that I know how to go about all this craziness!

                    Now it's time to start getting to grips with costs and profits... can anyone provide a link to a basic accounts sheet for me or recommend the best way to do this?

                    Si.
                    Wood Tattoos
                    Decorative Pyrography for all Occasions - Author of "Woodburning with Style" (2010) and "Learn to Burn" (2013)
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                    • #11
                      HI Encahnted Charms.
                      Im exactly the same as you.To unsure of myself and I havent a clue what Im doing but I went ahead and did it anyway, with these lovely forum people behind me.

                      I registered as a sole trader.
                      I receievd a form for tax or NI exemption(cant recall which, I get confused too) and I didnt fil it in straight away.About a month later I get a bill for £28ish!!The moral of this story is fill in all the forms you need to and send them off.I cant try to get the money back until the start of the next financial year.
                      https://folksy.com/shops/GrimmExhibition


                      http://poisonedapplecraftuk.blogspot.co.uk/

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                      • #12
                        Originally posted by Enchanted Charms View Post
                        What is VAT all about? ow does that all come in to in?

                        You only need to register for VAT if your turnover exceeds £60000 a year. Once it does, you must register. You then add 17.5% on to all your sales, and reclaim the VAT back on your purchases. There is also a flat rate scheme to make it easier to account for, where you still charge 17.5% but pay a different rate to the VAT man, but don't reclaim the VAT on your purchases.

                        So, MyCo is registered on flat rate scheme at 13% VAT. I can't claim any VAT back on purchases, unless they are capital items over £2000. I add 17.5% to my invoices for VAT, and pay the VAT man 13% of the invoice value. This is easier to account for, rather than adding up all the sales and costs and claiming the VAT back.

                        It will (probably) be a long time before you need to worry about VAT registration though - although if you have loads of things to buy then it may be worth registering to get the VAT back on them.
                        It's never too late to gyrate!

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                        • #13
                          Hi Enchanted Charms,

                          You should contact Inland Revenue, they run free courses on setting up and tax returns each year. Your local business link would also be a good place to get the information you need.

                          Good Luck

                          willow973

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                          • #14
                            Originally posted by woodtattoos View Post
                            Dear all,

                            I just wanted to say thanks to everyone who has contributed to this thread. I'm just starting out and have found this information invaluable. I've now printed the form from the IR website for registering myself as self-employed and the NI exemption forms are in the post to me as I speak. I feel reassured now that I know how to go about all this craziness!

                            Now it's time to start getting to grips with costs and profits... can anyone provide a link to a basic accounts sheet for me or recommend the best way to do this?

                            Si.
                            Si,

                            Can you remember the names of or the codes of the forms you completed and returned when registering as self-employed? I've been looking on the HMRC website and had intended to send them an email this afternoon but unfortunately there isn't the email option for my query.

                            I have a full time job but want to register my hobby as a business (in time for my July craft fair and hopefully website later in the year). Obviously I will need to complete an NI exemption form as well as the main form but I don't know are which.

                            Please help!
                            Emma

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                            • #15
                              Hi

                              You can only get an NI exemption if you think your earnings during the year are going to be less than £4,215. Otherwise, you will have to register for Class 2 NICs at £2.05 per week.

                              I'm sitting here with the forms on my lap as I saw Business Link last week and was told that I needed to register as self-employed / sole trader asap because I'm getting close to the 3 month deadline.

                              Also, HMRC won't allow you to register with them as self-employed until you actually are. So, to the person who posted this thread originally (so sorry, I can't remember who it was), I wouldn't actually register with HMRC until you've actually started trading / making any money. Until then, you can say you were "market testing", which is really what you're doing until you think you can actually make any money from your hobby.

                              Hope that helps & good luck !
                              Sarah
                              For 100% wool felt supplies, felt balls, buttons, ribbon, needle felting supplies and lots of other lovely stuff, visit BLOOMING FELT

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