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New to all this - little bit of help needed!

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  • New to all this - little bit of help needed!

    I have recently started selling handmade gifts, and it's been pretty successful so I have registered with HMRC as self-employed, and I'm now working on making it a 'proper' business.

    I plan on registering my business name in the next few weeks, so will that make it 'official'?

    I know that I need to keep a record of everything that I buy for the business, and a record of all sales. At the moment the only way I sell is through Facebook as I haven't got my website sorted yet, so the majority of payments are through PayPal. How do I record those payments? What if I'm charged fees?

    Does anyone know where there's a sample accounts sheet so I can look, as I think I'll understand it better if I see how other people do it.

    Also, I don't think I'll earn enough to pay tax, and I plan on filling a NI exemption form out, but if I don't pay tax can I still claim for expenses? And if so, how do I record expenses? I work from home so what can be included?

    Sorry if this is making so sense at all LOL, I didn't plan on making this into a business but as soon as people started paying for the things I make I knew I had to declare it as I want to do things right. I also like the idea of being my own boss and turning my hobby into a proper job, so I'm excited about that and I know I can expand and make it bigger and better.

    I just wish I understood all of the tax stuff a bit better. I've been through stuff on the HMRC website and I understand a lot of it, but I've been reading through this forum and know that people always have good advice

  • #2
    I'm watching this thread with interest. Can't help but would like to know the answers too.

    Ally
    xx
    Blog: http://lovinglyhandcrafted.blogspot.co.uk/
    website: http://lovinglyhandcrafted.weebly.com/
    Facebook: http://www.facebook.com/pages/Ally-S...09704535743430

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    • #3
      Hi and to the forum.

      You should be able to print off a list of all your transactions on PayPal which will break it down to show the amount, fees and total you received. Personally, I list the amount I receive as sales (so the fees are already deducted) but you could list the total before fees as sales and the fee as a separate expense.

      You need to list your expenses irrelevant of whether you take enough to pay tax as this figure is needed to get your total earnings. In basic terms: All your incomings - All your outgoings = Your total profit/loss. This is the figure the tax office use to calculate whether you owe them anything.

      Check to see if there is a course run by HMRC in your area or with Business Link. Personally, I decided straight away to use an accountant as there are lots of little extras you can claim for which I wouldn't have known about (such as a proportion of your utilities if you work from home) and my husband has one so it is pretty cheap for us to both use the same one. He actually saves me more than I spend each year so it definitely works for me.

      Good luck with your new business - you certainly do seem to be doing everything right so far! Next stop, website...!
      Ali x

      Etsy Shop: aliscraftstudio.etsy.com
      Facebook: AlisCraftStudio
      Follow me on Twitter:
      @AlisCraftStudio

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      • #4
        Thank you AliCat for taking the time to reply

        So if once a month I print off all PayPal payments and file it, that should be ok?

        I've bought two notebooks (I'll probably change to a spreadsheet on the computer though once I get my head around things) - one to list all the money I earn, like the items sold, how the customer paid and the amount, etc, and one for everything I spend. Basically along the lines of the date, what I bought (for example, buttons), how much it cost, how I paid and I plan to total it all up once a month. I've also started keeping receipts for things I've bought.

        I did look for free courses but can't see any. I'll look into it further though as I think it'll be really helpful

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        • #5
          I use an Accounts package called Accountz and separate all my postage out an in along with bank fees an paypal fees, stationery, materials etc. Then I can look at the accounts each month to get a view of the business. I think I prefer working this way as have always dealt with management accounts when working in a 'proper job' and had to analyse financial statements. You can use a simple spreadsheet for your in's and out's whatever you are comfortable with but agree if unsure a course by the HMRC would be worthwhile.

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          • #6
            Originally posted by kt2285 View Post
            So if once a month I print off all PayPal payments and file it, that should be ok?
            With PayPal you can download all transactions to an Excel file and this can be continually updated, you do not need to do it monthly.

            Using two note books is fine, but I would advise getting a couple of analysis books (ruled and multiple columns for £ and p). Then you can easily keep information in separate columns, and in later years you will be able to compare expenses or sales easily. You can buy them from any stationery shop like Staples or from eBay http://www.ebay.co.uk/sch/Office-Equ...=p3286.c0.m282.

            Expect in your first year to make a loss, but this will give your a tax refund on previous year's tax.

            Roger

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            • #7
              Originally posted by keystamp View Post
              With PayPal you can download all transactions to an Excel file and this can be continually updated, you do not need to do it monthly.

              Using two note books is fine, but I would advise getting a couple of analysis books (ruled and multiple columns for £ and p). Then you can easily keep information in separate columns, and in later years you will be able to compare expenses or sales easily. You can buy them from any stationery shop like Staples or from eBay.

              Expect in your first year to make a loss, but this will give your a tax refund on previous year's tax.

              Roger
              Sorry I should have said that they are actually analysis books, not just plain notebooks LOL, they've got the columns and I find it pretty straightforward recording things in there. I just wanted to make sure I was getting the right information down, and I think I am

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