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  • items purchased before i have registered as a business

    Hi there, wonder if someone could help me, ive been thinking of starting a small business for a while selling hand made jewellery and other items, its been a hobby for some time and i just wanted to know if items i bought before i register my business (not registered yet) can be used when i come to do my tax return and how far back you can go. This has been something i've been thinking about and have purchased materials and storage boxes etc but wasn't sure if it was something i was going to go ahead with which is why i haven't registered yet, but have now decided that i really want to make the jump now. Also the items i've purchased for my hobby and not yet used would be used to make things to sell so can i claim for these as well? would appreciate some help, i haven't made anything to sell yet but when i do i would use these materials so just want to know if i can claim for them or if i can only claim for items purchased when i have registered as a business.
    Many thanks Kelly
    http://stores.ebay.co.uk/enchantiz
    https://www.facebook.com/Enchantiz
    http://enchantiz.co.uk/

  • #2
    When I first registered, my accountant did tell me I could reclaim for items purchased before starting (obviously you had to have something to start with!). I'm not sure exactly how far back you can go, but I certainly had things going back a few months. HMRC or an accountant should be able to tell you.

    Good luck with your new business & to the forum!
    Ali x

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

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    • #3
      Hello Kelly and welcome to the Crafts Forum.

      Firstly registering yourself as self employed has nothing to do with any purchasing. I would advise doing it as soon as possible.

      When you come to drawing up your account for your first trading period is when the question of how far back can you go will apply. You will need to have evidence of the items original cost, an invoice is best proof. If you have sold/given away any of the items then you should reduce the value by this. You should be able to claim for most items up to 6 months, or possibly more, prior to registering.

      Luckily the rules are not as tight as registering for VAT. When I went to the VAT office to register I even had an invoice disallowed from the day before because the invoice did not have the trading name on it, just cash sale, so I could not reclaim the VAT I had just paid.

      Roger

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      • #4
        Thanks loads for the info, just need to get myself registered now and start making items to sell, looking forward to starting out for myself but also a bit scared
        Kelly
        http://stores.ebay.co.uk/enchantiz
        https://www.facebook.com/Enchantiz
        http://enchantiz.co.uk/

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        • #5
          Hi Kelly
          Welcome.............
          I too started like you (March 2011) making jewellery, I bought materials and storage bits and didn't actually start selling until May. I've included everything that I had receipts for in my year end accounts for the tax office. I was also a bit late registering with the tax office as I didn't know whether things would work out but I didn't get told off!
          I was a bit apprehensive at first, but I love it now even looking forward to the next craft fair.
          Good luck and let us know how you are getting on
          Jane

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          • #6
            The answer's on this forum somewhere but I can't find the correct search words to pull it up. The quickest and easiest thing to do is to ring your local tax office, register, and ask about your business self 'buying' tools and materials off your hobby self. A belts and braces thing to do is ask the person on the phone to direct you to something in writing so you can look up the rules yourself. It's a bit much to ask a phone operater to have the answer to everying on the tip of their tongues.

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            • #7
              Hi Kelly,

              I too hae recently started up as registered self employed with my little craft business and i had exactly the same worry as I had a lot of materials etc that I had already bought.

              I rang the tax office and spoke to a lovely chap there who was really helpful. He checked for me and said that you can put anything through for an unlimited backdated period as long as you have a receipt for it and it is a valid genuine expense for something you still have and will use to make things in the new business going forward.

              I had lots of things that I had not even opened or used so all of those went through but there were things I had receipts for that were long gone so I left those out.

              Hope this helps xx

              Forgot to say - he said they are called Pre Commencement Expenses. xx
              Last edited by RelativelyPink; 17-05-2012, 05:22 PM.

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              • #8
                Thanks for the info, better try and find those receipts. Can you use Paypal invoices?
                So many beads so little time!!

                https://twitter.com/Chillipepdesign
                https://www.facebook.com/Chillipepperdesigns

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                • #9
                  I have used paypal invoices as receipts as a large number of my purchases are from Ebay! Paypal only goes back around 3 months though. They are still invoices so I believe they are acceptable. xx

                  Comment


                  • #10
                    Originally posted by RelativelyPink View Post
                    I have used paypal invoices as receipts as a large number of my purchases are from Ebay! Paypal only goes back around 3 months though. They are still invoices so I believe they are acceptable. xx
                    I run a LTD company and we use paypal invoices for our VAT so its fine. How far back you can claim something depends on what it is and what type of business you have. I 'sold' my car to my company under a directors loan even though I had purchased it two years previously and there was no recent invoice. If you are going to make any large purchases it might be worth talking to an accountant first as there are usually several ways to do something, depending on how you run your business.

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                    • #11
                      In a reasonable time before you officially started you could use receipts as a start-up cost? As long as those purchases were TOTALLY for the business. Look at the HMRC website though if you are claiming VAT as they say you can claim back after a few years.

                      My best advice though is - contact Business Link in your area - they are free and they give great advice - they are not connected to HMRC and are there for local businesses.

                      Lib x

                      Lib
                      www.inside-the-jewellery-box.co.uk
                      My new blog:http://insidethejewellerybox.blogspot.co.uk/
                      www.facebook.com/insidethejewellerybox
                      http://folksy.com/shops/InsidetheJewelleryBox

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                      • #12
                        Also - if you haven't got the invoices - most suppliers will re-send them - just mention the tax man, then everyone supports each other :-)
                        www.inside-the-jewellery-box.co.uk
                        My new blog:http://insidethejewellerybox.blogspot.co.uk/
                        www.facebook.com/insidethejewellerybox
                        http://folksy.com/shops/InsidetheJewelleryBox

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                        • #13
                          This is the most helpful thread I've seen so far. Glad I'm not the only one that needs help with these things. I haven't started selling yet but have ordered lots of supplies and set up a page with a few things while I gather some audience with people. I'm not sure when to register as if I can't get a big enough audience for my products then obviously the won't sell. I've never understood taxes either. What do I have to pay for and what can I claim back? If anyone knows. The HMRC website confuses me so much sometimes. If I do happen to sell anything in this very early prototype phase I guess I'd have to add that down despite not being registered yet? And with the invoices, I often buy supplies from ebay and get email invoices from paypal and ebay, do these count as suitable receipts for my purchases and how do I create receipts for what I sell?
                          http://www.misscraft.co.uk
                          https://www.facebook.com/MissCraftShop
                          https://twitter.com/MissCraftShop

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                          • #14
                            Originally posted by Smkibbler View Post
                            I'm not sure when to register as if I can't get a big enough audience for my products then obviously the won't sell. I've never understood taxes either. What do I have to pay for and what can I claim back? If anyone knows. The HMRC website confuses me so much sometimes. If I do happen to sell anything in this very early prototype phase I guess I'd have to add that down despite not being registered yet?
                            Hi!

                            I've very recently registered with HMRC, and the advice I was given was to register as soon as you start advertising your products as being for sale. I'd get in touch with them just to check - but expect they would recommend you register ASAP, even if you haven't yet sold any items, because you can be 'a business' without making any profit (hopefully profit will soon follow though)!

                            The HMRC website is confusing! But you can register by phone (which I did, as the online service wasn't working. I called the Newly Self Employed Helpline 0845 915 4515) and they'll take about ten minutes to get everything sorted. The helpline is there for extra advice too

                            I was also quite impressed with the free 'webinars' they offer; one is a basic overview of what to look at when newly self employed, the other goes in to detail about expenses, allowances and a brief section on record keeping. They have a question and answer session at the end of each 30 minute presentation, where the two business advisors answer your queries as best they can, and provide useful links.

                            I believe invoices from ebay/PayPay are perfectly fine as a record of what you've purchased. I was advised to keep a record book or similar for sales made at a craft fair for example, and basically to keep up to date records of absolutely everything I buy for business purposes (and the receipts/invoices) and everything I sell.

                            I'm still a bit baffled by some of it to be honest, but I've not looked at all of the links yet. I have a feeling I may be spending a lot of time on the phone to them! As other people have said in this forum, the staff at HMRC seem really nice and helpful, so if in doubt, give them a call!

                            Hope that helps in any small way,
                            Hel

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                            • #15
                              Take it easy and do one thing at a time. Registering before you start selling is a great idea as you can get yourself sorted slowly and not face a mountain of stuff to do in a panic when you make your first sales.
                              What you can claim as expenses is written down all over the place - on websites, in pamphlets.
                              Just register then accept the help that is offered. I think most of us took up the 'helpful afternoon with tea and biscuits'. The nice thing about that was having a person to talk to. You can ask questions about things specific to you and what you are doing. I went home with a carrier bag full of leaflets. Somewhere you just need to sit down quietly and filter out what's relevent to you. Make a list, then remember to keep all the receipts.
                              Decide how often to update your records (daily - get a gold star, weekly - get a silver one, blind panic the day before your tax return is due - sit on the naughty step) and either enter it in a book (bit old fashioned and laborious and a pain to alter if you make mistakes) or a computer program (loads out there and a doddle to use if you keep it simple).
                              At the end of the year my accounts package spits out the numbers the self assessment tax form asks for. Both the paper and online forms come with a wodge of help stuff if you don't understand what they are asking.
                              The HMRC website just looks daunting as the tax man is trying to cover everyone from shop keepers to farmers, construction workers to basket makers so has a lot to say.
                              Have you looked at the Business Link site? http://www.businesslink.gov.uk/bdotg/action/home/
                              I like that one better. It takes your hand and walks you through things. If you get lost use the search box to get back to square 1 or 2 or 3.

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