skov
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| posted on 23/7/12 at 12:47 PM |
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OT: Self employed whilst still in main job
Hi all,
Bit off topic this one... but there's such a wealth of info on here I'm sure someone can answer it 
I'm currently full-time employed, but want to start running a small business on the side. I think the best way for me to structure this at the
moment is to do it as self-employed / sole trader.
What I'd like to know is what I need to do to keep it all legal, and what taxes etc will I be liable for?
I've done a bit of googling on this, but most of the info on self-employment seems to assume it's your only/main job.
If it makes any difference I don't expect the sideline to bring in more than £1-2k in the first year or two, and my main job pays a fairly
average salary (via PAYE).
Cheers
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designer
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| posted on 23/7/12 at 12:59 PM |
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Simplist way is to tell the Income Tax, and ask for a tax form to fill in at the end of the tax year.
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Humbug
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| posted on 23/7/12 at 01:06 PM |
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First of all check your "employed" contract to see if it says anything about it, e.g. "not allowed", "OK if you get
permission". If there is anything in your self-employment activity that is even vaguely competitive with your employer's business, you
could get into trouble regardless of what the contract says.
Other than that, you will need at some point to let the taxman know so you can pay tax (and maybe NI, not sure of the rules). Just be aware that if
you are over the 40% tax rate threshold (or the self-employment will take it over) you will be paying 40%. On the plus side, if you are a sole trader
you can take expenses (cost of materials, advertising, whatever) off your income so you will only pay tax on the net amount.
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FASTdan
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| posted on 23/7/12 at 01:34 PM |
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Yep as has been said visit the HMRC website here: HMRC and pretty much do as it
says to register.
After that you'll need to fill in a personal tax return at the end of the financial year - this will take into account your main earnings and
also your earnings from your 'self employment'.
NEW danST WEBSITE NOW LIVE! Bike carbs, throttle bodies and more......
http://www.danstengineering.co.uk/
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NOTE:This user is registered as a LocostBuilders trader and may offer commercial services to other users
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skov
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| posted on 23/7/12 at 03:50 PM |
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Thanks guys.
I understand what I have to pay on the income tax side of things now.
What I don't get is the NI contributions.
It looks like I potentially have to pay a flat rate of Class 2, and a percentage of my profits for Class 4.
Will I be exempt from these because my 'business' will only be making a small profit, or will the wages from the day job have any bearing
on it?
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quinnj3
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| posted on 23/7/12 at 07:37 PM |
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If you only expect to make 1-2K in the first year, do you really have to say anything? (Technically you do.  ) If you decide its not worth it after
the first year and have already declared yourself as having a 2nd income, The inland revenue will be watching your finances on a fairly regular basis.
I'd personally prefer to wait a year or 2 but keep track of all the incoming and out going monies to do with that business, see how things go
and if you want to take it a step further I'm sure you would be able to back date if necessary.
A relative of mine had a fairly modest income coming in from an online business she had running. She ran it for a year and a half before deciding
that things were going well enough to declare the business. She had kept all her receipts etc and when she took everything to her accountant, he was
able to sort out all the financial dealings from the previous 18 months. She still had a tax bill of over £4K but she was expecting it. She
wasn't expecting to have to pay the next 6 months tax up front however, it is based on a forecast prediction from the previous years income and
is levelled out at the end of the year. I'm not sure if this would apply to you starting from scratch.
Hope this helps.
my aim is to build my own locost wether it takes me a week or 10 years to get started, i'm sure i will sometime
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morcus
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| posted on 24/7/12 at 02:18 AM |
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depends what your doing, but my dad did this when he set up a limo company that only did one Job before he had to move an pack it in. He said he got a
tax rebate from his normal incometax as his spending on the business was negative income. I don't know how it all works but be careful if you
decide to keep it to yourself, you'll be in a world of poo if they decide they want to make an example of you.
In a White Room, With Black Curtains, By the Station.
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skov
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| posted on 24/7/12 at 08:07 AM |
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I have to admit, it did cross my mind to keep it quiet...
The thing that worries me about that though is that my customers are going to be ltd companies rather than the general public, so presumably
there's a much greater chance of the tax man finding out.
Still trying to figure out if the costs and paperwork involved make it worth doing or not. I know £1-2k is bu99er all in the great scheme of things,
but there's the potential for greater things to come of it.
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