locoboy
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| posted on 10/7/09 at 11:10 AM |
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making money on the side
Guys i have a day job but i have an idea and have some enquiries for products that i can make in my garage.
Annual turnover is small maybe up to £2000 with an intended profit of about 50%.
Yes i could do it all cash and stach it under the bed but im pretty straight when it comes to stuff like this so im wondering where i find out about
what my limits are before i need to declare any other earnings and how much might i be able to earn before i need to pay any tax etc etc.
Also is it worth my while registering a bonafide company name and trading under that.
Is it an expensive thing to do? or is it cheap and dead easy to do?
The upside to having a company name is that i could approach commercial concerns with a view to selling to them as they are unlikely to buy from joe
public and would certainly not be interested in paying cash for goods!
All advice and experiences welcomed.
ATB
Locoboy
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tegwin
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| posted on 10/7/09 at 11:12 AM |
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Hmm... think its better if I U2U..
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www.verticalhorizonsmedia.tv
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blakep82
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| posted on 10/7/09 at 11:31 AM |
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i'm gonna keep an eye on this too, i was thinking that same thing
________________________
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don't write OT on a new thread title, you're creating the topic, everything you write is very much ON topic!
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nick205
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| posted on 10/7/09 at 11:36 AM |
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The start point would be keeping accounts of all and any tansactions and then completing a tax return at the end of the year to declare your
additional income for tax purposes. At the turnover mentioned you could probably handle this yourself, but IMHO it would be worth speaking to a few
accountants to get an idea of what they'd charge for the service. Doesn't need to be afirm of accountants - I have a friend who is
qualified and offers just this kind of service working par time from home (not selling her services BTW).
One benefit of declaring everything properly is you will almost certainly be able to claim back VAT on things purchased in connection with the
turnover.
Setting up a Ltd co. is not expensive or difficult and has benefits in terms of keeping your business and personal finances seperated. As you rightly
point out too, most people whether private or corporate customers are likely to be more comfortable buying from a company rather than an individual
(if only in perception). Also it may allow you to reivest profits into new equipment etc with tax benefits.
Hope you get the project off the ground and it proves successful too 
[Edited on 10/7/09 by nick205]
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DarrenW
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| posted on 10/7/09 at 11:40 AM |
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Ive recently done something similar. Incredibly easy to set yourself up as a sole trader. Firstly though decide if you will have any liabilities that
you cant cover yourself.
For sole trader you just need to register as self employed and register for class 2 national insurance. You will then be on the HMRC and be sent self
assesments every year so you can declare all earnings and they can then calculate your tax.
You can then open a business bank account - again easy to do by making appointment at bank of your choice.
You dont need to be VAT registered if trading is under a certain level. However some choose to be so they can claim back VAT if (eg) they have a lot
of purchases. You can worry about VAT later for now though.
Everything you earn is yours as a sole trader. If your day job takes you over 40% bracket, put 40% of all earnings away in a savings account for now
until first assesment is sorted. i have heard some people get tripped up on first tax period as tax man can work out your tax liability and ask for 18
months, i think this is so they have 6 months on account for next period.
Best take advice from those with more knowledge as im a novice but this si basically what i have done. It gets a little more involved if you have a
partner or wish to become limited (companies house, partnership agreements etc).
I chose sole trader as yu can change to ltd later if you need to and i will try to manage any liabilities. However just think about what you would do
if you owe £1000 for materials to be paid for when a client gives you £1500 for a job only to find they dont pay. You can also look into product and
public liability insurance depending on what you are looking to do.
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GrumpyOne
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| posted on 10/7/09 at 12:23 PM |
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There are various routes you can take.
1) Sole trader, as the name suggests you are the boss, you keep your own accounts and do all the work. You can of course employ people if you wish.
There are no real tax breaks for a sole trader you pay tax on whatever you earn.
2) Partnership, as above but with someone else. Can be a minefield and you really need a lawyer to set up the agreement for you. If one of the
partners decides to leave then the firm closes and the partnership disolves, although there are ways around the firm closing.
3) Limited liability partnership as the name suggests a partnership with limited liability. Really only used for firms of accountants and lawyers.
4) Limited company, very easy to set up, costs around £50. Your liability is limited to your share capital i.e. the money you first put in to the
company. You can be the chairman and a director but you need one other to be the secretary. You also need to file accounts anually and complete a
annual return to companies house (£45). No requirement for an audit if your turnover is under £100,000 but an accountant must complete your year end
accounts.
5) Public Limited Company (PLC) Won't even talk about this option as you need a minimum of £40,000 capital.
For the amount of turnover you are anticipating I would opt for the sole trader status. You can use a name of your choosing as long as it is not
another persons name i.e you can't call yourself John Smith if your name is Joe Bloggs but you could call yourself Express Moon Rides. Tell the
tax man what you are doing, pay your class 2 NI, you also pay class 4 ni at the year end.
Keep your accounts up to date, you can get Microsoft money free and it is all you need. If you use the services of an accountant at your year end, as
of this year they are legally bound to be registered as providers of financial services.
If you need anything else drop me a U2U.
Cheers
Colin
[Edited on 10/7/09 by GrumpyOne]
My wife is very understanding, she understands that if I am in the garage I am not in the house annoying her.
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fatfranky
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| posted on 10/7/09 at 12:33 PM |
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quote:
One benefit of declaring everything properly is you will almost certainly be able to claim back VAT on things purchased in connection with the
turnover.
As a thought perhaps you could also claim for some expenses, eg. locoboy limited pays Mr & Mrs Locoboy a small amount of rent for office space (
spare bedroom) utilities, vehicle costs, telephone etc.
I'm not talking about trying to milk it dry, but merely offseting some legitimate business costs against your outgoings.
ps. I'm no expert, it was just a thought.
[Edited on 10/7/09 by fatfranky]
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GrumpyOne
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| posted on 10/7/09 at 12:55 PM |
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quote:
Originally posted by fatfranky
quote:
One benefit of declaring everything properly is you will almost certainly be able to claim back VAT on things purchased in connection with the
turnover.
As a thought perhaps you could also claim for some expenses, eg. locoboy limited pays Mr & Mrs Locoboy a small amount of rent for office space (
spare bedroom) utilities, vehicle costs, telephone etc.
I'm not talking about trying to milk it dry, but merely offseting some legitimate business costs against your outgoings.
ps. I'm no expert, it was just a thought.
[Edited on 10/7/09 by fatfranky]
Part Two
If you don't want the HMRC (tax man) to kick the sh*t out of you, get a seperate bank account and do not use your own personal account.
You can obviously claim certain expences, within reason and comeserate with your turnover. Don't try telling the tax man you bought the Audi R8
for deliveries when you are turning over £2000 he won't listen.
If you are working from home you can claim tax relief on certain expences like electric, gas etc but be careful about claiming rent as the tax man can
claim back capital gains tax if the house is sold.
Are you going to tell the local council you are working from home as this is another minefield. What about insurance, will you need business
insurance, another minefield but not as expensive as you might think.
I am not trying to put you off, rather the reverse, go for it Britain needs more people like you and you never know 10 years from now you could be
employing 200 people.
Cheers
Colin
[Edited on 10/7/09 by GrumpyOne]
My wife is very understanding, she understands that if I am in the garage I am not in the house annoying her.
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Humbug
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| posted on 10/7/09 at 01:58 PM |
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SWMBO ran a small catering business from home for a few years. A few things I remember (as "accountant", computer man, marketing manager,
etc.  ) are:
The was a sole trader - turnover never more than 6-8000 per year
Used Microsoft Money to record all incomings and outgoings
Things bought specifically for the business (e.g. large platters,) were deducted as expenses, as were things like advertising, website, etc.
Some other things partly used for household purposes wer partly deducted as expenses
Mileage at the standard rate treated as an expense
Some small proportion of gas and electricity for cooking treated as an expense
The odd printer cartridge, pack of printer paper.
She has liability insurance in case of accidentally poisoning people
She used a separate bank account
Filled in the tax return each year.. if you keep records it is not too difficult to complete the Self Employed pages.
Can't think of anything else at the moment.
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