Maximising income - Mystery Shopping? Surveys? (Part Three)

Hi all,

I’ve been asked to create this new thread as the old one was mighty long and this slows the site down. Thanks to nearlyrich and leni for the first two threads (one and two). Hopefully I can add some advice below to help newbie/wannabe Mystery Shoppers….

Introduction to mystery shopping (thanks redcar!)

The companies mentioned below are a good place to start. Don't worry if they ask you for bank details when you apply as this is only so you can get paid. Numbers of jobs offered seems to vary and very much depends on your location in the country so it's difficult to generalise. Lots of the companies have training materials and tests which help you to know exactly what to do and the standards they expect on their reports.

Most of us have worked hard to get good at this job so whilst we are helpful we are not keen to hand on a plate information to people not willing to do the legwork too. Please also note that there is a finite pool of MS work so respect that people may not be willing to share all their knowledge with someone who in essence will be taking work away from them or causing a decrease in fees. Being able to read and digest information is a vital skill for mystery shoppers so the next stage is to read the rest of the thread and you should find people happy to answer specific queries you have.

When you are ready pick a job: The first one is always nerve wracking. Possibly try one without timings or many complex stages as those give you just that bit much to think about on the first time. Go for one close to home so you aren't going out of your way as the fee will probably not be worth it otherwise. You can always go back into most places with an excuse if you miss something or if allowed take someoneelse who can keep an eye out too for details such as name badges.

COMPANIES USED BY CURRENT MSE Mystery Shoppers
Amber Arch
Registering for tax

If you wish to start Mystery Shopping on a self employed basis, even just one job, you need to register with Her Majesty’s Revenue and Customs (HMRC) within 3 months or you could face a fine of £100. Please don’t think that because you’ll potentially only earn a few quid doing MSing that you needn’t register as self employed – it’s absolutely essential that you do as being caught out can be costly. The admin work involved in being self employed is so minimal that it’s not worth avoiding - and we're here to help you do it!

Forms and Guidelines you will need –

To register as Self Employed you will need to either ring HMRC on 08459 15 45 15 or download and send back the form CWF1 (http://www.hmrc.gov.uk/forms/cwf1.pdf )

You may also be required to pay class 2 National Insurance at the rate of £2.30 a week, but only if you earn more than £4,825 (between 06/04/08 and 05/04/09) after expenses in any one year through Self Employment. This means earning more than £4,825 in addition to your other sources of income.

If you think you will earn less than £4,825 in the financial year, then you can apply for a “Certificate of Small Earnings Exception” which means you will not have to pay NI (National Insurance) Contributions. The Exception application can be found at the end of this document CF10 - http://www.hmrc.gov.uk/forms/cf10.pdf

Bear in mind that HMRC generally seem to have long delays on processing these forms so don’t worry too much if it’s a few weeks before you hear anything.

Information on Self Assessment - http://www.hmrc.gov.uk/sa/selfemp.htm

Working out how much tax you’ll have to pay

You will be taxed at your normal tax rates for your mystery shopping. This sounds desperately vague but means that your MSing income (profit) will be added to any other income you have (employment, generally) by HMRC and taxed at the following rates (between 06/04/08 and 05/04/09):

If your total income is less than £5,435, you’ll pay no tax.
If your total income is more than this, the next £36,000 will be taxed at 20%.
Any earnings higher than £41,435 will be taxed at 40%.

Tax rates can seem confusing but following the above information logically will help you work out your tax.

For a lot of MSers, MSing is done in addition to their full time job. If the full time job pays between £5,435 and £41,435 then your MSing income will most probably be taxed at 20%.

Unless you earn more than £5,435 by mystery shopping, National Insurance (self employment’s version of National insurance is known as Class 4) will not be applicable.

“Tax doesn’t have to be taxing”

Not sure where that little nugget’s from (possibly that annoying HMRC advert) but it’s true! A lot of people are put off MSing because of the tax registration work involved but they needn’t be. Tax is actually quite easy to deal with and when you know what to do you’ll have no issues.

I am an accountant (sorry ) and am happy to help anyone on this thread if they have any questions. There are also a few other accountancy trained MSers who regularly visit this board who will be able to help.

Record keeping

Keeping records is something that’s vital with MSing. This is for two main reasons – one is that the MSing company may call you (potentially ages) after the job has been completed to query your report, and the other is for your tax return information at the end of the year.

In terms of tax, the record keeping can prove invaluable on a month to month basis and it’s worth investing some time and possibly money in setting up a bookkeeping system.

The recommendation I would make for the accounting system is QuickBooks Simplestart – this is my absolute favorite piece of software (:D). I train people in this software group as part of my job and it’s very user friendly. Most people can get started with Simplestart on their own without training although this usually requires a bit of basic bookkeeping knowledge. The only downside to this software is that it costs £39.95 (inc VAT) to download. This is actually a great price for such a thorough and capable bit of kit compared to its competitors, so don’t be put off by it straight away is my advice! I am well accustomed to the workings of this software so would definitely support MSE users if they're struggling to get it set up/use it.

Microsoft Office Accounting Express 2008 is another piece of software you could use - It’s free to download so although this is great news, I have my reservations as this is a little hard to navigate and use unless you have a bit of bookkeeping knowledge/training.

Of course if you don’t fancy either of these, you could always use a spreadsheet or a manual book. These have their disadvantages too and as an accountant, would tend to advise against these if you can spare some time (and possibly money) on getting a proper piece of software set up.

Working out your profit/loss

There have been lots of people on the old MSing thread asking how to work out their taxable income. Below is a little example of how to do this for each job, with some suggestions of what you could include:

Income (includes all fees and reimbursements): £30.00

Expenses:
Job specific costs (anything you had to pay out as part of the job) (£20.00)
10 miles @ 40p (HMRC’s agreed rate per mile) (£ 4.00)
12 pages printed @ 6p (reasonable cost of printing a page)(£ 0.72)

Profit (income less expenses) £ 5.28

You can also claim expenses against your income such as buying software or small equipment (calculator, diary etc) which aren’t necessarily related to one job.

It’s important to remember though that you can’t take the cost per page for printing from your income AND replacement printer cartridges and paper – it’s one or the other.

Additional point, (thanks to Jobbingmusician!) - When the MS companies state that the fee includes all expenses, it is up to you to work out how much you have actually 'earned', and how much you have legitimately spent on expenses. And yes, it is even possible to make a loss, on paper, for the odd job!
What expenses can I claim against my income?

Claiming expenses other than the direct costs incurred in the job (meals etc) can be a bit of a minefield, and requires a bit of educated guestimating sometimes! with MSing, the usual, more obvious costs are:

• Paper & printer ink OR a cost per page (usually 6p for most people)
• Postage
• Files, dividers, folders etc
• Mileage costs (anything up to 40p per mile is acceptable)

There are some other things you can claim for though - these are more indirect costs and things you would have paid for even without MSing in most cases. These are simply contributions your business is making to you, for providing certain things. Below are some examples:

• Broadband - you can claim a % of your monthly cost against your income. For example, if you estimate that you use your internet 25% of the time for MSing, then claim 25% of your broadband costs against your income
• Telephone - this is done in a similar way to broadband. Line rental is done similar to broadband; calls are done either on this basis if you can't easily work it out, or using the exact costs if you can.
• Use of home - this is something most small businesses charge against their income. It's a bit of a notional amount (usually set at £5/£10 per month) that's supposed to contribute towards the costs of keeping your business running at home, using the heat, light and a bit of the spare room as an office!

The last one is definitely a guestimate one - it goes along the lines of using your common sense and making educated guesses. More info is available here from HMRC on allowable "other" expenses....

If you're employed by the MSing company and being paid a mileage rate per mile:

If the MSing company sorts your tax out for you; you need to consider the mileage, if they pay you a mileage rate that is - I'll explain below....

The HMRC recommended & agreed rate per mile is 40p. that means that you can claim 40p for every mile you travel for business reasons, against your profit or employment income. If you're employed by the MSing company, they will potentially pay you a rate per mile of anything up to 40p, which is not taxable (i.e. is paid to you in whole without tax taken off).

If the company pays you 32p a mile for example, you're missing out on the 8p that you could have been paid (remember, this is not taxable). This 8p can be claimed against your employment income on your tax return at the end of the year, and therefore REDUCE YOUR TAX !

So when you do your tax return at the year end, you'll need to fill in an employment section for each employment, where you enter your pay amounts from each P60 or P45 you have. There is a box called "Travel and Subsistence costs" on the second page of the employment section, this is where you include all of the mileage you have not been paid already.

This seems to be a bit of a confusing subject so please ask on this thread if you need help - one of us should be able to give you a hand! It's actually very simple for those of us who do it every day but as with all areas of tax, it can be daunting for some people.
Confidentiality

Confidentiality is something MSers really need to bear in mind. Please don't mention fees or client names on this thread as neither the MSing company nor the client being shopped will be very happy about their names being discussed on here.

UPDATE - 5 March 08 - New alerts thread!

I've set up a new thread specifically to alert shoppers of new job releases - the link is here.

Enjoy!

Done - I think! Please let me know if there's anything that could do with being changed on this post.