Newly self-employed need help!

bradc

I have received a payment for a holiday apt which I designed a web site for and try to let out for the owner.. (I am the agent) and have received the payment from the client (renter), I need to forward this to the owner (minus my %). What is the correct way of doing this? Obviously I only want to be taxed on my profit but want to do it correct as its my first time!

Many thanks

fengirl_2

Work out your %age and send a cheque for the balance with your invoice for the amount you have deducted marked 'paid with thanks' or similar, to the client. Keep a copy of the invoice.
Your expenses are a separate matter and you need to keep a record of these as you go along.

bradc

Thanks I will do. As for expenses does the owner need to send to me an invoice or can I just send a cheque with my commission invoice for his share?

First time and won't to do things right!

Thanks.

bradc

Duplicate of above post.

fengirl_2

What are you payng the owner expenses for?

bradc

Ok, I received £150.00 from rental client of which approx. £100 was passed to the owner. Say £25.00 is my commission and the other £25.00 is for a cleaning company which I will pay on his behalf.

So do I put down income £150.00
Expenses £125.00?

Or just put down my profit of £25.00?

Does owner and cleaning company need to send me receipt for the money? It all came in and left the account which I use for business purposes.

Thanks.

PlutoinCapricorn

Bradc, on the basis of your earlier posts, you must be approaching the age of 17.
This seems a little young to be in the property letting business!

You do seem to be quite financially aware, I think that the earlier people start learning about income tax and national insurance the better. So good for you, you know more than many much older people who post on this forum.

bradc

Thanks for the ever so helpful response. Yes I am young and yes its a learning curve and as a matter of fact I am doing quite well and have other successful online businesses too. It was just a simple question, of course I record all my income/outgoings but wasn't sure how to record this one, THAT IS WHY I ASKED! And actually I class both the owner and the renter as my clients as I am the middleman between the parties. And for your information, it's nothing to do with my parents.

Sorry for asking.

PlutoinCapricorn

I often wish that schools would offer courses ("GCSEs") in income tax, VAT, National Insurance, other insurance, Council Tax, Utility bills, interest rates and other useful subjects. If you are registered as self employed, and thinking of filing your first tax return, you are way ahead of the game. You sound well on the road to being a tycoon to me!

Do you know about the certificate of exemption for Class 2 National Insurance on the grounds of low earnings?

I am sure that you know to record all legitimate business expenses and all income and calculate the profit. If you file online, which I really recommend, your personal allowance will be taken from the gross profit leaving the taxable profit. I assume that bank account interest is being deducted at source. You will get an immediate figure for the tax that you owe them/refund due. What I do is try to get ahead of the game by calculating everything myself manually, and see if HMRC come up with the same figures when I file online.

Your question about the letting is a tricky point: I hope that someone more knowledgeable will give a proper answer. In the meantime, if you receive money from someone, you really need to invoice them. If you give money to someone for goods or services, you need to get a receipt from them. The first is income, the other is business expenses.

bradc

PlutoinCapricorn wrote: »

I often wish that schools would offer courses ("GCSEs") in income tax, VAT, National Insurance, other insurance, Council Tax, Utility bills, interest rates and other useful subjects. If you are registered as self employed, and thinking of filing your first tax return, you are way ahead of the game. You sound well on the road to being a tycoon to me!

Do you know about the certificate of exemption for Class 2 National Insurance on the grounds of low earnings?

I am sure that you know to record all legitimate business expenses and all income and calculate the profit. If you file online, which I really recommend, your personal allowance will be taken from the gross profit leaving the taxable profit. I assume that bank account interest is being deducted at source. You will get an immediate figure for the tax that you owe them/refund due. What I do is try to get ahead of the game by calculating everything myself manually, and see if HMRC come up with the same figures when I file online.

Your question about the letting is a tricky point: I hope that someone more knowledgeable will give a proper answer. In the meantime, if you receive money from someone, you really need to invoice them. If you give money to someone for goods or services, you need to get a receipt from them. The first is income, the other is business expenses.

Thanks for your response!

Yes I do know the basics, learnt it all myself and yes would be good if they taught more about it at school I agree! Yes I do invoice clients and normally it is easy as mostly I am just providing services and often have no expenses, and yes I do keep receipts from my web hosting supplier etc.. to claim as a business expenses. I do kinda know what I am doing and I guess if the property owner sent me a receipt for the £100 I sent him and I get the cleaners to do the same I should be OK? Knowing my luck I will be randomly investigated so would prefer to do things right at this stage to avoid any future problems.

Thanks again.

Brad

orangeslimes

bradc wrote: »

Ok, I received £150.00 from rental client of which approx. £100 was passed to the owner. Say £25.00 is my commission and the other £25.00 is for a cleaning company which I will pay on his behalf.

So do I put down income £150.00
Expenses £125.00?

Or just put down my profit of £25.00?

Does owner and cleaning company need to send me receipt for the money? It all came in and left the account which I use for business purposes.

Thanks.

You definately should get a receipt from cleaning company.
I would think based on having done accounts for a company doing similar thing as you- that the £25 commission is your 'sales'- the cleaning is possibly classed as a 'disbursement' and the £100 is the clients income to declare.
but you are probably in potentially rather tricky legal territory here...and it may depend on the nature of your contract with your client, who the invoice from the cleaning company is made out to, who in the event of the money not being paid is responsible for chasing the debt etc..