Starting a Business whilst being F/T Employed

vindaloot

I'm thinking of starting up a business in my spare time, whilst being f/t employed, But I'm not sure what extra tax implications will be for me.

Any help on this is appreciated.

Also do you think I will be able to apply for a bank loan to start a new business whilst still being employed?

NABC_LLP

On top of all your business problems, you do have your tax issues to sort out as well.

NI
Firstly, you must register to pay Class 2 National Insurance Contributions. These are currently £2.40 per week.

If you are already paying the full whack of NIC through your employment (earning more than c.£44k pa) you will also need to fill out a deferment form so you do not pay too much Class 4 NI on your earnings.

If you suspect that your self employed earnings will be less than the Small Earnings Exception you should complete another form so you do not have to pay any Class 2 NIC

Income Tax
For income tax you need to prepare accounts each year, and you need to keep good records. Keep all your sales invoices, keep all your purchase invoices, keep a mileage log, note all of the personal assets that you use in your business.

At he end of the tax year you will need to prepare a set of accounts.

VAT
Watch the VAT threshold (currently £68,000). If your income exceeds the VAT threshold in ANY 12 months you need to register.

Trading Entity
Self employed means an individual trading as themselves. Think about whether you need limited liability and therefore a company or an LLP. This is protection you may need, depending on your trade.

Think about using your spouse's unused allowances and tax bands if you are a high earner.

There is a lot to think about. But the more that you understand, the better position you are in to minimise your tax bills and avoid fines from HMRC.