Web design for extra income, should setup SB?

swift_gti · 29 September 2009 at 10:40AM

Hi all,

I currently work as an IT Manager and have been approached by a local group who would like a website designed for the local community.

They are obviously willing to pay for my time to do this and I was wondering where I stand in terms of tax etc..

If it goes ahead there will probably be in ititial fee of around £1000, followed by ongoing annual costs of a few hundred for maintenance.

My question is, whats the best way to go for getting paid etc?
Are there any benefits / costs / savings that can be gained from setting up my own business and putting it through there ? - Bearing in mind I already work full time for another employer..

Any advice would be appreciated.

FreheitOverture · 29 September 2009 at 10:48AM

Technically, you will need to register with HMRC as self-employed then fill in an annual Self Assessment. I'm in the same position as you and this is how I work

paulwf · 29 September 2009 at 11:39AM

As FreheitOverture says the easiest way to handle payments is to be self employed, when you get your first payment register with HMRC...it's all very painless.

You can offset expenses against your income as you are taxed on your profits. That means you can claim a portion of some household bills if you work from home. You can also claim for some equipment purchased and some travel costs. Just keep all receipts and post here if you need specifics on what you can claim for.

swift_gti · 29 September 2009 at 1:12PM

Great, doesn't sound too bad.. thought it could be a right minefield

I'll look into this a bit more now I know roughly what to do, but I presume that the tax amount will be at my usual % ?
(Just trying to get a rough idea of what the take home would be..)

martindow · 29 September 2009 at 2:36PM

swift_gti wrote: »

Great, doesn't sound too bad.. thought it could be a right minefield

I'll look into this a bit more now I know roughly what to do, but I presume that the tax amount will be at my usual % ?
(Just trying to get a rough idea of what the take home would be..)

And NI at 8 per cent I think.

paulwf · 29 September 2009 at 6:10PM

For self employed you will pay Class 2 NICs at £2.40 per week usually collected by direct debit. There are exemptions for low incomes. See http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073867963 for general info.

Tax will be at the same rate as in your job but in your case you will probably allocate your personal allowance towards your main job so just pay a flat rate of tax at the end of the year on your self employed earnings. Remember to put some money aside as it will be quite a while before you get the bill.

Will this be the only project that you take on? If so consider coming up with a package price for perhaps 3 years maintenance so that you don't have to bother staying self employed next year. Self employment isn't a major hassle but for one job I would prefer one (albeit reduced) payment up front then not having to worry about it for the next couple of years...I hate paperwork though

fengirl_2 · 29 September 2009 at 6:22PM

If this is only going to be a one off, dont register as self employed, but just ask for a self assessment at the end of the tax year. You can then decalre the fee as 'any other untaxed income'. You wont be liable to class 2 NIC on this level of income, so you are not evading duty.

swift_gti · 30 September 2009 at 7:20AM

Thanks for the sound advice, this will probably be a one off for the moment so I'll look further into the suggestions made here

Thanks

Slaine_43 · 1 October 2009 at 5:36PM

Hi,
I am new to the forum and don't have a clue how all this tax thing works. I am in a similar situation to Swift_gti, I work full time and pay tax on my main job. That's all fine but recently I have been approached to carry out extra consulting work for an agency. This work would definitely be in additional to my main job but I'm a bit confused about the tax implications. I thought a second job was taxed as additional income and that was it - But, I 've spoken to a few friends who are self employed and they say I can work for several agencies and register as self employed to lower the tax bill.

Can anyone tell me how this all works? Is it worth doing this extra work if you have a huge tax bill at he end of the year? I was also told that forming a limited company has high set costs but could be another way to go. To give an idea of numbers the additional work could earn me £10K per year but surely I would pay £5K in tax and N.I on this?

Any help would be greatly appreciated.

Rolo_Tomasi · 1 October 2009 at 7:12PM

Slaine - If you are working for an agency it is unlikely that you will be treated as self employed - you will just have a second job which will either be taxed at 20% or 40% depending on your other income.

Being self employed is not a choice - it is a question of fact. If the agency finds work for you, pays an hourly rate, tells you what hours to work and insists that it is you that carries out the duties then you are an employee and will be taxed as such. It does not matter how many agencies you work for, each one is looked at individually in determining the employment status.

ukbill69 · 1 October 2009 at 8:49PM

I think it is a highly competitive market to go into and as we are in hard times, you wont get much business, as the larger firms are lowering there prices. I got a custom shopping cart made to made to measure products and quotes come in at 10k, 7k, 5k, 3.5k and the one I went with was 1.7k.