1st Timer Completing Self Assessment

licious

Hello.....apologies if this is in the wrong place, but here goes!!

I work full time and pay Tax through my employer. Last April (09), I registered as self employed with HMRC as I had started up my own small business in my spare time.

I have now received the letter from HMRC to enable me to activate my online account with them so that I can carry out my self assessment online.

The question I have is this:

Having kept all documentation, receipts, invoices, etc I have come to the conclusion that my 'business' is not as lucrative as first thought!! (Although, I'm going to stick with it to try and build on it further). Since registering I have paid out approx £600 buying sales aids, receipt pads, etc but my profit is only about £250??!!!.........I know it's not a lot at the moment, but I'm still learning! so I have obviously made a loss in my first year. Soooo, when I complete my Tax return online will I have to pay tax on the £250 profit that I have made??

Sorry if this is a stupid question, but any advice is gratefully appreciated.

Licious xx

computerbar

licious wrote: »

Hello.....apologies if this is in the wrong place, but here goes!!

I work full time and pay Tax through my employer.
I have paid out approx £600 buying sales aids, receipt pads, etc but my profit is only about £250??!!!........

will I have to pay tax on the £250 profit that I have made??


Licious xx

hi there
it would be if you could explain in details i.e. what kind of business you are doing?
did you to buy any capital items printer/computers etc
What is this £250 PROFIT made of? I assume it is Sales-(Expenses+Stock sold)

however simply answers YES if this £250 is the PROFIT after "Sales-stock sold-Expenses" then yes you have to declare this £250 as self employment income. and you may to pay tax (about £50@20%) on it as your other income was more than £6475 (working full time).

Also you might get a refund if you bought any capital items like printers/computers etc (assuming you have not included that in your expenses already)

licious

Thanks for the reply!

I sell perfume (mainly via party plan). The £600 is what I've paid out in total including all of my demonstration kit, samples, order forms/receipt pads, carrier bags etc. This amount also includes what I've paid for the perfume I've sold over the last 12 months. So the £250 or so, is the profit I made from the perfume sales only. So, in effect I suppose, I am approx £350 down (sorry, I haven't got the exact figures with me at the moment!!).

Does this mainly mean that I have made a 'loss' in my first year?? I obviously didn't too well did I??!!!!!.....Still learning.

Licious xx

orangeslimes

licious wrote: »

Thanks for the reply!

I sell perfume (mainly via party plan). The £600 is what I've paid out in total including all of my demonstration kit, samples, order forms/receipt pads, carrier bags etc. This amount also includes what I've paid for the perfume I've sold over the last 12 months. So the £250 or so, is the profit I made from the perfume sales only. So, in effect I suppose, I am approx £350 down (sorry, I haven't got the exact figures with me at the moment!!).

Does this mainly mean that I have made a 'loss' in my first year?? I obviously didn't too well did I??!!!!!.....Still learning.

Licious xx

If I understand you have sold £250 worth of perfume so that is your turnover
and your expenses are £600
That means you have made a loss of £350!

So you don't have to pay any tax for your self employment (and you can offset your loss on other tax you have paid i.e. from your job - I think)

heretolearn_2

So the £250 or so, is the profit I made from the perfume sales only.

Stop calling it profit. It isn't. It's your 'income' or 'turnover'.

Profit is the difference between what you spent and took, if it was a good result. i.e. £100 costs, £200 sales, equals £100 profit.

If your costs were £600, and your sales (income/turnover) was £250, you've made a £350 loss.

You can get a refund.

To be honest, it might well be worth paying for an accountant to do your return to maximise your tax refund. It sounds like there are lots of expenses etc that you are not including in your calculations, that would increase your loss, that would actually be a good thing right now by increasing your tax refund. Dont' forget their fee is a tax-deductable expense next time, so it doesn't really cost you anything if you look at it that way.