new business advice

newbie2011

Hello all,
I ve been a great watcher of MSE but never posted before!

Im in the process of setting up my own business and know that I need to register within the first 3 months as a new business with HMRC, the only bit that confuses me, is that is it 3 months from the first time I buy something for the business, e.g. Laptop, stock etc...Or the first time I actually sell something and start making money? I want to wait as long as I can before registering, delaying NI etc... As I still have a full time job that I will be doing also at the beginning (As long as all goes well, Wish me Luck!!!) I will be Sole Trader.

My first sales will be in April, so in the new tax year also, however some stock will be bought End of March...

Hope this makes sense, thanks for any answers in advance!

steve1980

Three months from starting your business. So if you start in March, you have 3 months from March to register with HMRC.

You'll need to fill in one of these if you think you'll earn less than £5,075 (this may increase/decrease come April)

http://www.hmrc.gov.uk/forms/cf10.pdf

and one of these

http://www.hmrc.gov.uk/forms/cwf1.pdf

If you haven't already you'll need to open a business bank account, there are various "deals" going around at the moment, Barclays offer upto 2 years free banking, Santander offer completely free business banking.

newbie2011

Thanks for the links to the forms.

I was going to operate form my personal bank account at the start and review this in 12 months as to wether I really need a business account. I know that people recommend for simplicity to have a business account, should my tax affairs ever be look at in-depth from HMRC! However I plan on keeping good records, and highlight from my statements which is personal and which is business. Im a qualified nurse so im used to having to keep good accurate records!!
The work in which I will be doing will result in me being paid direct in to my Paypal account via website sales, so it will be easy to see the paypal payments going in.
Any expenses going out will be bought via debit card and then clearly highlighted?

Going back to official start date, is the official start surely the date you start taking money in? What does everyone think?

steve1980

If you are taking regular payments then the bank will look at it. For the sake of a ten minute phone call or 2 minute online application it's makes life so much easier. And should HMRC "inspect" your accounts do you really want them to see what's also going in and out of your personal account?

inneedofmoney

I believe that it has now changed to 1 month, not 3 months

steve1980

inneedofmoney wrote: »

I believe that it has now changed to 1 month, not 3 months

Nope, 3 months.

POPPYOSCAR

newbie2011 wrote: »

Thanks for the links to the forms.

I was going to operate form my personal bank account at the start and review this in 12 months as to wether I really need a business account. I know that people recommend for simplicity to have a business account, should my tax affairs ever be look at in-depth from HMRC! However I plan on keeping good records, and highlight from my statements which is personal and which is business. Im a qualified nurse so im used to having to keep good accurate records!!
The work in which I will be doing will result in me being paid direct in to my Paypal account via website sales, so it will be easy to see the paypal payments going in.
Any expenses going out will be bought via debit card and then clearly highlighted?

Going back to official start date, is the official start surely the date you start taking money in? What does everyone think?

You do not have to have a business account you can have just another current account so I cannot really see the point of using your own personal account.It really is much easier to have it set apart from your personal use.

No the official date is not from when you start to take money in it is when you start up your business.If you are offering a service/selling goods then you are running a business before any money comes in.

newbie2011

Thanks everyone for the advice, I understand it is three months for new business startups. I need to buy some stock only a small amount now and then the rest after April when I wanted to start the business.

I was hoping I would get away without having to do a tax return before Jan 2012, as the business would have started in the new tax year. There is not going to be any money coming in til April time, when the rest of the stock will be bought then sold...

Savvy_Sue

It used to be 3 months, but now there is some confusion because some parts of the HMRC site still say that, but others say "immediately", and you can be fined for NOT registering or for late registration. And some who should know what they are talking about say that you should only register if you definitely need to pay tax - although as you have a 'proper' job, you will have to pay tax on all your profits, so sooner rather than later is the advice for you.

I'd phone HMRC and ask them what to do.

POPPYOSCAR

Savvy_Sue wrote: »

It used to be 3 months, but now there is some confusion because some parts of the HMRC site still say that, but others say "immediately", and you can be fined for NOT registering or for late registration. And some who should know what they are talking about say that you should only register if you definitely need to pay tax - although as you have a 'proper' job, you will have to pay tax on all your profits, so sooner rather than later is the advice for you.

I'd phone HMRC and ask them what to do.

I don't really understand this bit.

So are you saying that if you do not register, do not make a profit then the Inland Revenue will not fine you?

Savvy_Sue

POPPYOSCAR wrote: »

I don't really understand this bit.

So are you saying that if you don't not register, don't not make a profit then the Inland Revenue will not fine you?

too many negatives in there for this time of night! brain has seized up on me.

I think what the person was saying (and they are no longer able to say it for themselves) was that HMRC didn't require you to register if you were eg doing ironing for a friend once a week and being paid a fiver for it, giving you a gross income of £250 pa which is clearly under the tax threshold (assuming no other personal income). And that HMRC really didn't want everyone earning JUST a fiver a week to register, because they didn't have the resources to deal with it.

Now clearly, this causes problems when you start by earning a fiver a week, but then 25 more friends ask you to do their ironing and you realise you should be charging each of them £50, and suddenly you have a very different business model. And I don't know what HMRC would say to that.

Also there is very definitely confusion - and AFAIK there is no clear guidance - on when you have to register, or at what point they will fine you for late registration. Again, suppose you do this ironing for a couple of weeks, and then think "Actually, I don't really like ironing, I'd rather cut back on food and spend my time cooking Old Style". Technically you should have registered, actually it would have been a great waste of time, because you've only got an income of £10 and now you've stopped 'trading'.

That is the gist of the argument as I remember it being presented.

That's why I say phone HMRC and ask them!

Maybe one of the current tax / accountancy professionals can give better advice than this ...