Additional work secured - Setting up advice sought please

IBM01

Hello Money Saving Experts,

I am looking for some advice for a friend please.

She has just been asked to undertake some work outside of her normal working hours, delivering training events. At present the number of training events is yet to be confirmed, but likely to be 1 or 2 a month for the next 6 months or so. If it materialises then the amount earned could be around £2000 + with possibility of further work. The organisation has asked her to invoice them direct for her time. Her employer is aware of this offer and is happy with this arrangement.

I have made enquiries of HMRC for her and they have said that she will remain a PAYE employee with her day job, and as amounts are not large she will just need to register and then fill in a tax return for her earnings outside of her normal job. They have suggested registering after April 4th so as to fall into next tax year.

In addition I have contacted Business Link as I hear that they may be able to offer her advice, but no reply as yet.

My request is really whether anyone out there can share any useful hints and tips to make sure she gets the most of this opportunity i.e. what to do (to make things run smoothly) and what not to do (the things to avoid).

For example should she open a business bank account and keep any income separate or is she o.k. using her normal current account?

If she has to open a business account will there be charges which negate any advantages of doing this? She should only be receiving payment i.e. receiving a cheque for training undertaken, unless of course she must also use this account to purchase anything associated with the training events e.g. fuel, telephone charges, paper and printing, equipment etc.

How and what records of any expenditure should she keep to enable her to claim anything back?

Will the fact that she will need to use the internet and a vehicle to get her to the training venues be counted as legitimate expenditure and if so are there any limits as to what items and how much can be claimed.

Does she need to register as a company or is that not necessary? If she does how would she go about this?

Basically any useful advice that would help me in advising her would be appreciated.

Thanks in advance

Poosmate

I had both a friend and an aunt who were approached to do some specialist type of work for companies that for one reason or another could not employ them directly (in my aunt's case because she had recently been made redundant from her company).

Anyway, they were both advised to set themselves up as a company (sorry not sure what sort Ltd, or Sole Trader) and take a salary/wage of National Minimum Wage from the company. It was something to do with keeping their income tax in the lower bracket whilst gathering their wealth in their company account.

I don't know exactly how it works but I think you get the cash tied up in the Company when you wrap that company up and cease trading and it's not classed as income - maybe capital gains?

I'm sure someone else will be able to explain it metter and properly than me and I'm sure things must have changed since my aunt and friend did it.

Poo

hermum

It may be worth posting this on the small biz board
http://forums.moneysavingexpert.com/forumdisplay.php?f=27
You will possibly get more answers from the people over there.