help with SA tax return for tiny business plz

sarahlou123_2

hello all
I registered as self-employed last may & am now due to fill in my SA tax return. I work from home doing what is mostly a hobby but as I do sell things sometimes I decided it would be better to register. I am a seamstress & make mostly childrens cloth nappy covers & clothing & sell them & some fabric online on my website. I'm not really sure where to start with my SA. I've got postal receipts, most of my supplies are bought through paypal online & I have all the paypal receipts. Also all of my orders are done online so i'm paid through paypal so i've got those paypal receipts. My sewing machine is in the corner of my living room (i have a 6 & 4 yr old so need to be about for them) What do i HAVE to include in my SA? Someone said to me i have to have an accountant but i've already made a loss this year (I enjoy sewing & like selling things for others to buy) i dont want to pay out for an accountant if possible.
can anyon give me any advice please? i'm sure i'm not the only one out there who's hobby is sort of a business lol
thank you sarah

Horace

An accountant will actually save you money, I have made a loss for the last two years but I haven't had to pay any tax either.

The HMRC run free courses on how to complete your self assessment and their self employment helpline is friendly and helpful.

I must admit that my accountant completes mine and I give her all my receipts (outgoings) and details of all my income (money received) together with copies of my bank statements. I give her details of mileage and all my mobile phone bills (for business phone). I can remember making an emormous boob when I first had to complete my SA which is now why I leave it in the hands of an accountant whose fees are offset against tax.

pinkclouds

Sort through all your receipts and invoices and add up the figures. There is a bit on the SA form specifically for businesses with low turnover or something (forget the exact amount but you are obviously well under it - plus it's something like trading under £70k). It's really, truly, very basic like A minus B equals C. The figures entered give you the loss figure and voila. That's it. (Well, as far as I recall from last year - I still need to do my SA too!) The other bits are just like business name, description ("seamstress"), address, etc. Standard stuff. And there's little prompts throughout to explain what to do and where to enter stuff. If you do it online, it's even easier and it does lots of the calculations for you.

However, you really should sort out your receipts and so on for record keeping purposes. You can totally do basic bookkeeping yourself. Best to borrow a book from the library to help you get the bits correct. (I tend to forget stuff if I can't see a reference book at the time.) Use the actual tax year as your accounting year, to make it easier. The main pitfall is to remember to deal with accruals and prepayments (if you have any) e.g. you might have paid for 1 year of whatever service but have only used 11 months out of a 12 month package so the last month belongs to the next year's accounts. I know it seems a trifle pointless for the sake of a hobby and a small loss but it is best practice and you may be glad of it one day. And, of course, it's an official type thing that you are supposed to do. I only mention the stuff in the first paragraph because you asked what are the actual figures required. I am not recommending that people fail to keep good records or ignore their bookkeeping!

Oh, and before I forget, this is just the business bit of your SA. The personal bit is separate. If you have more than one business then you enter the details of each one separately. If you have any income generating hobbies... I *think* they go in the personal bit. Ummm, what else? And employment is a separate bit too. But, really, do it online if you can - so much easier and less confusing. Just follow the prompts. And you can save it if anything is missing and go back to it later, if you don't have the information to hand. (Particularly useful when it comes to entering stuff like bank account interest. The tax statements seem to go for a walk every year and then you find about 3 duplicates of each, a few months later.)

Hope I haven't been too confusing! There are some actual accountants on this board. Hopefully one will be along soon.

pinkclouds

Horace wrote: »

An accountant will actually save you money

Possibly. But only to the extent that the OP may be saved from getting fined or whatever sanctions are imposed these days. I think, despite being registered self-employed, she probably is just a hobbyist. If she has no other income beyond child benefit (sorry if you are actually employed on a nice salary, OP - it's just for my hypothetical situation) then a couple of hundred for an accountant may not benefit her as much as spending some time teaching herself how to do this stuff. Possibly all her tax return will do is get her a rebate on her bank interest, if she hasn't registered for gross interest!

sarahlou123_2

hello
thanks for your advice, i've worked out incomings/outgoings which are below:

Outgoings
Postage total for year: £37.28
Products/Materials total for year: £251.47
Payments for advertising on online craft sites: £9.81
NIC’s Class 2 for year: £112.80
Paypal Fee’s for year: £14.37
Petrol for going to post office: £10.00
Total outgoings: £435.73

Incomings
Orders & alterations: £357.29

£357.29-£435.73 equals -£78.44 so a loss of minus £78.44 for the year

My partner is employed full time but earns less than £10,000 a year so we get child tax credit & working tax credit. I am mainly a hobbiest-something i could do to fit around my children & still be at home. I am 24 weeks pregnant but intend on carrying on sewing once baby born. We pay rent to my parents as we live in thier extension. My car is mostly for personal use, I'm not employed by anyone & only have this 'business'

umm the money i get from orders usually stays in my paypal account & then i use it from my paypal account to pay for things related to my business-we dont have any good fabric shops etc round here so everythings done online.

i've got all my paypal receipts. postage receipts, website orders etc all in plastic wallets in a folder. do you recommend any certain book keeping programmes?
thanks sarah

no-oneknowsme

sarahlou123 wrote: »

hello
thanks for your advice, i've worked out incomings/outgoings which are below:

Outgoings
Postage total for year: £37.28
Products/Materials total for year: £251.47
Payments for advertising on online craft sites: £9.81
NIC’s Class 2 for year: £112.80
Paypal Fee’s for year: £14.37
Petrol for going to post office: £10.00
Total outgoings: £435.73

Incomings
Orders & alterations: £357.29

£357.29-£435.73 equals -£78.44 so a loss of minus £78.44 for the year

My partner is employed full time but earns less than £10,000 a year so we get child tax credit & working tax credit. I am mainly a hobbiest-something i could do to fit around my children & still be at home. I am 24 weeks pregnant but intend on carrying on sewing once baby born. We pay rent to my parents as we live in thier extension. My car is mostly for personal use, I'm not employed by anyone & only have this 'business'

umm the money i get from orders usually stays in my paypal account & then i use it from my paypal account to pay for things related to my business-we dont have any good fabric shops etc round here so everythings done online.

i've got all my paypal receipts. postage receipts, website orders etc all in plastic wallets in a folder. do you recommend any certain book keeping programmes?
thanks sarah

I dont think you should be counting your class 2 NIC as an allowable expense. As far as I am aware this is not allowable.

sarahlou123_2

ok thank you, its things like this that i have no clue about so any advice is great

sarahlou123_2

can i include replacement battery for my laptop & replacement charger? my laptop is personal & business use so do i need to work out a percentage?

Savvy_Sue

I think you could be asking for a Small Earnings Exemption on Class 2 NICs anyway. If you're planning on having further children then there's an argument for continuing to pay them, because I think that if you have paid them, you can claim Maternity Allowance. But as you can 'make up' the necessary years if necessary (or you used to be able to!), then that goes against that.

Plus if you're claiming Child Benefit in YOUR name, you're getting your state pension contributions protected anyway.

Give HMRC a call and check, anyway.

spenderdave

As far as the self assessment form itself is concerned (or its online equivalent) the only things you need to enter in the self-employment section are:
Turnover (box 8), ie the money you received, £357
Total expenses (box 19), ie your outgoings, less NIC which doesn't go on the form. You can claim any capital expenses separately in box 30, which could include your laptop repair, but since you share this with personal use you have to put it as a percentage.

For this sort of turnover you almost don't need to do anything, but now they know about it clearly you do...

You do though need to fill in all the pages in the form to do with bank/building society interest etc. Since there will be no tax on your self-employment as you are well below the tax threshold you will be due a rebate on any interest you have paid on those, well worth getting (although with current interest rates it is not likely to be much...).

I have been running my own business for many years and do all my own accounts, it is all pretty straightforward. Also a lowish (but not THAT) low turnover, not worth using an accountant as all the profit would go in his fees.

sarahlou123_2

hello
thanks for all your replies,

regarding NIC's i've already paid up to date for the last year so shall i just see if i can get an exemption for from now on?

my bank account is just a normal very basic account-i dont have a cheque book or anything like that & dont earn interest or pay it as far as i'm aware. i can only spend what is in the account but can have direct debits, standing orders. my account is a personal account but linked to my paypal account.

on section 4 of the SA online is it better to put expenses as a single total value or detailed breakdown?

sorry for so many questions, hopefully it will be easier when i know how to do it maybe lol

regarding my 'actual' paperwork-what do i need to do with it? i've got it all in plastic wallets in a folder dated from 17th may 2010 (when i first started) to 5th april 2011.
thanks