Pros and cons of setting up on business from a hobby?

BenJMin

Hello all,
I've been doing photography as a hobby for the past 10 years and have been thinking of starting up a business working on weekends to suppliment my main income from the 9-5 Mon-Fri job I have. I don't expect it to make a significant income but more a hobby that pays.
I've got a few questions that I hope people can help me with.
- The studio I use is not my own but is one that I rent off someone else for a fixed price per day. Is this classed as a business expense and if so can it be claimed back either partially or fully?
- Is there a limit on how much you need the business to earn before you have to pay tax on a business (similar to the tax freshold of not paying any tax before £7k)
- If buying camera equipment / computer equipment is this classed again as a business expense and claimable? I've had a few people mention that if I did set up the business I should register for VAT as I'd be able to claim this back for any camera equipment etc bought which could then add up.
- I plan on using a seperate bank account for the business but do I have to pay any tax / NI regularly throughout the year or is it just one demand that comes in yearly based on the tax return forms?

Any advice or help on this would be much appreciated to help me consider which avenues to go down.

steve1980

The rent for the studio is a business expense so you would put the monthly/yearly rent in your expenses box

If you are PAYE in your FT job then you will pay tax on the overall PROFIT of your business.

If you register for VAT, you have to charge VAT to your customers. If you're going to be dealing with business then it's probably a good idea even though the threshold is £74,000 before VAT becomes payable.

You can claim a percentage back for camera equipment each year although not 100% sure the correct amount.

You have to pay NI contributions if you are going to earn over £5000 something, otherwise you can apply for an exemption certificate. Separate bank account is a must. Santander offer a free for life business account, Barclays offer upto 2 years, HSBC the same (I think)

martindow

Regarding VAT, if you are under the threshold and voluntarily register you can claim back the VAT element of your expenses but you will need to charge VAT on your sales. If your sales are going to be mainly to VAT registered companies it would be a good idea but if you are selling to private individuals your prices will be 20% higher than they need to be which is not a good idea.