Startup guidance

ravravrav

Hi I have a day job but now wish to run my own business on the side. I've already run it for a few months to see how it will do and I believe it is something I would enjoy doing more in the long term.

I've gone to see Chamber of Commerce but to be honest I felt they were trying to sell me their packages rather than totally free mentoring and guidance.

The few bits of info I gleaned was:

1. I should ask my employer whether running a separate business in my own time is ok with them/doesn't go against any terms on my contract.

2. Declare myself as a sole trader to HMRC - reason not a ltd company is because I don't believe I will be doing much business anyway.

3. Set up a separate account just for my business. Not a 'business account'.

Is there anything else I should do? Is insurance vital? Any other things I may have overlooked?

Also, I need some guidance on how I should be recording my business transactions and so on. I understand I should keep my receipts and spending info. As I work from home how should I work out costing for electricity, petrol, gas etc?

Thanks:)

InsideInsurance

1) You should read your contract. Outside of the contract you should also know if you have a conflict of interests and if you do then evidently the two arent going to be compatible with each other.

2) If you've been running your business for "a few months" then you need to very quickly register with HMRC to avoid the fine for operating without having been registered

3) You can set up a new account and it can be a business or personal account. As you are a sole trader there is no legal requirement to do so but it can make things easier. The advantage of business accounts is that you can accept payment in your trading name rather than just your personal name but the downside is that there arent many free business accounts (other than for introductory periods)

Insurance is an option, as you have no employees there is no legal requirement for it and so it is basically up to you to decide if the risk or premiums are better for you. Remember that as a sole trader you and the business are legally the same thing and so if somehow someone is injured as a result of your business activities it is you personally they will sue. If you have any contracts in place these may stipulate that you are required to have insurance. Likewise you will need to check your home/ car insurance etc are still valid given your business activities.

PlutoinCapricorn

Work through www.businesslink.gov.uk

pitkin2020

ravravrav wrote: »

Hi I have a day job but now wish to run my own business on the side. I've already run it for a few months to see how it will do and I believe it is something I would enjoy doing more in the long term.

I've gone to see Chamber of Commerce but to be honest I felt they were trying to sell me their packages rather than totally free mentoring and guidance.

The few bits of info I gleaned was:

1. I should ask my employer whether running a separate business in my own time is ok with them/doesn't go against any terms on my contract.
Check your contract, if their is a conflict of interest your employer may not be too happy or if it is likely to effect your work

2. Declare myself as a sole trader to HMRC - reason not a ltd company is because I don't believe I will be doing much business anyway.
You should have already registered from when you started to avoid being fined, you may wish to be slightly flexable when mentioning the start date

3. Set up a separate account just for my business. Not a 'business account'.
If you can get a free business account go for it as it always looks more pro but if your not going to be doing a great deal of business you won't want to be paying anything for it. A seperate personal account will make it easier for keeping transactions seperate for accounting purposes. If you set up a personal account don't mention to the bank it will be used solely for business as they may refuse, its meant to be a personal account for personal use not business so they are within their rights not to open an account for business.

Is there anything else I should do? Is insurance vital? Any other things I may have overlooked?
Insurance in most trades isn't a legal requirement so you have to weigh up the risks and decide if you need insurance. If I was working on customers property that could cost a couple hundred if something went wrong or I could possibly cause an accident than I wouldn't risk not having insurance. If I was working from home typing documents I probably wouldn't bother.

Also, I need some guidance on how I should be recording my business transactions and so on. I understand I should keep my receipts and spending info. As I work from home how should I work out costing for electricity, petrol, gas etc?

Thanks:)

Speak with an accountant, for the first year its good to get their opinion on exactly what percentage of costs you can claim and it will make a difference if you have a room in the house solely for business or if you have a computer in the corner of the lounge. A good accountant should easily save you atleast double their fee in the first year!!

Petrol you can either work out in cost or mileage, but you can only do it one way for the time you have that vehicle. If your dual using the car mileage is far easier and you don't need to keep receipts, just log the business mileage and claim that.

computerrally

Hi all

I'm also looking to do the same.

If I register as a "sole trader" does that mean my tax code would change?

I don't want my employer to know that I'm running a business from home and if my tax code changes it would be pretty obvious to them (and no, my contract doesn't restrict me and nor would I be a competitor of my employer, totally different type of business)

I just don't want them to know!

Thanks
Michael

PlutoinCapricorn

Your PAYE tax code need not change in connection with becoming self employed. When the time comes for you to pay tax owed, you can elect to have it collected via PAYE, in which case it would change. If you do not tick this box, you will get a bill with the other ways to pay listed. Even if your tax code did change, your employer would not know why. It could be something personal, unconnected with work of any kind. If you work for a big company, the payroll department would apply the new code as a matter of routine and no one else would see it.

But these things have a habit of coming out - will you be advertising?

computerrally

OK, I see.

So if I registered as a sole trader, my tax code would not change?

I live 75 miles from my employer, I've worked for them a year and have never met anyone from the office, not even my boss. I'm employed by them and sub-contracted out to one of their clients on a permanent basis.

At what point will I pay tax or NI with relation to my home business? I'm not looking at making more that £5000 a year profit and turnover is likey to be less than £200 lower than profit.

Will being registered as a sole trader have an effect tax and NI I pay for my full time job if I elect for tax to NOT be collected via PAYE?

Thanks
Michael

InsideInsurance

Your tax code may or may not change, if it does change it will not be identifiable as to being because you are now a sole trader - there are many reasons why codes can change.

You will do an annual tax return which will calculate the payable tax factoring in what you have already paid in your employed life.

ravravrav

Thanks for your responses. The bit which has worried me is incurring a fine from HMRC - does anyone know what it is or how flexible I could be in my 'start date'? How would it be proved when I started trading?

Savvy_Sue

computerrally wrote: »

At what point will I pay tax or NI with relation to my home business? I'm not looking at making more that £5000 a year profit and turnover is likey to be less than £200 lower than profit.

Ask about a small earnings exemption certificate from your Self Employed NI liabilities.

Eliza_2

ravravrav wrote: »

Thanks for your responses. The bit which has worried me is incurring a fine from HMRC - does anyone know what it is or how flexible I could be in my 'start date'? How would it be proved when I started trading?

It's all on here and the surrounding pages.http://www.hmrc.gov.uk/sa/register.htm. Best to look things up for yourself and really get to know the hmrc guidance.

I'm sure the CofC and other advisors must have told you about this, - try googling for more re going self employed, there's masses of help. Businesslink already mentioned has everything you need in one place, it's invaluable.

E