Sole Trader and Employed with Salary - Tax and Accountant Questions

LeadHead_2

Hello all,

I'm currently in full time employment and pay income tax, NI contributions and in to a work pension through my salary in my full time job.

During the past year or so I've been doing some stock photography and within the next few months I should start receiving payments for this work. Initially these payments will be quite small (less than £200) but should with a bit of hard work and luck; increase over time.

I'm now wondering what the next steps for me to take are, do I

a) set up a business as a sole trader, put everything I earn through my photography through this business? I've set up a free business bank account with HSBC that I can use.

b) get an accountant for all my finances (including personal) so I can claim costs against my profit - reducing the amount of tax payable.

c) Speak with CAB and go through the options.

Ultimately this sideline from my main job is pocket money to feed a hobby but I want to keep most (if not all) of this money to myself and not give it away to the taxman!

Thanks for any help...

InsideInsurance

Citizens Advice really isnt one of the places I would consider going. The Business Link would be a reasonable place, either online or in person. Alternatively most accountants give a free initial consultation and you'll be able to get most of your questions answers.

The one concern at the moment is that you say you have been doing stock photography for about a year. You legally must register with HMRC in the first 3 months of starting otherwise fines are liable to be paid so sounds like your already late on that front.

You don't set up a business as a sole trader you simply register the fact you are a sole trader. Legally you and your "business" are one and the sale as a sole trader. You can have an accountant do your Self Assessment Tax Return but most would find it overkill as it is very simple to do whilst your turnover is low (hence the name). If you decided to incorporate and have a Ltd company then accountants are much more a sensible consideration because you get a lot more returns to do which are much more complex.

LeadHead_2

Thanks for taking the time to reply.

Could you see me being fined by HMRC even though I've not generated any turnover at all?

InsideInsurance

It sound like you have been generating turnover in that people have been buying your photos just you havent drawn down the money. Plus it is from when you start up and so creating your product etc is all part of that.

Speak to HMRC, they are generally fairly friendly bunch, until they think your deceiving them then they stop being nice

LeadHead_2

The Agency I work for has so far generated the money, I need to raise to a certain amount before I receive any payments. I'm now reaching this stage hence trying to make sure I'm sorted business wise.

martindow

LeadHead wrote: »

The Agency I work for has so far generated the money, I need to raise to a certain amount before I receive any payments. I'm now reaching this stage hence trying to make sure I'm sorted business wise.

I can't see there will be a problem with telling HMRC as you have not started trading until you receive payments.

Amatheya81

I used to work for Business Link.

Technically you should have registered already but since the sums you're talking about are so small you can probably just say that your start date is the same as you first pay date from your agent.

So, Contact HMRC and aske them to register you as a sole trader. Also register for NI contribution and if you are expecting to earn less than £5k per year from your own company ask for a exemption form. You need to start keeping accounts immediately and keep all business related receipts. Once a year you will need to fill in a self assessment form to tell HMRC how much you are earnng from both your employed and self employed jobs. This is quite easy so it's unlikely you will need a accountant to help you. Remember to save some of your earnings to pay your tax bill at the end of the year.

Business Link offer a free business councelling service. You can make a appointment and see a business adviser who will give you ideas and information on what to do next. They also have a very informative website. In addition they used to offer a 2 day business start up course whuich covers everything from creating a business plan to getting funing and doing your accounts. It's definately worth looking into.