Setting up a web based business - questions

PrincessJR

Hi,

I currently work full time for a local authority but my dream is to work for myself and I have been looking into setting up a website offering online/telephone Counselling and Psychotherapy.

I would probably start this off slowly, remaining in employment, but would hope that after a year or so, I would have built it enough to take the risk of quitting my job and making it my sole source of income.

As the income would be varied (and relatively unpredictable initially) how would I go about paying tax and NI. Would it be based on my actual earnings or would I pay an estimated amount each month? If so, how do they calculate this?

Would it be feasible to do my own tax returns or is it best to get the help of a professional?

As you can tell I know pretty much nothing about self employment, any advice appreciated

steve1980

Are you actually trained to give support?

This is not something you can just go jumping into. You need years of teaching and face to face contact before you can be let loose on the unsuspecting public.

Bryang

website offering online/telephone Counselling and Psychotherapy.

The best site for this is Sarah White Therapy com

InsideInsurance

Tax and most other things will depend on how you legally structure your business. Most small start ups begin as a Sole Trader (aka self employed) which is the simpliest one to do and handle as you and your business are legally one and the same thing. The downside is that your liable for any of your businesses losses so if someone sues you, they are suing you and not "your business". For this you pay about £2 per week as NI class 2, unless you claim exemption for earning under £5,000. At the end of each year you complete a tax return detailing all of your employed and self employed incomes, expenses and taxes already paid and HMRC will calculate how much tax and NI you need to pay. It is therefore sensible to put aside a proportion of everything you earn to pay for this throughout the year but you dont actually pay til year end.

The other legal structure is that of a limited company. This is much more complex as it is a legal entity in its own right and you as a director are an employee of it. The advantage is generally that if it gets into financial difficulty then its assets are separate to yours but because of this some will ask directors to give a personal guarantee thus negating this and/ or you can become personally liable if your negligent in your duties as a director.

With this you can draw a salary, which is paid at the frequency you want, normally monthly and pay the income tax, employee NI and employers NI quarterly. At year end you have to do a company and personal tax return and both will possibly have liabilities to pay though one is from the company funds and one is for your personal funds. Because of this extra complexity most will hire an accountant if they are running a Ltd.