Expense pre-selfemployment question

Flora07

Hi everyone

New to the boards and pretty new to being self employed as a sole trader (December 2006).

I bought some stock in October 2006 thinking I would be starting up my business then. Unfortunately due to health reasons I had to delay registering and start trading and only managed to get around to it in December 2006.

Now here is my question: what I bought in October - for which I have kept a receipt - can I claim it as an allowable expense or because it is dated pre-self employment I am not allowed to?

Hope someone can help. Thanks in advance.

Flora

windswept

as I understand it, as you bought the items purely for your business, yes you can claim them as expenses, in fact , the laptop that we bought 12 months ago, and now use for the business, we can partially claim for. having a receipt is the key, as long as you keep them, you are ok. I would imagine most people have some sort of gap between buying in stock and starting to trade. you are actually allowed 3 months before you have to register anyway.

Flora07

Excellent. Yes I have the paypal receipt (bought it on Ebay) and I will enter it on my purchase ledger.

Thanks for your help :beer:

WHA

Don't forget that you can't claim the purchase of stock for resale as an expense until you sell it. So if you bought £5000 of stock, and still have £5000 of stock, there is no expense - you've bought stock and still have it. Now if you have bought £5000, sold some, and have £4000 of stock left, you have an allowable expense of £1000.

Flora07

Ah thank you WHA. I guess that is an important tidbit of information. I am working my way through this stock and should be done by mid February. Business is going well :j

martindow

A few people to talk to who might be able to help
Business link http://www.businesslink.gov.uk/
Inland revenue http://www.hmrc.gov.uk/
Accountants. Most will give an initial 30 minute free consultation - try a few in Yellow Pages

Flora07

Cool - thanks for the links martindow

rharper83

Just a quick question... If you buy stock for a business - pre-startup - do you have to register with HMRC within 3 months of doing so, or within 3 months of making your first incoming transaction?

Flora07

rharper - as far as what I know it's from the first trading day that you need to count the 3 months. So say you make your first sale today you need to inform the IR by April 26th. I also think there is a limit on how long before you bought the stock...maybe 12 months. Don't quote me on that last bit though.