What Level of SE Income Would You Recommend an Accountant?

jimmo

Income tax has a strange mixture of accountancy rules and tax rules.
The taxman will expect you to determine your annual profits using standard accountancy procedures but then apply tax rules to adjust your accountancy profit to taxable profit.
You have most definitely got your “accountancy” profit wrong so far by not adjusting for stock on hand.
You have almost definitely got your taxable profit wrong so far because your expenditure on the attic conversion is probably capital expenditure some of which will qualify for capital allowances as plant and machinery. Some of which may not.
Off the top of my head, putting in storage facilities will probably qualify as plant and machinery but changes to the house’s wiring to provide lighting to the attic might not be plant and machinery so much as a permanent change of the structure.
However, what appears to be important to you is whether your are liable to tax.
Given that you have £60 per week taxable income i.e. £3,120 per year and an Income Tax personal allowance of £7,475 you would have to make profits in excess of £4,355 to become liable for tax.
Despite the obvious technical weaknesses you have demonstrated I struggle to think that, at your present level of business activity, you would become liable to tax.
I would suggest you go to your meeting with the accountant and try to learn as much as you can from it but don‘t be prepared to spend a penny.
Having said that I haven‘t got a clue whether your profits from trading could have an effect on the £5 per week in Income Support. My guess would be that voluntarily giving up the Income Support would be cheaper than paying an accountant.

marie-20

Unfortunately for this tax year I have already earned my taxable allowance through PAYE so therefore any profit this year will be taxable.

The attic was something that we were expecting to do next tax year however I have taken your advice on board and I may rent a small storage facility which should be tax deductable.

I have got a list of things that I need to find out about i.e. as the main part of our business is through eBay how do I account for 'free' gifts as they don't show on the eBay/Paypal invoice, how to account for damaged stock and do I need to store it or can I dispose of it and for items that have passed their BBE again can I just dispose of them.

Needless to say I am now looking forward to my meeting. To be fair we never expected to be at this rate of turnover yet but I may invest in a basic accountancy course.

marie-20

Well I have had my meeting and I must say that it was great - most of what I thought and expected were confirmed and I have got an answer to all of my questions which is great.

Their fee is £300 + VAT upto £30K turnover for self assessment however he is going to charge me £300 inc VAT this year which is great so I think that at that price I will let them do it this year.

adi2402

£300 and VAT seems a good price. Just be wary of any extra charge, if any, for phone calls and emails etc. Anyway, happy new year and I hope all goes well for this venture.