Finishing being self employed

NinkyNonk_2

I am self employed, making and selling handmade crafts items on ebay. I wish to close my business down and try and find a job (become an employee). I don't make enough money with my business to justify continuing with it.
Do I tell HMRC that I am shutting down when I make my last sale to my last customer? Or when I sell the last of my stock and equipment (for making the craft items)?
Is there anything else I should know/do when it comes to shutting down a business?

Savvy_Sue

I was hoping someone more knowledgeable would come along, but TBH I don't think it matters ...

Assuming you are self employed, rather than running a limited company, then you'd have to continue to do a tax return for as long as you have income coming in from the business.

Have you been paying National Insurance, or have you had an exemption certificate? You could apply for one if you're not going to make more than c. £6000 profit from self employment this tax year.

NinkyNonk_2

Thank you for replying. I am self employed with an exemption certificate as I am earning hardly anything.
The only thing that is left is the materials and equipment I used to make the items I sold on ebay. Am I right in assuming that the last employment day/no longer self employed is the last day I sell the materials and equipment?
Another thing...
I'm not claiming any benefits nor intend to but if I ever needed to in the future, how does the exemption certificate affect this?

Mistral001

Stopping business on a certain day is not a bad idea from a lot of points of view even if you have to sell stock at a loss. You can say that you are no longer trading.

It is quite important to have clean break if you have insurance connected with the business apart from anything else.

Savvy_Sue

NinkyNonk wrote: »

I'm not claiming any benefits nor intend to but if I ever needed to in the future, how does the exemption certificate affect this?

Badly, I'm afraid, in the short to medium term.

You haven't been paying NI contributions, so you won't be eligible for any benefits which are dependent on contributions. Also there are fixed periods for which your contributions are assessed - I'm not entirely sure how it works, but I know, for example, that my about-to-graduate son won't be entitled to contributions based JSA because he has not been paying NI for the relevant periods, which I think cover two tax years.

However, you can make voluntary contributions, and if you're ever likely to want to claim Maternity Allowance, that can be worth doing!

If you can't find a job, it may be worth signing on anyway because you'll get your NI paid, even if you're not getting any actual benefit.

NinkyNonk_2

Savvy_Sue wrote: »

If you can't find a job, it may be worth signing on anyway because you'll get your NI paid, even if you're not getting any actual benefit.

So I could sign on to get NI paid for until I find a job? And not get any benefit? And this will last for 2 years? TBH, I need to find a job asap so can't see me waiting for 2 years.

It sucks. I tried to be self employed, the business failed (BIG TIME) and not entitle to anything. I don't want to claim anything - I have been on dole before and it is awful! But there is a flaw in the system that there is no support for people with failed businesses.

Savvy_Sue

NinkyNonk wrote: »

So I could sign on to get NI paid for until I find a job? And not get any benefit? And this will last for 2 years? TBH, I need to find a job asap so can't see me waiting for 2 years.

I don't know all the ins and outs of claiming JSA, but on the Employment board people often state that your NI is paid while you are claiming, whether or not you are entitled to any actual benefit. There's a whole Work and Benefits section where you'd find helpful stickies, I'm sure.

I was careful to state what I know - and there's a lot I don't know! I know my son won't be able to claim contributions based JSA because I know he hasn't paid enough NI. I know if he won't be able to claim income based JSA either, because that depends on the income within the household. Your situation is different, so you need to check it out.

Note that the rules about the NI payments you've made are quite complex: I said I thought you had to have made enough payments in two tax years, which makes life difficult if you haven't worked for full tax years at quite the right time. Also not all NI payments are equal: the voluntary ones I made years ago enabled me to claim Maternity Allowance, but would not, I think, have entitled me to JSA, had I wished to claim.

But AFAIK they ALL count towards pension entitlement.

NinkyNonk wrote: »

It sucks. I tried to be self employed, the business failed (BIG TIME) and not entitle to anything. I don't want to claim anything - I have been on dole before and it is awful! But there is a flaw in the system that there is no support for people with failed businesses.

But I think if you'd paid the right kind of NI then you would have been able to claim JSA. Very few people WANT to claim JSA, but if it will pay your NI contributions then that is something for the future.

patman99

I will just say this. I stopped being self-employed 20 years back, but HMRC carry on sending self-assessment reminders every year. When I asked why, they just said it is common practice as many people still have a small income on the side.

I always moan about doing the Tax return, but for year 2010/11 I got back nearly £800 so for the first time ever I felt it was worth doing.

Savvy_Sue

patman99 wrote: »

I will just say this. I stopped being self-employed 20 years back, but HMRC carry on sending self-assessment reminders every year. When I asked why, they just said it is common practice as many people still have a small income on the side.

If you don't have any other source of income, you can tell them this and ask them to stop. They did for me.

patman99 wrote: »

I always moan about doing the Tax return, but for year 2010/11 I got back nearly £800 so for the first time ever I felt it was worth doing.

Oh excellent! Yes, worth doing IF there's anything unusual about your situation.