when to register as self employed

carebear13

my hubby is in the process of setting up a business- at the moment he is doing a lot of background work, making samples and hanidng them out, getting flyers done and just generally getting word round everywhere ready for when the season starts next year.
does he have to register as self employed now? or can he wait until the season starts and he actually starts selling stuff? he has had quite a few expenses buying in ingredients etc, but these are manageable, and we dont need to apply for any business grants or funding or anything.
the only experience we have of s/employment relates to his part time work and thats kind of like a contractor thing, also how on earth do we estimate an income for tax credits when he is probably gonna sell most of his stuff over the summer period?

Notmyrealname

You estimate the annual income for the first year in the business plan you've done so you should already have it. Remember that startup costs such as equipment are tax deductable so will be taken off the gross takings so therefore it is perfectly feasible for the first years income to be zero or less.

You can retrospectively include accrued costs when you start trading so you don't need to register for now but need to as soon as you start invoicing for money or taking cash.

InsideInsurance

The only "harm" in registering now would be having to pay the Class 2 NIC but it is only circa £2.65 a week anyway. If he has no other employment at present then he could claim small earnings exemption from it if he wanted

Evidently registering late has much worse implications

carebear13

notmyrealname- he hasnt got a business plan as we are funding it all ourselves . but its handy toknow that he can restrospectively include them. the fishing season doesnt really start til march,but has obviously got to get plenty of stock and is in talks with someone about supplying to their lakeside business. hopefully once thats sorted and he knows a rough idea as to how much he wants, we should be able to do an estimate.

inside insurance- he has a full time and a part time s/e job already, but i think has already got the exemption, but i beleive that he can change this if he needs to ?
do hmrc still allow 3 months grace- they did in october when he started his other one, but its probably different now.

thank you, advice is much appreciated.

InsideInsurance

If is is already self employed (aka sole trader) then there is no registration required as he is already registered.

From a HMRC point of view it doesnt matter if you do 1 activity or 1000 activities in your self employed life it is all under one banner.

When you do your SA return you can choose to break each activity out if you want but that is for your benefit for ease of entry/ tracking etc not a legal requirement etc

carebear13

ah right ok- so when he does his self assessment in january he wont need to include anything of his new one?

actually just thought-neven though they are 2 very different businesses can he claim expenses back from his new one from tax he willpay on the current one?

InsideInsurance

Legally as a sole trader there is no "company", there is only him. The tax calculations are therefore done across everything he earns (ie employee salary and self employed profit)

In the self employed section he will need to enter all the details of all the self employed activities he has been involved in. It is up to him if he enters it all consolidated in one or decides to break it out into separate rows - it makes no difference to the calculations/ taxes due etc.

Of cause as you do your tax return in arrears if he is only starting "now" then it wont be until the 2012/2013 tax return done by Jan 2014 that it'll be included.

carebear13

thank you for your help- much appreciated.

Notmyrealname

carebear13 wrote: »

notmyrealname- he hasnt got a business plan as we are funding it all ourselves

Oh. Dear. You don't just do a business plan to get funding. You do it so that you can identify pitfalls, costs you'd not thought of, whether or not it is actually a viable business given market conditions and local competition and to set targets for Y1, Y2 etc.

Very few businesses that start from the back of a fag packet do well.

As you say he is already self employed, all he has to do is fill in another separate self employment section for the new business.