Buisness / Tax help required

johnnyl

Hi all

A relative of mine has started to make a very decent amount of money from an online business. At first it started small scale as a bit of cash to make, but it has got quite serious very quickly to the point that they need to go legitimate.

What are the ways available for doing this. For reference, the rough earnings will be between 5K per month and 50K per month (fluctuates).

The type of things that they want to know are

1) What are the most tax efficient ways of paying yourself
2) How to register a company
3) What are reasonable expenses that can be taken out of a business.
4) Who to seek professional advice from (solicitor or accountant etc)

Both this individual and myself don't have a real knowledge of running a business, this is just an idea that has by chance worked very well and if it continues to do so it will have to be legitimate.

cheers

notanewuser

You need an accountant ASAP. Is your relative registered with HMRC as self employed and in the self assessment system?

johnnyl

notanewuser wrote: »

You need an accountant ASAP. Is your relative registered with HMRC as self employed and in the self assessment system?

doubt it but couldnt (and wouldnt :rotfl:) comment either way at the moment.

If they werent do they have to register as self employed or can you register it as a business. I apologise for the very dumb questions but this isnt my forte, I am just a bit more confident and able to seek out information than my relative!!!

holly_hobby

If you run your own business either as a sole trader of as a controlling director of a Ltd Co, you are self employed, and have to complete and submit SA.

If your are a co director of a ltd co, even though technically an employee of the Ltd Co, you have to complete and submit SA.

If he is trading on Ebay - HMRC are well up on this, and looking at business/high volume traders, and their tax registration and record - so if he continues trading wout registration, he will at some point get a call from HMRC re his activity.

Your friend may wish to register for VAT (assuming their goods/svc aren't VAT exempt), to enable reclaiming of VAT incurred by the business (nb - if he goes flat rate, VAT he incurs on svcs/goods can not be reclaimed).

There are SA fines for non registration and late payment.

Forum advice may be free, but it can not be relied upon if you/the commenter gets it wrong - and given the implications I believe this would be a poor choice to make - so he'll have to get his wallet out I'm afraid.

In the meantime, here are a few starters ... suggest your friend absorbs this, and then either contacts an accountant/tax adviser or HMRC for further guidance as to manage their own situation.

Self Assessment basic guide (there are further links within the text)
http://www.hmrc.gov.uk/sa/introduction.htm

Registering a Ltd Co
http://www.hmrc.gov.uk/factsheet/limited-company.pdf

When, who and what may/has to register for VAT
http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm

Hope this helps ...

Holly

Davide123

Get an accountant, they will help you to do everything. Well worth the fees.

johnnyl

cheers all