Self employment

IronWolf

Greetings. I am currently employed full-time, earning below the high rate tax threshold.

I have recently set up my own 'business' which is a website with some adverts which generates some money. My girlfriend is self employed so I know a little about how it works but would still like some advice on how I need to deal with the tax issues.

Do I need to register as self employed with HMRC, even though as of today my gross revenues have amount to just £5?
Will I have to pay top up NI contributions for being self employed, even if I have not made any money?

I have spent quite a bit of money on both 'capital investments' and recurring costs so Im still a long way from a profit. Would I be able to use these losses to offset income tax from my regular employment?

What would the pro's and cons be of setting this up as an actual company and the costs involved in doing that?

Thanks

Pennywise

IronWolf wrote: »

Greetings. I am currently employed full-time, earning below the high rate tax threshold.

I have recently set up my own 'business' which is a website with some adverts which generates some money. My girlfriend is self employed so I know a little about how it works but would still like some advice on how I need to deal with the tax issues.

Do I need to register as self employed with HMRC, even though as of today my gross revenues have amount to just £5? Yes
Will I have to pay top up NI contributions for being self employed, even if I have not made any money? You can claim small earnings exemption

I have spent quite a bit of money on both 'capital investments' and recurring costs so Im still a long way from a profit. Would I be able to use these losses to offset income tax from my regular employment? Yes as long as all costs were 100% business with no private use

What would the pro's and cons be of setting this up as an actual company and the costs involved in doing that? A Ltd Co is far more complicated and you'll almost certainly need an accountant to do the year end accounts and corporation tax - not usually worth it until you're making a fair profit.

Thanks

Have a look at http://www.ukbusinessforums.co.uk/forums/showthread.php?t=60813 for probably the best discussion on the pros and cons of Sole trader versus Ltd Co

IronWolf

Pennywise wrote: »

Have a look at http://www.ukbusinessforums.co.uk/forums/showthread.php?t=60813 for probably the best discussion on the pros and cons of Sole trader versus Ltd Co

Thanks for the help, accountant costs of £1k for a ltd co makes it an easy decision for now!

Think I'll hire an accountant to do my first self assessment return next year and use it as a template for future years. My gf claims all sorts on hers, like a % of the electricity bills n stuff, I wouldn't know what Im am and am not allowed to include.