From Hobbie to Small business ??

cp2000

Hi there. I'm new to the forum and hope that someone may be able to help me out.
I have over the past year developed my Hobbie of model making into a potential small business by doing projects for like minded people.
I have a day job so manage to fit this in in my spare time.

I have managed to make a a small but reasonably worthwhile profit and am wondering wether it is worth while registering as a business and at what point is best to do so. What type of business is best for me.
I have no business experience so am completely green here.
To help with any advice you may be able to give, I currently earn £40k a year and my model making turned over just over £5k with £2k profit over 12months.

What do I do next??

Aquamania

cp2000 wrote: »

Hi there. I'm new to the forum and hope that someone may be able to help me out.
I have over the past year developed my Hobbie of model making into a potential small business by doing projects for like minded people.
I have a day job so manage to fit this in in my spare time.

I have managed to make a a small but reasonably worthwhile profit and am wondering wether it is worth while registering as a business and at what point is best to do so. What type of business is best for me.
I have no business experience so am completely green here.
To help with any advice you may be able to give, I currently earn £40k a year and my model making turned over just over £5k with £2k profit over 12months.

What do I do next??

You should have registered with HMRC as soon as you decided to make the items with the intention of selling them for profit.
(or realised that is what you were doing if there was no clear, earlier decision to do so)

Do it now!

cp2000

Should I just register on the hmrc website or find an accountant.

Percy1983

Just register for self assessment with HMRC, you may need an accountant to help out but this does sound like its quite straight forward so you might be able to do it yourself with a little research.

zygurat789

cp2000 wrote: »

Hi there. I'm new to the forum and hope that someone may be able to help me out.
I have over the past year developed my Hobbie of model making into a potential small business by doing projects for like minded people.
I have a day job so manage to fit this in in my spare time.

I have managed to make a a small but reasonably worthwhile profit and am wondering wether it is worth while registering as a business and at what point is best to do so. What type of business is best for me.
I have no business experience so am completely green here.
To help with any advice you may be able to give, I currently earn £40k a year and my model making turned over just over £5k with £2k profit over 12months.

What do I do next??

If you made a sale anytime in the period to 5 April 2013 then you have to file a tax return by 31 January 2014. I would have thought it was impossible for HMRC to set you up to do this before that date. £100 fine
You should have registered as self employed and paid National insurance class 2 within 3 months of starting. There was a fine of £100 but I think they no longer operate it for technical reasons, however, you will have to pay the NI at just under £3 pw.
You have already made some expensive mistakes and you admit to having no knowledge in this area.
Go to see an accountant tomorrow if not sooner.

hunnie

Hello,


It is possible that up to now this could have been classes as a hobby. So if you think you can devote more time and make more money just register with HMRC as starting up in business from now for 2014.


Also even if it were self employed income, it is below the threshold for NI.
If you will remain below this threshold you should register for small earnings exemption as you won't get any extra benefits because you are already covered in your employment.


regards,
Hunnie

goldtop

Register on HMRC website and ensure you complete the small earnings exemption asap to ensure you do not pay NI 2 contributions. You will need to complete a self assessment and if its going back 12 months it will need to be done for 2012/13 tax year which is the end of this month. HMRC advise it will take up to 2 weeks due to the time of year to get the gateway ID etc from them so may be best to ring and explain and they'll advise. You don't need to use an accountant or bookkeeper to do this as its unlikely to be complicated.

Jobseeeker

hunnie wrote: »

Hello,


It is possible that up to now this could have been classes as a hobby. So if you think you can devote more time and make more money just register with HMRC as starting up in business from now for 2014.


Also even if it were self employed income, it is below the threshold for NI.
If you will remain below this threshold you should register for small earnings exemption as you won't get any extra benefits because you are already covered in your employment.


regards,
Hunnie

Hi, this is not quite right. The OP already earns £40k so anything he makes from the hobby is taxable. The threshold is already used up in the first job.

Al1x

Jobseeeker wrote: »

Hi, this is not quite right. The OP already earns £40k so anything he makes from the hobby is taxable. The threshold is already used up in the first job.

Quite sure this is correct.

Even though it was a hobby you still have to pay tax on any earnings. You should have registered with the tax office as soon as you started selling.

If I were you I would phone the tax office and explain the situation and register. They have always been very helpful when I've phoned them.

Mistral001

Al1x wrote: »

Quite sure this is correct.

Even though it was a hobby you still have to pay tax on any earnings. You should have registered with the tax office as soon as you started selling.

If I were you I would phone the tax office and explain the situation and register. They have always been very helpful when I've phoned them.

Have you discussed this with a qualified accountant?

Aquamania

cp2000 wrote: »

Should I just register on the hmrc website or find an accountant.

If you have to ask, I would urge you to do both