Setting up a new business

clj1_2

Hi,

I am wanting to start a small business selling homemade bath products etc. For example, bath bombs, soaps, face masks etc. I would start by selling on Ebay/Facebook. I am currently employed and contracted to only 4 hours a week. I would still like to keep working at my current employment place but also maintain this business.

I am just unsure on a few things such as would I have to pay tax and would I have to get insurance? Would I have to register the business and if so, how would I go about this?

Thanks in advance

soolin

Yes you would have to register with HMRC and pay tax and NI on any profit. HMRC are actually quite helpful if you phone them and talk to them they will explain what you will have to do and how to keep your books.

I would also urge you to check your margins before committing any money especially if using eBay. Check out completed auctions in eBay for similar products and work out whether you can match them and still make a profit, don't forget postage costs will be high as well.

clj1_2

Would I also have to have insurance in order to cover myself?

trailingspouse

You'll need product liability (in case something you produce damages someone in some way), and you should probably have public liability too. Regarding the Products Liability, bear in mind that people might not use your product in the way you intend - for example your face cream may be perfectly OK when used on the face, but not so good if accidentally eaten by a toddler.

Write a business plan, to make sure you will actually make money in the real world. Questions to ask, and answer, are

- how much do I have to make and sell in order to make the amount of profit I want to make
- can I realistically make that quantity
- do enough people want to buy so that I can actually sell that quantity
- what makes me think I can compete with the huge multinational companies that currently supply most of the toiletries we use

clj1_2

Thank you, thats has come in really useful. How would I go about getting product liability and public liability.

tiger_eyes

clj1 wrote: »

I am currently employed and contracted to only 4 hours a week. I would still like to keep working at my current employment place but also maintain this business.

soolin wrote: »

Yes you would have to register with HMRC and pay tax and NI on any profit.

Seconding this with the caveat that if you're only working four hours a week at your regular job plus starting a business, you may be under the tax threshold. The personal tax allowance this year is £9440 and you will only have to pay tax on income (that's the total of your employment income + self-employment profit) above that level. So if your income from all sources is very low, you may not have to pay tax at all.

Please note that the class 4 National Insurance threshold is lower at £7755. If your self-employment profit is above that level, you'll need to start paying at a further 9%. And class 2 National Insurance is a flat rate of £2.70 a week regardless of income as long as you're self-employed (although there is a low earnings exemption, but you may not want to take it as class 2 payments count toward eg. your statutory pension).

trailingspouse

Google 'Product Liability Insurance', then shop around just as you would for house insurance or car insurance. They will probably want to know your projected turnover figures and suchlike (this is one of the reasons why writing a business plan is a good idea).

BTP1956

hi if your going to be a sole trader doing markets fairs

then CMTIA is a good one you get £5.000.000 cover for
around £48.00a year

cheers btp1956

oldharryrocks

The business forum is a good place to discuss business http://forums.moneysavingexpert.com/forumdisplay.php?f=27