Setting up a part time business - ready to get going!

sjk1985

Hi there, I feel completely overwhelmed with starting a business.

My partner and I want to set up a business, we have very low start up costs really as already have access to the equipment we need, and we can cover paying for what we do need to buy without loans. We know that there is a market and we have tested the water with friends and have offered services for free to build our portfolio and experience. Now we are starting to get requests for our services from friends of friends and strangers are asking for prices. (great!)

But now we want to register for tax and trade as a business. We are both full time employed, My partner is happy to continue working full time and doing this business in her spare time. I currently work full time as well and may go part time to cope with the demands of the business if it needs the attention.

Are we best off treating this second job as individually self employed, split the profits and each pay half tax each on a self assessment or will this get compliacted? My partner can only make £10k more a year before going into next tax bracket. Or would it be better to set up self assessment for one of us and have the other as an employee? any benefits to this? Do we need to set up a ltd company? We just trade under her name currently, do we need to register anything else to continue doing this?

We don't expect to make much money this year and most of what we make will be invested back into the company (a few grand), but eventually we estimate we could be making about £50k a year in a couple of years time if we both quit our jobs and went full time, this would be a slight increase in our income but the work/life balance would be much better.

Also we would need public liability because we would be going to people's houses and public and private venues. Do we both need to get covered individually or would the "Business" be covered whoever is working for it?

Also what would happen if we paid an assistant a one off wage to help us out with something, would this just come under "expenses" and they would be responsible for paying their own tax? What if that person became a regular "employee"?

The one other thing that I find complicated is "how long has the company been trading?" is that from when you first take a paid job?
And then what about any expenses you have had previous to "trading" that you had when you were offering your services for free?

It is probably all a lot more simple than I am making it out to be but I just don't want to make an expensive mistake.

Any help or guidance would be greatly appreciated. :beer:

Bravestar

sjk1985 wrote: »

Hi there, I feel completely overwhelmed with starting a business.

My partner and I want to set up a business, we have very low start up costs really as already have access to the equipment we need, and we can cover paying for what we do need to buy without loans. We know that there is a market and we have tested the water with friends and have offered services for free to build our portfolio and experience. Now we are starting to get requests for our services from friends of friends and strangers are asking for prices. (great!)

But now we want to register for tax and trade as a business. We are both full time employed, My partner is happy to continue working full time and doing this business in her spare time. I currently work full time as well and may go part time to cope with the demands of the business if it needs the attention.

Are we best off treating this second job as individually self employed, split the profits and each pay half tax each on a self assessment or will this get compliacted? My partner can only make £10k more a year before going into next tax bracket. Or would it be better to set up self assessment for one of us and have the other as an employee? any benefits to this? Do we need to set up a ltd company? We just trade under her name currently, do we need to register anything else to continue doing this?

We don't expect to make much money this year and most of what we make will be invested back into the company (a few grand), but eventually we estimate we could be making about £50k a year in a couple of years time if we both quit our jobs and went full time, this would be a slight increase in our income but the work/life balance would be much better.

Also we would need public liability because we would be going to people's houses and public and private venues. Do we both need to get covered individually or would the "Business" be covered whoever is working for it?

Also what would happen if we paid an assistant a one off wage to help us out with something, would this just come under "expenses" and they would be responsible for paying their own tax? What if that person became a regular "employee"?

The one other thing that I find complicated is "how long has the company been trading?" is that from when you first take a paid job?
And then what about any expenses you have had previous to "trading" that you had when you were offering your services for free?

It is probably all a lot more simple than I am making it out to be but I just don't want to make an expensive mistake.

Any help or guidance would be greatly appreciated. :beer:

Ready to get going? I don't think so.

More research needed first, I think it's safe to say

paddyrg

Wow, so many options ahead of you.

As you're planning on reinvesting to build the business initially, many of your questions get simpler if you set up a limited company (but be aware there are responsibilities in doing so, and allow a grand a year or so for the year end accounting). Then the company would pay you both salaries, could optionally pay dividends, would hold the insurance, register for VAT, pay any employees, etc. Best of all, when it's profitable and robust and you're bored of it, you can sell it as a going concern and do something else :-)

What you really need, though, is a chat with a good small business accountant who can give you real, insured advice - not a forum. They'll probably give you 30 mins free as a come-on against future business.

trailingspouse

This is where the OH and I were about 5 years ago. It's very exciting, and very scary, all at the same time. But now you have to take a deep breath and get serious. As a previous poster has said, a forum full of un-insured non professionals is not the place you need to be going to for answers. For one thing, much depends on the actual business you're in, your individual salaries, and so on and so forth.

Take each of your questions in turn and either find out the answer for yourselves (google is your friend), or find someone who knows what they're talking about (accountants are lovely people, I'll be having breakfast with mine next week...). There is a lot to learn, but it isn't impossible, you just have to pay attention and don't be afraid to ask if you're told something you don't understand.

Good luck.

AbbieCadabra

Lots of useful info here

Mistral001

All your questions will easily be answered by an accountant as others have said (I am not one BTW). They will probably be able to advise you or things you have not thought of. For example, you say that you have equipment available. An accountant will be able to advise you on whether you can bring that equipment into your business and treat it was an expense even though it as bought before you started trading.