doing your accounting, for dummies.

keaton

I'm planning on opening my own small business in the future, while I intend to use a accountant I believe it does not hurt if I understand the basics myself.

I plan on making my own handmade items, working from home and selling online. So profits would be those things I sell, expenses would be -

Materiels
Ebay & PayPal fee's
Postage
Packaging

I would work alone, not need transport and will be a sole trader. As I understand, to do my self assessment I add up all my sales, subtract the expenses, add in the unsold stock and then the amount is taxable for example-

Sales-100.00
Expenses- 25.00
End of year stock not yet sold- 10.00
=85.00 taxable.

I've done a simple version but is that pretty much it? I've read about assets and such, but I don't want to add the few tools I own to make the stuff into the equation as it just makes it that bit more complicated.

Carl31

Accountants fee will be another expense, but in all honesty I don't think it's worth your while using one, what do you think your turnover will be? Also, will this be your only income? Or in addition to another job?

Pennywise

If you adopt the new simplified cash accounting rules, you don't need to adjust for opening and closing stock levels. It makes your book-keeping even simpler, but on the other hand, you are more restricted as to claiming costs for use of home, less flexibility on claiming capital allowances on equipment purchased, and can't claim loss relief, say if you make a loss in year 1 (likely for new business due to start up costs, building up stocks etc) you can't claim tax refund against tax paid on other income. So swings and roundabouts, but definitely worth doing a comparison on the normal and the simplified cash basis to see which works best for you.

keaton

Carl31 wrote: »

Accountants fee will be another expense, but in all honesty I don't think it's worth your while using one, what do you think your turnover will be? Also, will this be your only income? Or in addition to another job?

It would be my only job, gross takings in year one I expect to be around 20k.