We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

New sole trader business questions

Options
bigstevex
bigstevex Posts: 919 Forumite
Part of the Furniture 500 Posts Name Dropper Combo Breaker
edited 2 January 2015 at 2:22PM in Small biz MoneySaving
Hi, I'm setting up as a sole trader after as something I've been buying as an investment has become very profitable to trade in so my queries are...

I know about registering with the HMRC etc for being a sole trader and paying TAX/NIC, that's the easy part.

I have so far built up a stock of £45000 but this is prior to registering, (havent been trading as it was going to be an investment) I assume I can just show this in day 1 as puchases? What do I do when I don't have receipt though but I know the purchase price (kept detailed info of these)?

Next, can I claim mileage as I'll be driving quite a bit (6000 miles a year). Also does anyone know of any free spreadsheets I can use for all the tax purposes?
«1345

Comments

  • bigstevex
    bigstevex Posts: 919 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    In addition, I currently use 2 spare bedrooms and my garage as storage.

    Moving forward I'll be using an additional bedroom as a home office. The house has 10 rooms including the garage so can I say I use 4 rooms of the house or 40% of the rooms allowing me to claim 40% of household costs back as none taxable? i.e. mortgage interest (not capital), gas/electricity/water/council tax?
  • notanewuser
    notanewuser Posts: 8,499 Forumite
    bigstevex wrote: »
    In addition, I currently use 2 spare bedrooms and my garage as storage.

    Moving forward I'll be using an additional bedroom as a home office. The house has 10 rooms including the garage so can I say I use 4 rooms of the house or 40% of the rooms allowing me to claim 40% of household costs back as none taxable? i.e. mortgage interest (not capital), gas/electricity/water/council tax?

    You can't include garages, kitchens or bathrooms in the calculation.
    Trying to be a man is a waste of a woman
  • notanewuser
    notanewuser Posts: 8,499 Forumite
    Are you likely to sell the £45k worth of stock for more than £79k? If so you need to register for VAT too, which is another can of worms! Is it definitely not worth forming a limited company for this?
    Trying to be a man is a waste of a woman
  • bigstevex
    bigstevex Posts: 919 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    The 45k of stock isn't to sell straight away in year 1 I should add. That would take me a couple of years to sell. Total anticipated sales would be around £50k a year maximum, I wouldn't get anywhere near the VAT limit fortunately.

    The amount of profit vs being a limited company etc isn't worth it for me tbh, I've had a limited company once before and it wasn't worth the extra accounting hassle for the profit I made! This is an extra business in addition to my normal day job but it's not scaleable upto a business where I could quit work, it's merely additional income :)
  • bigstevex
    bigstevex Posts: 919 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    You can't include garages, kitchens or bathrooms in the calculation.

    I thought that might be the case, how about loft space or rooms in other peoples houses? I also have a room full of stock in a friends house (they don't need the space so don't mind).
  • bigstevex
    bigstevex Posts: 919 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Ps, Am I being silly in thinking that if I transfer the 45K of stock to the business and only sell say 40k in year 1, I'd actually be on -5k for tax purposes?

    Or is it on a per item basis so even though overall it's minus 5k, on the individual items I've sold I've actually sold them at a profit of say 10k?

    I sense I'm getting this confused in my head haha
  • notanewuser
    notanewuser Posts: 8,499 Forumite
    bigstevex wrote: »
    I thought that might be the case, how about loft space or rooms in other peoples houses? I also have a room full of stock in a friends house (they don't need the space so don't mind).

    Not unless they're charging you rent, no.
    Trying to be a man is a waste of a woman
  • bigstevex
    bigstevex Posts: 919 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Ignore that actually haha.... It's Gross/Net profit.... Just remembered. That -5k would simply be my overall balance
  • notanewuser
    notanewuser Posts: 8,499 Forumite
    bigstevex wrote: »
    Ps, Am I being silly in thinking that if I transfer the 45K of stock to the business and only sell say 40k in year 1, I'd actually be on -5k for tax purposes?

    Or is it on a per item basis so even though overall it's minus 5k, on the individual items I've sold I've actually sold them at a profit of say 10k?

    I sense I'm getting this confused in my head haha

    As a sole trader there is no business to transfer anything to. Stock is stock, and if you sold £40k worth you'd still have £5k in stock (presuming no depreciation). Whatever profit you make on the £40k (so sales minus legitimate expenses) would be taxable, and depending on your earnings elsewhere would be at 20% or 40%.

    So as a worked example:

    £45k worth of stock to start
    £40k worth sold for £50k
    Storage and selling expenses of £1k
    Taxable profit £9k
    Tax at 20% = £1800 at 40% £3600
    Net profit of £7200/£5400 and £5k worth of stock remaining.

    Does that make sense?
    Trying to be a man is a waste of a woman
  • bigstevex
    bigstevex Posts: 919 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Sorry I meant it this way....

    £45k stock to start....
    Year 1
    £40K of sales using £20K of the stock.

    I assume my taxable amount is the £20k I've made on the stock, and not the -5K my balance would technically show?
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.8K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.