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New sole trader business questions
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bigstevex
Posts: 919 Forumite


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?
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?
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Comments
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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?0 -
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 woman0 -
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 woman0
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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 income0 -
notanewuser wrote: »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).0 -
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 haha0 -
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Ignore that actually haha.... It's Gross/Net profit.... Just remembered. That -5k would simply be my overall balance0
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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 woman0 -
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?0
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