Hobby into a business

kg147

Hi

Apologies if this has been asked...

I've been running a small website for a few months and recognized there is the potential to monetize parts of it through an annual subscription - I never created the website for commercial purposes but its been quite a surprise that things have taken off and potentially allowing me to cover my costs; primarily hosting costs!

The question I have is, do I need to set up a company for this? If so what kind of company do I need to create?

The kind of figures I'd project would be less than £1500 - £2000 max pa - I'm not at all looking at the site as a money spinner, more akin to cover my expenditure.

Would I need to pay tax, would I need an accountant, would I need a business bank account?

Apologies for the extremely basic questions but I have no knowledge of setting up businesses and no knowledge of things like tax requirements. So please be gentle

Any advice or pointers to posts / threads would be warmly appreciated!

Kindest Regards
KG

PasturesNew

Just register as self employed with HMRC.
Keep a small book/file/whatever with all your costs/income listed and you can fill out an annual tax return for yourself - it'll be really simple with those figures of just saying how much you took in and what you spent out.

There'd be no tax to pay under the new rules of being able to earn small amounts online etc.

But you do need to file the tax return - and on the screen, the last screen as you do it, they tell you if/how much tax is due and you can either pay it then or wait a bit.

kg147

Thanks for the reply!

Do you know where I'd stand on the bank account... would I need to get a business account or would I be able to use my own current account?

DCFC79

kg147 wrote: »

Thanks for the reply!

Do you know where I'd stand on the bank account... would I need to get a business account or would I be able to use my own current account?

Depends on the terms of the bank account, some banks don't like current accounts being used for business.

CKhalvashi

DCFC79 wrote: »

Depends on the terms of the bank account, some banks don't like current accounts being used for business.

Although for amounts as small as this, assuming annual subscriptions, it shouldn't be too much of a problem.

If it's more than 1 or 2 payments a month, then it may be advisable to have a separate account.

somethingcorporate

CKhalvashi wrote: »

Although for amounts as small as this, assuming annual subscriptions, it shouldn't be too much of a problem.

If it's more than 1 or 2 payments a month, then it may be advisable to have a separate account.

I'd suggest just for simplicity it would be worth opening up a second account for.

Kayalana99

I've been using my current account for business for a while now, I need to get it sorted but you can only book an appt Monday - Friday and myself and partner need to attend.

I would say for such a small amount as above just get a second current account and don't mix it with personal money for bookkeeping purposes + if you grow in future you can always change it to a business account.

Aquamania

kg147 wrote: »

Hi

Apologies if this has been asked...

I've been running a small website for a few months and recognized there is the potential to monetize parts of it through an annual subscription - I never created the website for commercial purposes but its been quite a surprise that things have taken off and potentially allowing me to cover my costs; primarily hosting costs!

The question I have is, do I need to set up a company for this? If so what kind of company do I need to create?

The kind of figures I'd project would be less than £1500 - £2000 max pa - I'm not at all looking at the site as a money spinner, more akin to cover my expenditure.

Would I need to pay tax, would I need an accountant, would I need a business bank account?

Apologies for the extremely basic questions but I have no knowledge of setting up businesses and no knowledge of things like tax requirements. So please be gentle

Any advice or pointers to posts / threads would be warmly appreciated!

Kindest Regards
KG

To answer you specific questions

(a) No you do not need to create a company. If you opt not to, then you should register yourself with HMRC as self employed if you are running your own business
(it's not really clear from your post if you are planning on trading - you say at the beginning you recognise "there is the potential to monetize parts of it through an annual subscription" and that " its been quite a surprise that things have taken off ", but then go onto say it's not intended to make any profit. Here's a link that may help you establish if you will actually be trading
http://www.hmrc.gov.uk/manuals/bimmanual/BIM20205.htm )

If it is a business you plan to run, this explains briefly the legal structures available to you.

https://www.gov.uk/business-legal-structures/overview

I suggest you also seek expert advice.

(b) Yes you will be liable for tax at your applicable rate on any untaxed income you generate (i.e. profit)

(c) No you do not need an accountant, but you may find one useful if you are going into business

(d) No you do not need a bank account - how do you plan to collect monies owed and pay monies due?
As it's online, perhaps you are considering using Paypal? If so, refer to their terms for what type of paypal account would be suitable for you.
(Note that personal bank accounts usually prohibit their use for business purposes - refer to your own bank account's terms & conditions)