Side Business set up. need HELP!

jord_h87

I am 29 and have been employed since leaving school. I currently have a job which pays me 29500 per year before tax. i know nothing about self employment or tax!

i have set up a little business making and selling a product/products which i have in the past few months started selling on big cartel and making a profit on as they become increasingly popular, ive been using the money i make to buy more stuff to make more products, i have many receipts but nothing in good order etc! think profit will only end up being about 150 a month maybe less maybe more sometimes its hard to work out

i now realize i need to get all this setup properly, what do i need to do as its worrying and stressing me?

at the moment i use a business pay pal account to receive money which i transfer into my personal account:

i will be setting up a separate business bank account at the weekend and linking this to the pay pal but where do i go from there, this is all new to me.

Set up as sole trader?
Inform hmrc? when do i say business commenced?
what do i use to track in and out goings?

thankyou

J

martindow

You need to let HMRC know straight away and I would fess up and tell the truth about when you started.

It sounds as if you really have little idea of how the business is going. Once you tot up all of your expenses you may find it is less than you think. You will pay tax on your profits - your tax allowance has already been used up with your PAYE work.

If all of the sales are paid for by Paypal you can use that to print out monthly summaries which will give you the gross income and their fees for the month.

If you are manufacturing something you really need product liability insurance just in case someone who chooses to sue you for a sum that could bankrupt you.

jord_h87

its a big mess really, i might seize to trade until i know the score! i set my shop up on big cartel nov last year and it has each sale listed on there. can i use this for hmrc and then the hard copy reciepts i have from material deliveries or will they review my papal also? there are in and outs all over on there, as i used most of the money i received to rebuy more materials.

i know im in profit but i dont know how much! i diddnt think it would kick off as well as it did and i know its naive but i diddnt realise it all needed to officially set up!

i know now and want it all sorting so is simple, legal and fun

martindow

You are much better off owning up rather than being found out in some way. Your situation must be fairly frequent so they are not going to clap you in irons or send you to prison!

Some people advise using an accountant to deal with HMRC to sort it out. It will cost you some money but you may feel happier letting them do it.

I think in any case you need to sort your accounts out whether you use an accountant or not so you know what profit you've made.

The print outs you mention will be evidence of sales (what do you mean by a cartel by the way?). You will need receipts as evidence for your expenses and you ought to keep everything from now on.

You can use accounting packages, but lots of people just use spreadsheets. I keep monthly excel pages which I print out and keep alongside the receipts.

looknohands

Big Cartel is an online store, like Etsy.

Work it out, get something like Kashflow and add in all the receipts you have plus all the sales receivables you have and just run the self assessment report, don't try and fudge anything just be overly honest, if you're not sure on a receipt leave it out, just make sure you have every sale on the books!

You only started the business November 2015, you wont owe tax until Jan 2017. So just register for tax and maybe send HMRC a note saying you got behind with registering, you literally have nothing to hide.

You can still file returns online for 2015 - 2016, in-fact a lot of people dont do this until January 2017.
I would get it done and dusted and from now keep trading just keep hold of all your records!

PS. the tax year is April 6th 2015 - April 5th 2016, you need to file everything between these dates before 31st January 2017.

Rappa

jord_h87 wrote: »

I am 29 and have been employed since leaving school. I currently have a job which pays me 29500 per year before tax. i know nothing about self employment or tax!

i have set up a little business making and selling a product/products which i have in the past few months started selling on big cartel and making a profit on as they become increasingly popular, ive been using the money i make to buy more stuff to make more products, i have many receipts but nothing in good order etc! think profit will only end up being about 150 a month maybe less maybe more sometimes its hard to work out

i now realize i need to get all this setup properly, what do i need to do as its worrying and stressing me?

at the moment i use a business pay pal account to receive money which i transfer into my personal account:

i will be setting up a separate business bank account at the weekend and linking this to the pay pal but where do i go from there, this is all new to me.

Set up as sole trader?
Inform hmrc? when do i say business commenced?
what do i use to track in and out goings?

thankyou

J

I would suggest you start doing some research - here's a good place to begin
https://www.gov.uk/working-for-yourself

In reposne to your particular questions

Set up as sole trader? - it sounds like you already have done, but you do need to register with HMRC (see link above)

Inform hmrc? - yes

when do i say business commenced? - I can only advise that you are honest as you can be in all your dealings with HMRC

what do i use to track in and out goings? - business accounts. Consider seeing an accountant who will advise you what exactly they would want you to keep to minimise the cost of assisting you later with tax returns & the like. That should also assist you to financially manage your business too

Rappa

jord_h87 wrote: »

its a big mess really, i might seize to trade until i know the score! i set my shop up on big cartel nov last year and it has each sale listed on there. can i use this for hmrc and then the hard copy reciepts i have from material deliveries or will they review my papal also? there are in and outs all over on there, as i used most of the money i received to rebuy more materials.

i know im in profit but i dont know how much! i diddnt think it would kick off as well as it did and i know its naive but i diddnt realise it all needed to officially set up!

i know now and want it all sorting so is simple, legal and fun

You don't actually need to give HMRC any receipts, invoices, etc (unless they later ask for them as proof! )
All you need to supply is a correctly completed tax return to begin with.

As I said, see an accountant today, and that should make things a lot easier for you & your accountant later to return the tax return when due.