Small business earning about 4k but only between jun-aug - how do I register to HMRC?

PAUL7331

Hi guys,
I currently started a small seasonal business hiring out a ice cream tricycle for weddings, BUT this is purely only between June-august so THREE months only. I'm earning profit wise less than 5k and have to purchase stock etc and had to pay to set up a website and attend wedding shows. My questions is do I need to register for a small business OR casual income via HMRC?

Also can I get back money I spent attending wedding shows/website fees?

It's a minefield at the moment! Started in june (when I took first payment) and used the app invoice2go.

Any advice so that the taxman wont come knocking at my door would be most helpful.

Aquamania

PAUL7331 wrote: »

Hi guys,
I currently started a small seasonal business hiring out a ice cream tricycle for weddings, BUT this is purely only between June-august so THREE months only. I'm earning profit wise less than 5k and have to purchase stock etc and had to pay to set up a website and attend wedding shows. My questions is do I need to register for a small business OR casual income via HMRC?

Also can I get back money I spent attending wedding shows/website fees?

It's a minefield at the moment! Started in june (when I took first payment) and used the app invoice2go.

Any advice so that the taxman wont come knocking at my door would be most helpful.

You appear to accept it is a business that is intended to produce a profit, and therefore you should register it as such with HMRC.
In fact you should have registered it before you started, but better late than never...

PAUL7331

Aquamania wrote: »

You appear to accept it is a business that is intended to produce a profit, and therefore you should register it as such with HMRC.
In fact you should have registered it before you started, but better late than never...

I only realised yesterday when somebody said I should register it. I had it round my neck in the fact that I wrongly assumed you did not have to declare the first 11k (I now realise that was incorrect as I have a day 9-5 job too)

Ok so ive also read that the first 1k is tax free - is that correct?
Once registered is it a simple matter of sending HMRC the invoices that invoice to go produced? Also when do you pay the tax owed?

Pennywise

PAUL7331 wrote: »

IOnce registered is it a simple matter of sending HMRC the invoices that invoice to go produced? Also when do you pay the tax owed?

No, YOU have to keep decent book-keeping records and you have to complete a self assessment tax return where YOU enter your totals for each tax year, i.e. total sales, total cost of goods for resale, totals of each overhead, etc., and ultimately it's profit or loss. You'll also have to enter your wages totals from employment and any other declarations such as bank interest, gift aid payments, etc. It's "SELF" assessment, so the onus is on you to get all the figures together and put them on your tax return which you submit to HMRC.

HMRC won't do any of that for you. If you can't do it yourself, you need a decent book-keeper and/or accountant to do it for you.

00ec25

ok lets start with tax 101

1. you are taxed on your income. Income arises from many sources, you have at least 2: you work as an employee so you have "employment earnings" and you also run a trading business buying and selling "stuff" with a view to making a profit, that is self employment so you have "self employment earnings". You may also have other source of income such as interest on savings outside an ISA, dividends from shares you own etc

2. Because you have self employment earnings you must register to do a tax return

3. your self employment earnings comprise your income minus your costs. Obviously the cost of the gunk used to make the ice cream is a primary cost, but so too will be a whole host of other costs such as: bike repairs, site/trading licences, hygiene certificates, advertising, attending shows and a website to name but a few that may apply to you. You will need to research which costs can be claimed and which cannot (or leave it to a bookkeeper/accountant)

4. the tax return is a summary of ALL your earnings/income. It has sections where you must detail all the topics referred to in point 1 above. You must populate the return yourself to show your total income less your total expenses, less your personal allowance off £11,500 (for 17/18) to give the figure on which you will pay tax. From that tax due amount the total tax you already paid on your employment earnings via PAYE will be deducted, leaving you with a net amount of tax you have to pay on your tax return.

5. you submit a tax return once per tax year (April - April). The deadline (and penalties for failing) to do so are facts you can research yourself on the .Gov website

6, Note if the amount of tax you owe is more than £1,000, you will be placed on the payment on account system from the following year so from then onwards you not only pay the tax due on the previous year's profits, but you also pay some of the tax that will be due on the current year's profits, so that at least some current year self employed tax is paid as you go

NOTE - you do not get the first 1k tax free. That was a proposal which was never passed into law.

PAUL7331

Ok thanks for info guys.
I actually purchased a website for this business back in december so how would I go about claiming costs for that as it does not fall in to april 2017-april 2018 ?
Also the tricycle cost me just under 2k and the van to take it in was 2.3k..... are these classed as expenses?

Pennywise

PAUL7331 wrote: »

Ok thanks for info guys.
I actually purchased a website for this business back in december so how would I go about claiming costs for that as it does not fall in to april 2017-april 2018 ?
Also the tricycle cost me just under 2k and the van to take it in was 2.3k..... are these classed as expenses?

Anything you bought before starting needs to be entered in your book-keeping as if it was bought on the date you started.

You can claim the bike and van as an expense, but only the business use element, i.e. for the van, the proportion based on business miles compared to non business miles.

PAUL7331

Pennywise wrote: »

Anything you bought before starting needs to be entered in your book-keeping as if it was bought on the date you started.

You can claim the bike and van as an expense, but only the business use element, i.e. for the van, the proportion based on business miles compared to non business miles.

Ok so my van and ice cream trike were purchased in December and (van was 2.3k and bike was 1.8k)
Basically i'm still in the RED at the moment as my outgoings have been more than my in-goings (if you count van and tricycle). So will I actually be owed tax based on that?

Is it basically my outgoings vs ingoings ?

What happens if I miss a transaction when doing the self assessment? Theres loads of purchases ive made such as fuel that ive not actually kept receipts for but can be seen on my online banking! Also other items such as napkins etc ive purchased for the business. Do they not ask for receipts detailing every transaction or do they just 'take your word for it' ?

00ec25

PAUL7331 wrote: »

Do they not ask for receipts detailing every transaction or do they just 'take your word for it' ?

as explained in post #4 above, it is SELF ASSESSMENT, you are expected to have educated yourself to the point where you know precisely what can and cannot claim and how to claim it (business v private use for example) OR you are expected to use a professional bookkeeper/accountant to do it on your behalf

the point being that if you are unlucky enough to be selected by HMRC for a random inspection you must then be able to produce perfect records and full supporting documentation for anything you have claimed. Woe betide you if you cannot do so when asked as then HMRC will really take an interest in you and things will rapidly escalate to very uncomfortable

you are not going to master this by asking 1001 questions as you don't even know what the 1002nd question should be to be able to ask it.


do a lot of research....
https://www.gov.uk/log-in-file-self-assessment-tax-return

https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

https://www.gov.uk/working-for-yourself

http://www.coalesco.co.uk/combining-employment-self-employment-tax-ni-implications/

https://www.moneyadviceservice.org.uk/en/articles/tax-and-national-insurance-when-youre-self-employed

https://www.litrg.org.uk/tax-guides/self-employment/how-do-i-pay-tax-self-employed-income

the list goes on.....

PAUL7331

00ec25 wrote: »

as explained in post #4 above, it is SELF ASSESSMENT, you are expected to have educated yourself to the point where you know precisely what can and cannot claim and how to claim it (business v private use for example) OR you are expected to use a professional bookkeeper/accountant to do it on your behalf

the point being that if you are unlucky enough to be selected by HMRC for a random inspection you must then be able to produce perfect records and full supporting documentation for anything you have claimed. Woe betide you if you cannot do so when asked as then HMRC will really take an interest in you and things will rapidly escalate to very uncomfortable

you are not going to master this by asking 1001 questions as you don't even know what the 1002nd question should be to be able to ask it.


do a lot of research....
https://www.gov.uk/log-in-file-self-assessment-tax-return

https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

https://www.gov.uk/working-for-yourself

http://www.coalesco.co.uk/combining-employment-self-employment-tax-ni-implications/

https://www.moneyadviceservice.org.uk/en/articles/tax-and-national-insurance-when-youre-self-employed

https://www.litrg.org.uk/tax-guides/self-employment/how-do-i-pay-tax-self-employed-income

the list goes on.....

Ok thanks, I think I’m slowly getting it but a couple more questions if I may.
I’ve registered for self assessment so that stuff is in the post. Now I’ve only taken payments for between June-August this year for bookings. But I paid for the website in December 2016 and purchased the tricycle and van to carry in also in December 16. I also attended wedding fayres between jan-march. So basically from December 16-May 17 I’ve had outgoings for this small business but had no incomings during this time. So what happens with that? When I called HMRC a guy on the phone said i May be able to offset this against my tax on my current 9-5 job? How the hell would that work?
And exactly how much roughly could I claim back for website, tricycle and van along with advertising at wedding fayres?

00ec25

PAUL7331 wrote: »

Ok thanks, I think I’m slowly getting it but a couple more questions if I may.
I’ve registered for self assessment so that stuff is in the post. Now I’ve only taken payments for between June-August this year for bookings. But I paid for the website in December 2016 and purchased the tricycle and van to carry in also in December 16. I also attended wedding fayres between jan-march. So basically from December 16-May 17 I’ve had outgoings for this small business but had no incomings during this time. So what happens with that? When I called HMRC a guy on the phone said i May be able to offset this against my tax on my current 9-5 job? How the hell would that work?
And exactly how much roughly could I claim back for website, tricycle and van along with advertising at wedding fayres?

excuse me but what were you not able to read/understand in post #7?

suck it up and pay a professional to do it for you. You are out of your depth and drowning.