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

Savvy_Sue

At the most basic level, HMRC do not care when you earned money through self-employment, nor when you spent money on expenses associated with that business. They care that you know how much profit you have made when you are self employed, they care that you declare all taxable income sources, and they care that you pay tax on that figure.

Support the advice to get an accountant, and also think about year round activities where you could sell ice cream!

PAUL7331

Savvy_Sue wrote: »

At the most basic level, HMRC do not care when you earned money through self-employment, nor when you spent money on expenses associated with that business. They care that you know how much profit you have made when you are self employed, they care that you declare all taxable income sources, and they care that you pay tax on that figure.

Support the advice to get an accountant, and also think about year round activities where you could sell ice cream!

Hi Sue,
Next summer i'm only going to be doing a handful of weddings to be honest between June-august as it was taking most of my weekends this summer and became a chore along with my mon-fri 9-5 job so it all seems a bit to much aggro to be honest. Getting an accountant in for a small sideline seems excessive. I'll have to just submit self assessment and pray I get it right.

trailingspouse

It's perfectly normal for a business to make a loss in the first year (and beyond). You have a lot of set-up costs (van, trike, website in your case) which your first year's income may well not cover.

The point is, you need to keep accurate records (backed up by receipts, invoices etc etc) to prove to HMRC that you made a loss.

Think of it this way -

Basically (very basically) your return to HMRC will consist of 3 figures -

£Amount received from the business (income)
£Amount paid out in the course of running the business (expenditure)
£The difference between the two. This could be a negative number (loss) or a positive number (profit).

That's all HMRC need from you BUT those figures need to be evidenced by your bookkeeping records that show how much you took at each wedding, and how much you spent on everything from stamps to a van. And in turn that bookkeeping record needs to be backed up with actual receipts for the stuff you spent your money on, and for monies paid into your business bank account (you do have a business bank account, yes?). HMRC are extremely unlikely to want to see all of the stuff that's going on in the background - but if they get a sniff that things aren't quite right, you'll be glad you took the time to do it right.

Your business idea sounds lovely, and great fun. I'm sure the wedding guests really like what you're doing. You owe it to yourself and to your clients to make sure your business is run well, so educate yourself on everything bookkeeping, and take advantage of accountants who will give you 30 minutes of their time for free - hopefully the posters on here have given you some ideas of questions you need to be asking.

And when you go to speak to an accountant don't be afraid to ask how much they charge - it might be less than you imagine, and they are very likely to save you a lot of money, time and general hassle.

PAUL7331

trailingspouse wrote: »

It's perfectly normal for a business to make a loss in the first year (and beyond). You have a lot of set-up costs (van, trike, website in your case) which your first year's income may well not cover.

The point is, you need to keep accurate records (backed up by receipts, invoices etc etc) to prove to HMRC that you made a loss.

Think of it this way -

Basically (very basically) your return to HMRC will consist of 3 figures -

£Amount received from the business (income)
£Amount paid out in the course of running the business (expenditure)
£The difference between the two. This could be a negative number (loss) or a positive number (profit).

That's all HMRC need from you BUT those figures need to be evidenced by your bookkeeping records that show how much you took at each wedding, and how much you spent on everything from stamps to a van. And in turn that bookkeeping record needs to be backed up with actual receipts for the stuff you spent your money on, and for monies paid into your business bank account (you do have a business bank account, yes?). HMRC are extremely unlikely to want to see all of the stuff that's going on in the background - but if they get a sniff that things aren't quite right, you'll be glad you took the time to do it right.

Your business idea sounds lovely, and great fun. I'm sure the wedding guests really like what you're doing. You owe it to yourself and to your clients to make sure your business is run well, so educate yourself on everything bookkeeping, and take advantage of accountants who will give you 30 minutes of their time for free - hopefully the posters on here have given you some ideas of questions you need to be asking.

And when you go to speak to an accountant don't be afraid to ask how much they charge - it might be less than you imagine, and they are very likely to save you a lot of money, time and general hassle.

Thanks for that. I'll get reading I guess. One thing I cant find though is what I put down for the van I purchased. It cost 2.3k so do I put that amount down or a portion of the miles it's done? I dont actually know how many miles it's done but could probably work it out. I have the credit card receipt of van so that's cool if they check.
Oh - and NO I don't have a business account! Just a normal account.

trailingspouse

Get a business account - most banks offer them free for at least the first year. If you make sure that all of your income and expenditure goes via the bank account it is a very simple way of keeping an eye on things.
And besides, banks take a very dim view of people using personal accounts for business purposes.

Don't worry about not knowing much about the business side of things - the important thing is that you now know that you don't know it, so you can do something about it. It sounds like hassle, but really once you've got into a routine it's not so bad.

PAUL7331

trailingspouse wrote: »

Get a business account - most banks offer them free for at least the first year. If you make sure that all of your income and expenditure goes via the bank account it is a very simple way of keeping an eye on things.
And besides, banks take a very dim view of people using personal accounts for business purposes.

Don't worry about not knowing much about the business side of things - the important thing is that you now know that you don't know it, so you can do something about it. It sounds like hassle, but really once you've got into a routine it's not so bad.

Thanks for the encouragement!

One last question though - my van? What do I put down on self assessment - full cost of van as its used only for business to transport ice cream business OR miles it's done since purchase?

Mupette

get the wave app

I use wave, it's one of the easiest (& Free) online book keeping, helps you keep your records and prepares end reports, BUT you still need to keep your receipts just in case you are asked to supply them

00ec25

PAUL7331 wrote: »

One last question though - my van? What do I put down on self assessment - full cost of van as its used only for business to transport ice cream business OR miles it's done since purchase?

you claim the cost as a capital allowance. However, you claim the usage either as actual costs spent each year or at the approved mileage rate based on business miles done

For example,:

1. you need to understand the implications of claiming the van as an annual investment allowance or as a writing down allowance as those 2 different figures directly impact the size of your first year loss, and so what you can and cannot do with it. Correct treatment of losses is one of the more complex areas where accountants do visibly save their clients tax by setting up the accounts in the most efficient manner. You only have one chance to get your losses right: eg: carry forward or offset (carry back obviously irrelevant in your case)
   https://www.gov.uk/capital-allowances
2. you also need to decide if you are going to use the simplified expenses method when calculating your profit and loss (has implications for how you account for van usage)
   https://www.gov.uk/simpler-income-tax-simplified-expenses

[Deleted User]

PAUL7331 wrote: »

Hi Sue,
. Getting an accountant in for a small sideline seems excessive. I'll have to just submit self assessment and pray I get it right.

Please don't! Get it wrong and you will really need not just an accountant but one who specialises in dealing with HMRC enquiries and that will be expensive!. Don't forget - the accountancy fee is a tax deductible expense.

You have mentioned losses - do you really expect to be able to claim these correctly against your other income? If you make a loss in the first year there are numerous options to maximise relief. This is a specialist area. Consider the advice given by the accountants and current HMRC employees who have contributed to this thread.

You 'don't want the taxman knocking at your door' but you could be issuing them an invitation.

Good Luck!

[Deleted User]

00ec25 wrote: »

You only have one chance to get your losses right: eg: carry forward or offset (carry back obviously irrelevant in your case)

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Also loss in early years of trade - but your point is well made!