Selling merchandise from my podcast..

Glenwils

Hi everyone,

Me and my 2 brothers have a podcast "Chatting with the Wilsons'.
We all have other jobs and do the podcast as a hobby. We have a small but loyal fanbase that have asked us wether we can start selling merchandise on our website. T-shirts, caps, mugs etc. The extra cash would be handy as it would cover the running costs and maybe buy us some better equipment.
I've been looking into Signing up as a sole trader but the whole thing is a bit of a minefield.
Am I right in thinking that because we all have full time jobs that we have to pay income tax on everything we sell straight away?
Also we have a few sponsors interested in going us some cash for a few shoutouts, would the same apply to sponsorship money?

Thanks in advance!
Glen
:beer:

Savvy_Sue

You pay tax and almost certainly some NI on your profits. You'd all have to register as sole traders, or as a partnership, or as a limited company - by far the simplest would be sole traders if you were doing a straight 3 way split.

I'd see if you can find a couple of accountants, preferably with some experience of monetising online 'stuff' and see what their take on it is.

00ec25

so you intend to convert what appears to be a hobby website that costs you money and currently has no income (really? no advertising income share given you have named the podcast so are presumably looking to bump up your subscribers and view count?) into a business which has both income and expenses producing a net profit (or loss!)

you cannot be sole trader if there is one business and 3 brothers, unless you intend to be the sole business owner and your 2 brothers will be your employees, not co-owners.

if you intend the brothers to be on an equal footing to you in terms of sharing the profits then, as you mention, the 2 routes are: partnership or Ltd co.

whether a partnership or a Ltd company will be most cost effective is something you need to sit down and number crunch with an accountant as each will have their own admin costs and personal tax efficiency for the owners .

A partnership requires each partner to submit their own individual tax return plus the partnership itself has to submit its own tax return. Producing partnership accounts can be quite complex and best left to an accountant.
a ltd co must obviously produce accounts in accordance with company law requirements, again best left to an accountant to do for you.

if you go down the partnership route you will need to register as having a self employed business by 5th October 2018, calculate your net profit splits and each pay the tax due on your respective share by 31 Jan 2019, the last possible date for submitting a tax return in respect of the tax year 17/18 which we are currently in.

On the other hand, a Ltd Co has a different time line depending on its accounting date.

don't even contemplate not declaring the income as your website and its sales will be reported by someone eventually! If you remain a sole trader then you will have both employment and self employment income so will need to register for self assessment as above deadlines and pay your tax accordingly. If your brothers are your employees, you will have to operate a computerised payroll, report your pay figures to HMRC every month and pay the tax you deduct from them to HMRC

if you leave things as they are and continue to receive advertising income that should be declared by you as "casual" earnings and HMRC will make the decision if it wants you to do a full blown tax return or whether they will simply adjust your tax code on your main employment job

2bFrank

I think you are over thinking things. You can earn up to £1,000 tax-free in the government's property and trading scheme. Whilst I am not sure if you can pool all three peoples allowance, I really wouldn't worry about it in the short term.

Instead, I would concentrate on building a site to sell the stuff (simple WordPress shop/ Shopify etc) then see what occurs. If you start making quite a few sales and build up to the £1,000 limit then I would start looking at your options.

Your main options I would look at would be an LTD company or just plain sole trader. But I really wouldn't bother until you know you are going to make some money.

00ec25

2bFrank wrote: »

I think you are over thinking things. You can earn up to £1,000 tax-free in the government's property and trading scheme. Whilst I am not sure if you can pool all three peoples allowance, I really wouldn't worry about it in the short term.

Instead, I would concentrate on building a site to sell the stuff (simple WordPress shop/ Shopify etc) then see what occurs. If you start making quite a few sales and build up to the £1,000 limit then I would start looking at your options.

Your main options I would look at would be an LTD company or just plain sole trader. But I really wouldn't bother until you know you are going to make some money.

no, that £1,000 scheme does not exist

yes it was announced in the budget, but has not passed into legislation

https://www.moneysavingexpert.com/news/protect/2017/04/government-drops-1000-tax-breaks-for-online-sellers-and-room-renters-for-now

http://www.telegraph.co.uk/tax/income-tax/government-quietly-drops-ebay-airbnb-tax-break/

2bFrank

Ah, well that's awkward lol.

However in all honesty, even with the scheme not existing, I still would concentrate on getting your infrastructure set up (online shop and merchandise printed) before I would look at your legal and tax structure.

When you start making some sales that are worth anything, then I would look at your setup. If you spent £200 on getting your t-shirts and stuff printed, and only made £100 of sales, then you won't owe the tax man anything anyways.

00ec25

2bFrank wrote: »

Ah, well that's awkward lol.

However in all honesty, even with the scheme not existing, I still would concentrate on getting your infrastructure set up (online shop and merchandise printed) before I would look at your legal and tax structure.that would be a mistake.

When you start making some sales that are worth anything, then I would look at your setup. If you spent £200 on getting your t-shirts and stuff printed, and only made £100 of sales, then you won't owe the tax man anything anyways.

if he starts as a sole trader he must register with HMRC as self employed by 5th October in the second tax year after he started trading otherwise he will be penalised for late notification

whilst I agree that jumping straight into a Ltd Co would be (very) inadvisable due to the associated costs, your advice that he ignore the legal trading structure is poor given we know that the brothers are "involved" and therefore, we assume, expect a slice of the action. If he decides to go the sole trader route and starts paying the brothers a wage he will need to start the payroll by the end of the first month otherwise he will be penalised for late notification of employer's tax deductions. he will therefore need to be clear he is both a sole trader and an employer

there are less pressing time scales on the partnership option

2bFrank

However in all honesty, even with the scheme not existing, I still would concentrate on getting your infrastructure set up (online shop and merchandise printed) before I would look at your legal and tax structure.that would be a mistake.

To an extent, I disagree. You are correct, when they start taking salaries and paying themselves, they do indeed need to look at a legal and tax structure.

However, starting out, they need to concentrate on the business, getting everything up and running and seeing if they actually make some money first. worrying about partnerships and legal structures are not the best way to get started. Trial the market first and see if there is a business, then worry about the structure.