Starting a business whilst being employed help

double_chocolate

Hey everyone, I'm hoping someone can help me out or point me in the right direction I'm currently employed but am starting to think about setting up my own business on the side. There's a few things that I'm interested in learning more about and that's 1. In terms of taxes do you pay tax on the full sale price of a product or just the profit? And 2. Do I need to set up a separate business only account with the bank? Also how does Vat work when you're under the Vat threshold? I look forward to your help! Thanks 

Brynsam

Firstly check if your contract with your employer allows you to do this or whether you are precluded from doing so, or need their permission.

Before doing anything, do some proper reading up and do nothing until you've progressed from cluelessness (guaranteed business failure!) to clued up (much better chance of success). Start here: https://www.gov.uk/browse/business/setting-up and also think about getting a basic business book or two from Amazon or borrowing online from your local library.

For now:

1. Neither. Any tax is levied on the business's overall results after legitimate expenses have been deducted.
2. If you are setting up a limited company, yes. If you are just running a little business as a sole trader, you don't have to, but it makes life a huge amount simpler if you do.
3. You only need to worry about VAT when you come to the point of needing to register.

Lomast

Check the terms and conds of your bank account as many will not allow you to run a business through a personal account although many get away with it.

With regard to vat unless you are registered (optional below £85k turnover) then you will not be able to reclaim it on anything you buy but won't be adding it into anything you sell/ invoice

Dox

Lomast said:

With regard to vat unless you are registered (optional below £85k turnover) then you will not be able to reclaim it on anything you buy but won't be adding it into anything you sell/ invoice

Just to be clear - you can't reclaim VAT via a VAT return if you aren't registered for VAT. If you pay VAT on something you buy for the business, then the whole of the purchase price including the VAT can be claimed as a trading expense.