New small business owner, help regarding tax and possible expenses :)

seaneylad

Good Morning, happy friday

Currently work a salaried job paying 40k for 26 hour week over 4 days with tax sorted via payslip etc

Recently started a small business selling log, coal & kindling and delivering it locally - my main question is regarding tax & expenses (due to currently working another job too)

Am i right in thinking as long as i keep all receipts for my bulk pallet orders of stock and note all sales (cash and via my card machine & Bank transfer) up at the end of the years its a case of just seeing how much profit i have made minus current stock still left unsold to work out what i owe tax on?

My other question is can i claim any sort of expenses as a sole trader? or not because i work elsewhere? like fuel for the van, repairs etc? 

Any advice is welcome, its all new and going a little research online. Thanks 

Jeremy535897

Is your new small business a sole trade (self employment), or is it carried out in a limited company?

Assuming the former, there is some good basic guidance here:
https://www.gov.uk/expenses-if-youre-self-employed
https://www.litrg.org.uk/tax-guides/self-employment

Whether or not you account for changes in stock levels depends on whether you choose to use the cash basis.

You claim the appropriate expenses for your self employment, and that is unaffected by whether you have employment as well (although you cannot claim expenses for your self employment that are actually to do with your employment).

You must register as self employed, and if you don't already complete a self assessment tax return, you must do so:
https://www.litrg.org.uk/tax-guides/self-employment/how-do-i-register-tax-and-national-insurance

trailingspouse

So, you're buying in bulk, then splitting into smaller lots? Or just getting packs delivered to you and then adding a mark-up? Either way, I'm going to guess you have stock - where are you keeping it? If you rent or have a mortgage/house insurance, and it's being kept at your home address, your landlord/mortgage provider/insurer are going to be interested to know about it. Can customers come to collect? Again...

And I'm going to assume that you've read up on guidance for storing combustible materials.

Apologies if you know all this already - sadly many people don't, so worth mentioning.

Sandtree

As a small business you can potentially do cash accounting which simplifies your accounting and removes the matter of unsold stock.

Never had a vehicle for any of my sole trader activities so better for you to look at official guidelines or ask an accountant. The general principle is that expenses should be for the exclusive use of your sole trader activity and so if the van has other purposes you'll be limited as to what you can claim (wont be 0 but unlikely to be 100%)

martindow

Regarding vehicles that are shared between private and business use, most people keep it simple and use 45p/ mile as the expense for business use.  The alternative is to apportion costs on the percentage of business use.  Either way, records need to be kept of the mileage and purpose of the trips to justify the expenses.  Insurance cover needs to be changed for business and private use if previously it was just private.

If you have a vehicle entirely for business use, you keep receipts for fuel, repairs, MoT, insurance, etc. as expenses.  I'm not sure how you deal with the initial purchase cost.

Savvy_Sue

And again on the subject of insurance,  make sure it's at the level you require. I have a colleague whose personal vehicle is a van (bikes, children etc): they asked for a quote for business use, to allow use to visit clients. Hugely expensive, so they kept it as just SDP (And they don't use it to visit clients.)

If you're on top of this, happy days.