Can I start a business without big expenses into administering it (HMRC, accountant, etc)?

DraxDomax

I've done this back in 2015 when I was wondering about letting a room in my house.
I don't remember how long was the session but it was very informative and we talked about real numbers, which really helped identify which options are even relevant to the endeavor.

Sorry, I use "business" as any form of trading some product or service for money, with the motivation to make a profit.
Even PAYE is a business - although that's so specific that I am never going to refer to it as a business.

A company, to me, is a legal entity separate from myself, which makes risk and tax somewhat more favorable (using my very superficial understanding)

Thanks for the advice here, friends, I have plenty to chew on for now and will start developing the answers to the questions arisen here

martindow

I think that free sessions can be helpful.  I got some of my more naive ideas out of the the way and ended fairly confident that I was going in the right direction.  When I needed to pay for advice I think I knew exactly what questions I needed answers to and being sure that they were pertinent.  Really the only way of deciding which accountant you would like to use when it comes to paying for their services is by talking to them, so you may as well get some free advice while you're at it!

prowla

If you're thinking of a Limited Company, then creating one is a few pounds.

• However, there is time and some costs in running one.
• You may need to set yourself up as an employee of your company, in which case you'll need to manage PAYE.
• I think HMRC are mandating electronic submission, which means you'll have to use something like Xero to do your accounts.
• If you're going to charge (or claim!) VAT, or will earn over a certain amount, then you'll need to be VAT registered.
• Of course, your taxes will need to be paid from the income, which will need to cover employer and employee tax and NI.
• You'll also need a bank account.
• A Limited Company doesn't need to have any turnover and can submit annual accounts to the amount of zero. There is an annual £35(?) fee for the submission.
  

The other option is self-employed, which someone else may be better suited to comment on.

macman

The Cayenne is not difficult to account for. You can simply calculate your business mileage as a percentage of your total mileage, and claim a proportion of your motoring costs accordingly as an allowable business expense.
The capital allowances for vehicles are rather more complex, if you haven't actually bought the Cayenne yet...

DullGreyGuy

DraxDomax said:

All the contractors I know drive very sweet cars and I doubt they only take out the Cayenne for commuting to work!

Assuming they arent committing fraud then they wont be taking the Cayenne out of their company as the BIK would be £12k which would outweigh any tax savings on the lease

If they are driving a Tesla Model S or Audi e-Tron GT then thats a different matter as the BIK on electric cars by comparison would be under £1k even for a top line vehicle

Postik

I wouldn't even bother registering a limited company until you see how things pan out.  If you are a small, one man business there used to be tax advantages to having a limited company over being a sole trader, but these advantages have now diminished to virtually nothing.

I would just setup a new bank account to keep your business expenses separate to your personal ones.  You can then register with HMRC for self assesment and do your own tax return each year.

I wouldn't bother with limited companies, pay rolls, company cars, etc until later on when you're turning over a more sizeable amount and know that the business works.

MatyMoo

You could start as a sole trader - Mr DraxDomax trading as SuperConsultant for example. I would keep all business incoming and outgoing in a separate bank account for ease. Initially I would also keep details on a detailed spreadsheet which matches the total in the bank. 

A good accountant is worth his fee - they can advise on tax allowances which could save you far more than you pay them. 

TripleH

You can setup a limited company and have it as dormant whilst working on setting up the reputation as a sole trader if you have a name you want to use and protect otherwise solectrader.

You can transfer the business into a limited company at a later date. You can call yourself DraxDomax as a sole trader but own DraxDomax limited as a dormant company then when you go limited only have a couple of things to tweak on invoices.

The important bit is keeping good records even if once a month you enter all purchases on an excel spreadsheet and list mileage (destination and reason) on another tab. That should save you a lot in accounting fees as less work for them to do.

A lot of these fancy cars are leased and the big trick is that many when they start consulting on big daily rates is to forget they don't own that money. For the first year take out a minimum out to ensure all tax is paid then when you know what you have and have a safety cushion in the second year you look at fancier toys. I know of a number of people who spent too much in the first year and are struggling to get by as they are funding expensive leased toys and historic tax bills.

koru

Just a couple of points to add.

If you want a company you can set it up yourself on the Companies House website. The fee is £12. 

Someone already mentioned Freeagent accounting software. You get this free if you use Mettle as your business bank account.

As others have said, if you don't know much about accounting and company law and tax, it would be easy to make mistakes doing it DIY.