Setting up as a sole trader

Woolley2002

Hi,

I am currently employed full time but have also just started a new business working evenings and weekends as a sports coach.

I am looking for various advice on the below questions to get my business as a sole trader set up properly.

At the moment I'm unsure how this new business venture is going to go re income etc.


1 - How do i go about registering my business name as a sole trader?

2- Do I need to register with HMRC now or wait till I know I will earn over £1000 in a tax year?

3- Is the £1000 limit for self employed after any expenses or is it just on total income?

4- I would like to open a seperate bank account for this business can I apply for a business account now or do I need to want till I have a few months trading to prove my business name etc?

5-As this is only a small business at the moment I would still need to keep a set of accounts does anyone have a google sheets template to run simple accounts?

Sorry for all the questions but justing wanting to get everything set up properly before I really get the business up and running to hopefully make it is easier in the long term.

Bookworm105

1. Sole trader names are not "registered" in the sense I think you mean. If the name is particularly important to you then you could pay (a lot of) money to register it as a formal trademark to prevent others from using that name.
Note however for tax purposes the sole trader name is indeed "registered" since you must declare it to HMRC when registering your self employment  
Become a sole trader: Register as a sole trader - GOV.UK

2. are you already required to do a tax return? If yes, then register for SA now as there is a sanction for being late.
 If not, then take a guess whether you will have GROSS Income > £1,000 ie. income before ANY deductions incl the trading allowance and thus be required to register 
Self Assessment tax returns: Who must send a tax return - GOV.UK

3. It is vital that you understand from the outset how your self employment taxable profits are calculated as you can chose one of 2 methods, it is an either or situation, do not mix them any single year!!:
a) Claim the trading allowance:  gross income - £1,000 allowance = taxable profit 
or
b) Claim actual expenses, not the allowance: gross income - actual expenses = taxable profit 

4. Depends on the bank. Yes a bank's T&C may claim you need a business account but there are loads of banks that don't enforce it and just allow trading/ad hoc income through a personal account.
There is no legal requirement to have a separate account provided your accounting records clearly show the trading income received for tax purposes

5. either pay an accountant or don't. A spreadsheet is more than adequate to cover what you describe and therefore in reality becomes your accounts. Income list on one worksheet, expenditure list on another worksheet, and a third worksheet calculating your net profit. Those totals then track directly to your tax return, QED you have a set of accounts - the link above includes info on what records you need to keep.
If you have a business bank account then obviously a 4th worksheet would be the bank statement download and would agree with the totals of income and expenditure worksheets. If you just use a personal account then cross reference each income and expenditure entry to your personal bank statement so there is a record of what you have and have not declared as part of the business.

DullGreyGuy

Woolley2002 said:

Hi,

I am currently employed full time but have also just started a new business working evenings and weekends as a sports coach.

I am looking for various advice on the below questions to get my business as a sole trader set up properly.

At the moment I'm unsure how this new business venture is going to go re income etc.


1 - How do i go about registering my business name as a sole trader?

2- Do I need to register with HMRC now or wait till I know I will earn over £1000 in a tax year?

3- Is the £1000 limit for self employed after any expenses or is it just on total income?

4- I would like to open a seperate bank account for this business can I apply for a business account now or do I need to want till I have a few months trading to prove my business name etc?

5-As this is only a small business at the moment I would still need to keep a set of accounts does anyone have a google sheets template to run simple accounts?

Sorry for all the questions but justing wanting to get everything set up properly before I really get the business up and running to hopefully make it is easier in the long term.

3. Its revenue not profit

4. As a sole trader the account will be in your name as you are the legal entity. Most business accounts will allow you to add one or more trading names such that you can accept payments made out to your brand. You will need to prove your identity for your actual name but there is little/no requirement on the trading name typically

5. It will depend on if you are running your business on a cash (the default for sole traders) or accrual (the only option for companies) basis. How you capture it will depend on your excel skills, how future proof you want it and how much, if any, analysis you want to be able to do. Some will have two identical tabs one for sales and the other for expenses, each one having a table of who, when, what a total cost and the cost broken down by categories (the double entry helps spots miskeys). Others wont have multiple columns for categories but have a category field which they can then use a pivot table on to see what they're spending on premises hire or marketing etc. 

Add a final summary tab which has revenue, allowable expenses as a sum of the other two tabs, Profit and if you want to be sensible, then tax

LITRG

Hello. We are the Low Incomes Tax Reform Group (LITRG), part of the Chartered Institute of Taxation who are an educational charity. We are not part of HMRC or MSE. Although we can’t give individual advice, you might find our self employment guide useful: https://www.litrg.org.uk/working/self-employment/self-employment-guide. If you require further help, we recommend that you contact a tax adviser, HMRC or one of the tax charities where relevant. You can find more information about where to get help with tax here: https://www.litrg.org.uk/tax-nic/getting-help-tax. Thanks.

dinosaur66

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Woolley2002 said:

Hi,

I am currently employed full time but have also just started a new business working evenings and weekends as a sports coach.

I am looking for various advice on the below questions to get my business as a sole trader set up properly.

At the moment I'm unsure how this new business venture is going to go re income etc.


1 - How do i go about registering my business name as a sole trader?

2- Do I need to register with HMRC now or wait till I know I will earn over £1000 in a tax year?

3- Is the £1000 limit for self employed after any expenses or is it just on total income?

4- I would like to open a seperate bank account for this business can I apply for a business account now or do I need to want till I have a few months trading to prove my business name etc?

5-As this is only a small business at the moment I would still need to keep a set of accounts does anyone have a google sheets template to run simple accounts?

Sorry for all the questions but justing wanting to get everything set up properly before I really get the business up and running to hopefully make it is easier in the long term.

1 / just go to HMRC website and open a new account-i have always just used my actual name

2/ £1000 is not a lot but you could wait until april 5th to register so you know whether you get clients or not

3/ £1000 is all income not profit

4/ i have never opened a business account / never had a question from any of the banks i have been with in 40 years asking me to switch to one / but i have never required capital /loans but might be handy for you to have one as you can have a card reader for your clients to pay with/ i am assuming sports coach as individuals

5/i have always done my own / for a starting up like yourself an A4 book for recordkeeping

so easy template

start april

write down the days of the month in a column

write down takings for the day when you work

on opposite page write down all your expenses

at end of the month total takings

then total expenses

whats left is your profit which you write down

at the end of the tax year all hmrc wants to see is total figure for your expenses and total figure for your profit

thats it

you have to keep the books though for 6 years in case any queries come up or an audit

martindow

dinosaur66 said:

at the end of the tax year all hmrc wants to see is total figure for your expenses and total figure for your profit

thats it

you have to keep the books though for 6 years in case any queries come up or an audit

Just for sake of completeness, you also need to keep receipts and invoices to back up the figures on the spreadsheet.  Queries and audits from HMRC seem very rare, but anecdotally can be brutal if there is a suspicion of fiddling the books because there is insufficient evidence kept.

dinosaur66

yes

in the op case it seems a very straightforward and easy record keeping process business

i have had  about 5 interviews at my place of work when inland revenue did raids on street markets where i traded in the 80s in east london some of them where just a month or so apart

it should have been obvious who was legit as most of the traders left there stalls and legged it and the ones that stayed were the ones interviewed / they brought police with them as back up , for an hour or so but the police bored all kicked our van tyres / looked at everything we are selling /snooped in backs of van and being the east end no customers would come near until they had gone.

a few times i was called into tax offices in stratford for interview under recorded taped cassette interview but just routine and no follow up.

it has got to be 30 years since the last raid or query but my income is 20 x what i was decalring back then .