advice please on new business?

freebie_junkie · 22 September 2006 at 11:14AM

hi, i know its not until april but im already getting a bit worried about doing a self-assesment tax return as i dont know whats invloved. how much money should i put aside to pay taxes, i ahev no idea what teh % is (i know taht full-time students only ahve to pay after £5000 proffit, so i dont know if i will have to pay anything at all coz its only a part time job for me to get myself through my 3rd year of uni)

i just registered as a sole trader in july and im selling stuff (free samples and beauty stuff i pick up for peanuts in sales) on ebay and markets.

i havent done a market yet but i know taht i need public liability insurance, i got a quote for that, stock and personal insurance up to million pounds each, plus a years membership to teh market trader's federation for £72, is that cheap?

im keeping all my reciepts/invoices stapled in a book and have written down all the 'ins' and 'outs' both on a daily and monthy basis, so i know exactly how much im taking and how much is proffit and how much is going out also. i keep reciepts for postage, envelopes, bubble wrap, ebay fees, half of my internet costs (coz i only use it half teh time for ebay) etc. (can anyoen suggest anything ive forgotten?)

is there anything else i need to do and is there some help the inland revenue can offer to young people whove just started up? i tried ringing tehm up but they were really unhelpful.

also, how long does it take for them to set up that direct debit for ni contributions? i still havent gotten any paperwork back off them from filling in both that dd form and teh actual registration form. i want to go to the wholesalers in cheetam hill (tonne sof them!) but until i have any official documentation showing im registered as a sole trader i cant get a trader's card so cant use those particular wholesalers which arent open to teh public.

any advice from long-standing traders would be most welcome, im good at selling to people coz ive done car boots since iwas 4 and i have a retail management diploma, but the books and that side of things is very new to me.

Tallymanjohn · 22 September 2006 at 11:56AM

Unusual that tax office wasn't helpful - maybe you caught them on a bad day - our local one is brilliant - run seminars for new businesses etc. Suggest you start using a spreadsheet to keep track of income/outgoings so you can keep track on a daily basis. There are manual ledgers you can use but as you have PC make use of it. Pub liability sounds about right - mine was £90odd this year, should shop around I suppose. If you're based at home you can claim a percentage of heating/lighting costs - based on size of area used - need to clarify with taxman if it isn't a complete room (I have a study so it's easier for me). Telephone costs, if you have an extra phoneline. Mileage @ 40p/mile if you need to travel to collect/deliver etc. - maximum's about 10,000miles I think. If your turnover is less than £15,000 then you need to ask for a short tax form - 4 pages, easy to complete. If it's over £15,000 then you'll get a full tax form - may need to consider paying an accountant to help in that case. Tax is currently just under 1/4 of profit after your personal allowance - if you use a spreadsheet you can easily keep a running total of profit & it's easy to see what you'll need to keep back for HMG. I don't think you'll get much official paperwork from the taxman - it's a while back for me now, but I don't think they even give you your company number in written form any longer. As far as wholesalers are concerned you may need to pay as a cash customer elsewhere initially just to get some invoices for over £50 or £100 then use those for getting Makro card or whatever.

Cannot help on the NI as I still do a bit of PAYE work & that covers it.

freebie_junkie · 22 September 2006 at 1:21PM

do tehy not write to you to tell you theyve recieved your paperwork and to tell you when your direct debit will commence? how would you know otherwise?

i dont know about heat and light as i only have 4 rooms in total in my flat, kitchen, bathrroom, bedroom and study/livingroom/dinigroom/tv room in which my computer is!

i feel much more comfortable using pen and paper to record evrything, and i have two charts i made on word and printed out, one for daily ins and outs and one for monthly totals. for some reason i cant seem to do it teh same on computers, i think it might be my dyslexia/dyspraxia or something, i cant seem to connect what i type to what i see on teh screen, hence why i make so many mistakes on here! i have proff of all ins and outs in my book so if anyoen ever wanted to see it its all justifiable.

i cant see me making more than £15,000, its only part time and its my 3rd year so i will have to spend most of my time doing my dissatation anyway.

teh milage thing is helpful, as to get to and from markets you ahve to drive, obvously.

thanks very much, great advice

Pennywise · 22 September 2006 at 2:57PM

Just a couple of other points...

Remember you pay tax on profits, not what you draw out. It is quite possible that your profits are far higher than your drawings which would give you quite a shock tax demand.

For example, you have sales income of £15,000, total expense payments of £10,000 and you have taken £5,000 out as drawings. You would probably think that your taxable profit was £5,000.

BUT, you need to account for any stock you have. If, say, you have £1,000 of stock left, then your expenses are only £9,000 and so your taxable profit would be £6,000. (Just remember to add back the opening stock next year and deduct the closing stock, and so on each year).

The same applies for timing differences. I.e. a sale is accounted for tax when it is made, not when you receive the money. Likewise a purchase is accounted when you have the goods or services, not when you pay for it. Similarly to stock, at each start and end of a year, you have to adjust for these items.

freebie_junkie · 22 September 2006 at 3:20PM

thanks, thats useful before i go to the wholesalers! but in teh meantime i only have free samples (obvously i didnt pay owt for those!) and a few bits that havent yet sold, i pretty much list stuff as i buy it or get it free!

advice please on new business?

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