Side hustle

smithy_789 · 7 October 2019 at 3:03PM

Hi,
I currently have a full time job and in the 40% bracket.
I'm setting up a website with an online shop as a side hustle as a bit of a fun challenge and to learn.

I will be buying my product from a sole UK supplier and running the business from my garage part time. I do not expect this to make me a millionaire but I do expect it to be profitable.

I'm looking for your advice as to whether to set up as a sole trader or a limited company. I'm also looking to understand why as i can figure out the how.

Thanks

00ec25 · 7 October 2019 at 9:04PM

go and talk to an accountant, simply stating you are a 40% taxpayer is no where near enough info to make an informed decision on one v the other as it will depend on your holistic financial circumstances including whether you need the money or would see it as a means to increase your tax efficiency through, for example, pensions

susanbraintree · 15 October 2019 at 1:47PM

Be prepared to spend a lot on Google/Bing/Facebook ads etc. My fiance started an online bedroom business and was amazed at how much PPC style ads ended up costing.

Disjoint · 28 October 2019 at 10:28PM

I sole traded avoided me the hassle.
I was in that bracket of yours running a property management business on the side. My in-house accountant told me I should set something up so that I can put some cash in a pension as more tax efficient than an ISA.

Bottom line is I file my taxes myself, and it's a lot easier if you are a sole trader. If you really start making money then you can think of something else.

Again this is my non-expert opinion.

As a side note, I left my job to pursue my own projects 6 months ago. Still running as a sole trader as I don't make meaningful amount of cash and I need the money to live. Also I have kids + a mortgage and need to feed them so pension is an after thought for now. You can deduct your business expenses etc.. as a sole trader as well.
Now if I get sued - they can go after me but you can take insurance against this and when I looked at it it was like GBP 100 a year, reminds me that I really need to take that insurance...

Again this is what I do, and I might be completely wrong with it.
I set up last month a limited company with company house for a project I am doing with a partner - if we do get the financing I'll pay an accountant to do the math, but the income from this should be meaningful enough to pay for an accountant. For the time being I am doing property construction and management and trade as a sole trader.

scaredofdebt · 29 October 2019 at 5:02PM

I'd start as sole trader and see how the business develops, you can always change later. It's generally easier and cheaper to start as a sole trader.

motorguy · 29 October 2019 at 8:18PM

smithy_789 wrote: »

Hi,
I currently have a full time job and in the 40% bracket.
I'm setting up a website with an online shop as a side hustle as a bit of a fun challenge and to learn.

I will be buying my product from a sole UK supplier and running the business from my garage part time. I do not expect this to make me a millionaire but I do expect it to be profitable.

I'm looking for your advice as to whether to set up as a sole trader or a limited company. I'm also looking to understand why as i can figure out the how.

Thanks

Do your costings first. Very very hard to make money these days online without economies of scale behind you or a value add.

Once you factor in fees, charges, advertising, P&P costs, packaging, factoring in for returns, etc it can be almost impossible to turn a profit from what might be a slim margin in the first place

Anthony673 · 31 October 2019 at 2:21AM

Don't worry about that for now, focus on getting sales. Once you have profits coming in, it'd be a good time to determine whether you want to run as a sole trader or a limited company. Both have their own share of benefits based around business writeoffs.

Side hustle

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