To be Sole Trader

ab713 · 5 November 2019 at 2:22AM

Hello All,

Newbie here, apologies in advance if I don't follow the rules.

I want to sell products on ebay and Amazon. I am still thinking what products to sell. As per my research, I need to have sole trader account.

My question is: I am not 100% sure if I am indeed going to sell but I would like to ask if for now I set up the sole trader account and for time being I use current personal bank account as I am not making any money yet and is it OK if I don't do any self assessment for HMRC?
For now I just want to have sole trader company but don't intend to start earning any money. Will be thankful if anyone can advice.

Gareth83 · 5 November 2019 at 1:25PM

You can trade from your personal account no issue, but be sure to record what is business and what is personal.

Some banks frown upon it but they'll soon tell you if you need to upgrade

00ec25 · 5 November 2019 at 3:40PM

you appear to be confusing some issues

in tax terms you will be "trading"
you will be doing so using a business seller account on eBay (eBay will eventually cotton on to you if you try and use your ebay personal account) rather than selling direct from your own website

for bank purposes you can "get away" with a personal bank account until the bank themselves notice you, most don't until you start putting big sums through with high transaction volumes

As you will not be operating a limited company, you will be a self employed business operating as a sole trader
technically you need to register as self employed with HMRC
https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

HOWEVER, I suspect it will take a whole time period before your business gets going by the sound of your vagueness so far, and therefore you will be claiming the £1,000 trading allowance and thus unlikely to have a net taxable self employed income
https://www.gov.uk/government/publications/income-tax-new-tax-allowance-for-property-and-trading-income/income-tax-new-tax-allowance-for-property-and-trading-income

ab713 · 5 November 2019 at 8:17PM

Thank you for the answers.

Here is my conclusion and further questions:

1. I can use my personal bank account for sole trader.
2. I would need eBay business account to sell products.
3. I don't need to register to HMRC as I don't believe for next 6 months I will be able to make more £1000 profit. If I indeed make a profit then I need to register and declare using self registration. Is this correct?

4. let's say after 6 months everything is set up and I indeed make a profit of more than £1000: I am working full time now and in my employment contract there is no clause that could stop me selling products online. I understand as soon as I register to HMRC, my tax code will change? Is my understanding correct? I don't want to inform my employer that I am doing some business of selling stuff, will the change in tax code tell them I am doing something else along with full time job? Do I need to tell my employer about something else I am doing apart from full time job? Do I have any liability to inform this?

00ec25 · 5 November 2019 at 9:03PM

1. yes (bearing in mind the bank may eventually object)
2. yes, eventually, there is a threshold beyond which you must use a business account, surely you can look up the rules for yourself on ebay
3. technically you must register as soon as you have a self employment income, even if that is only £1 (note income, not profit). Whether you need do a tax return is a different question

4, why do you think your tax code will change? Yes HMRC make mistakes, but not something as basic as that. A tax code relates to collecting tax under PAYE, not self employed income taxed via tax a return, not via a (coded) payroll. Your tax code will not change until you yourself ask HMRC to alter it - which frankly would be a stupid thing to do unless you are so bad with money that you cannot discipline yourself to set aside part of your profits to pay the tax when it is eventually due

the trading allowance means income - £1000 = taxable profit. If that sum is £0 you have no tax to declare and no requirement to do a tax return. If that is >£0 you do, and as it is self assessment it is your responsibility to do the tax return when you need to.

your employer has nothing to do with it. You've already said your contract is silent, so your employer has no need (or right) to know anything

ab713 · 5 November 2019 at 9:38PM

Thanks again.

Another scenario: If my income is less than £1000, I decide that this ebay thing is not for me so I wish to delete Sole trader account. Is it possible to delete it or inactivate it? As I have not registered to HMRC so no question of informing them about closing of sole trader account.

ANDY597 · 5 November 2019 at 10:32PM

Recommend you look at starling bank for cheap free business account.

Hope this helps.

ab713 · 5 November 2019 at 10:43PM

Thanks for the tip. I do have current account with starling bank so can check for there business account.

ab713 · 5 November 2019 at 10:44PM

I am just waiting to understand if we can decide to delete or close or inactivate sole trader account if I am not interested in pursuing online sales business...

00ec25 · 5 November 2019 at 11:54PM

ab713 wrote: »

I am just waiting to understand if we can decide to delete or close or inactivate sole trader account if I am not interested in pursuing online sales business...

as i said, you are using words that I doubt you fully understand or your standard of English can't convey what you think you mean when using them

there is no such thing as a sole trader account

who do you think you have such an "account" with?

To be Sole Trader

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