SB - setting up freelance web design company (VAT and other questions)

lellie · 9 March 2005 at 5:43PM

Hey.

I've been web designing for a few years now and have done some commercial work - I am hoping to establish my own small business - a freelance web design company and was looking for some advice.

I've already got a web design portfolio - which I'm also redesigning at the moment - this will be my main method for obtaining work - people can contact me after looking at my past work for a website. I've got a fair idea of where things are going with this.

However I have some questions:

* Would is be wise to become VAT registered - this would enable me to get computer equipment/software cheaper when I need to upgrade etc and allow me to get a trade account with aria - however wouldn't this mean I'd also have to charge VAT for my services and how would this work? I have very little knowledge about all this.

* I am considering a part time course (perhaps CIW or preferably something teaching flash/php) in order to get formal qualifications - although I am experienced and knowledgeable there are a few things I'd like to expand on and get more practice at - however as far as I can tell these are costly and I don't know if I can fit it in between my current studies.

Which leads onto:

* Are there any grants available for young people like me setting up similar businesses - I'm currently a history student at manchester university and this will business will be in addition to these studies - although the business will not be that expensive to set up I could do with some extra cash to fund promotion (printed flyers/business cards or similar). Also if I did a course in addition to my degree a grant would be helpful in funding such course.

* Should I get a seperate business bank account for my business - I could just use my personal account but would it be wise to have a business account - are there any benefits to this.

* Also - a frequent question but best online credit card processor for ecommerce - I'd like to offer ecommerce solutions as part of my company but would like to use a decent card processor - I currently just use paypal but are there better?

Finally - does anyone else have any tips?

newsmonkey · 11 March 2005 at 10:47PM

lellie wrote:

* Would is be wise to become VAT registered - this would enable me to get computer equipment/software cheaper when I need to upgrade etc and allow me to get a trade account with aria - however wouldn't this mean I'd also have to charge VAT for my services and how would this work? I have very little knowledge about all this.

If you become VAT-registered, you'd need to charge 17.5% VAT on the web design services you sell. In return, you can claim back the VAT you pay on stuff. This involves filling in a VAT return (quarterly, I believe).

For example,

sell 4 websites per quareter, at £1000 each. = £4000 + VAT at £700
but you bought a computer this quarter, costing £1500 = VAT paid at £262.50

VAT received = £700
VAT paid = £262.50
so you owe the govt. £437.50 this quarter

* Should I get a seperate business bank account for my business - I could just use my personal account but would it be wise to have a business account - are there any benefits to this.

I'd strongly recommend getting a separate sole trader account. Remember you'll also need to register with the Inland Revenue, National Insurance etc.

Savvy_Sue · 12 March 2005 at 6:28PM

lellie wrote:

* Are there any grants available for young people like me setting up similar businesses - I'm currently a history student at manchester university and this will business will be in addition to these studies - although the business will not be that expensive to set up I could do with some extra cash to fund promotion (printed flyers/business cards or similar). Also if I did a course in addition to my degree a grant would be helpful in funding such course.

Could try The Prince's Trust. Possibly worth asking at your Uni Careers Office.

lellie wrote:

* Also - a frequent question but best online credit card processor for ecommerce - I'd like to offer ecommerce solutions as part of my company but would like to use a decent card processor - I currently just use paypal but are there better?

Search the threads on this board for discussions about this! I think 'no simple answer' sums it up ...

For other advice, others have spoken highly of local Businesslink - I think that's what it's called - for general advice, so worth trawling other threads about starting new businesses from that point of view.

Savvy_Sue · 12 March 2005 at 6:29PM

And a final thought: talk to the IR about how / when self-employed people pay back their student grants!

lellie · 13 March 2005 at 5:36PM

Savvy_Sue wrote:

And a final thought: talk to the IR about how / when self-employed people pay back their student grants!

that's a good point...

lellie · 13 March 2005 at 5:44PM

newsmonkey wrote:

I'd strongly recommend getting a separate sole trader account. Remember you'll also need to register with the Inland Revenue, National Insurance etc.

hmm.. any ideas which?

also registering with IR/NI - how does this affect the fact I have a part time job at uni also.. my income from web design will probably be very irregular - especially while establishing myself..

Savvy_Sue · 14 March 2005 at 8:33PM

lellie wrote:

hmm.. any ideas which?

Nope. It's been discussed elsewhere on this board so you could start by looking for those threads and skimming through but because banks change their t&c you will need to check out for yourself what you need and what is on offer.

lellie wrote:

also registering with IR/NI - how does this affect the fact I have a part time job at uni also.. my income from web design will probably be very irregular - especially while establishing myself..

Initially it doesn't: you carry on paying tax and NI as appropriate for your pt job but YOU must keep a record of all your income from your freelance work and declare it at the end of the tax year. The point of registering is to make sure IR send you a tax return (so you don't 'forget' to declare income and have it catch up on you a few years down the line). And apparently there's a fine if you don't do it within a certain timescale. Give them a ring, they are usually very helpful and friendly in the local office.

lellie · 15 March 2005 at 2:26PM

Savvy_Sue wrote:

Nope. It's been discussed elsewhere on this board so you could start by looking for those threads and skimming through but because banks change their t&c you will need to check out for yourself what you need and what is on offer.

Initially it doesn't: you carry on paying tax and NI as appropriate for your pt job but YOU must keep a record of all your income from your freelance work and declare it at the end of the tax year. The point of registering is to make sure IR send you a tax return (so you don't 'forget' to declare income and have it catch up on you a few years down the line). And apparently there's a fine if you don't do it within a certain timescale. Give them a ring, they are usually very helpful and friendly in the local office.

fair enough - that's ok then - as I shouldn't be paying tax at the moment (although I am and will get it returned at the end..) blah I hate tax. I shall get that sorted then when I get the chance..

camstop · 19 March 2005 at 12:32AM

First things first...savvy your on the ball as usuall

Lellie, are you doing this as a business or a stop gap ?

On the vat question, if your selling to other businesses then it is advised to go VAT registered as they wont be bothered about the vat.

SB - setting up freelance web design company (VAT and other questions)

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