Self Employed Help

[Guest Electric Yetis]

Just looking for a little advice from those self employed.

My girlfriend is not currently working as she stays at home to look after our youngest. To combat the boredom she recently took a nail technician (read painting nails) course and is now qualified. She wants to start doing this for friends and family, a number of whom have already shown an interest, to make a little money and more for the social side.

 

She is unlikely to make more than a few hundred pounds a year and she is not actively advertising it but could do with a little advice.

For such a small thing would she need to register as a business? I'm guessing all money needs to be declared. She is not the most savvy when it comes to things like this so naturally it has been left to me to try and work out what she needs to do.

If anyone has any tips it would be much appreciated.

Edited 6 April 2018 by pds

[Strokes]

Just now, pds said:

Just looking for a little advice for, those self employed.

My girlfriend is not currently working as she stays at home to look after our youngest. To combat the boredom she recently took a nail technician (read painting nails) course and is now qualified. She wants to start doing this for friends and family, a number of whom have already shown an interest, to make a little money and more for the social side.

 

She is unlikely to make more than a few hundred pounds a year and she is not actively advertising it but could do with a little advice.

For such a small thing would she need to register as a business? I'm guessing all money needs to be declared. She is not the most savvy when it comes to things like this so naturally it has been left to me to try and work out what she needs to do.

If anyone has any tips it would be much appreciated.

Just ring Revenue and Customs and register for a URN number. Then she will have to do a Self assessment January 2020 and beyond. I’d advise public liability insurance though, just to be safe.

[Guest Electric Yetis]

1 minute ago, Strokes said:

Just ring Revenue and Customs and register for a URN number. Then she will have to do a Self assessment January 2020 and beyond. I’d advise public liability insurance though, just to be safe.

Thanks, how come the self assessment won't need to be done until January 2020?

 

Forgot to mention I work in Insurance so that side of things is sorted.

[Strokes]

Just now, pds said:

Thanks, how come the self assessment won't need to be done until January 2020?

 

Forgot to mention I work in Insurance so that side of things is sorted.

It’s nine months after her first tax year (April 2018- April 2019) iirc. 

[syston_fox]

There was an allowance proposed a couple of years back that meant if profits were below £1,000 and it was your only source of income then there was no need to do a tax return..... not sure if that ever actually made it through the finance bill or not though. Worth looking into though. 

 

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

Edited 6 April 2018 by syston_fox

[Guest]

5 minutes ago, Strokes said:

Just ring Revenue and Customs and register for a URN number. Then she will have to do a Self assessment January 2020 and beyond. I’d advise public liability insurance though, just to be safe.

assume you mean UTR?

[Strokes]

2 minutes ago, winchesterton said:

assume you mean UTR?

Yes, sorry

 

[Guest Electric Yetis]

Thanks for the replies, having not seen or completed a tax return before is this basically a note of all incomings and outgoings?

 

I guess she should do receipts for people?

[Strokes]

9 minutes ago, pds said:

Thanks for the replies, having not seen or completed a tax return before is this basically a note of all incomings and outgoings?

 

I guess she should do receipts for people?

Yeah it’s pretty much that, if she is doing well enough you might want to get an accountant to help you complete but as a one woman band and very little tax due she can complete herself. 

An accountant can help you find things that are tax deductible to reduce your end bill but it’s only worth it if they can save you more than they cost you 

[Mike Oxlong]

Does she charge per nail or per hand ? 

 

[Strokes]

11 minutes ago, Mike Oxlong said:

Does she charge per nail or per hand ? 

 

Is he from Coalville?

[Guest Electric Yetis]

37 minutes ago, Strokes said:

Yeah it’s pretty much that, if she is doing well enough you might want to get an accountant to help you complete but as a one woman band and very little tax due she can complete herself. 

An accountant can help you find things that are tax deductible to reduce your end bill but it’s only worth it if they can save you more than they cost you 

Thanks for the response again. As mentioned she's unlikely to make more than a few hundred pounds because she is only doing it as a side/hobby when I am back from work. Is there an amount a self employed person can earn before paying tax?

 

(I have googled this but always best to get tips and opinions from people who experience it).

[Strokes]

Just now, pds said:

Thanks for the response again. As mentioned she's unlikely to make more than a few hundred pounds because she is only doing it as a side/hobby when I am back from work. Is there an amount a self employed person can earn before paying tax?

 

(I have googled this but always best to get tips and opinions from people who experience it).

I honestly don’t know, but I would assume self employed get a tax free personal allowance similar too employed. 

[syston_fox]

17 minutes ago, pds said:

Thanks for the response again. As mentioned she's unlikely to make more than a few hundred pounds because she is only doing it as a side/hobby when I am back from work. Is there an amount a self employed person can earn before paying tax?

 

(I have googled this but always best to get tips and opinions from people who experience it).

 

 

Personal allowance for most people is £11,850 this year which means you can earn that amount with no tax due

 

 

[Alf Bentley]

Yep, that personal allowance sounds correct for self-employed income tax.

However, you start paying National Insurance at about £6200 p.a. (still unlikely to affect you, by the sound of it).

You can pay voluntary contributions, even if your income is lower, if you want to clock up qualifying years for state pension, benefits etc. (though voluntary contribs are set to rise sharply, I think).

 

If your partner is only going to be earning a small amount, it's not likely to be worth her while hiring an accountant. I've never done so and I was F/T.

For a very small business like that, the accounts/calculations required are pretty simple and can be done on-line.

 

I'm sure there is info online and leaflets from HMRC about what you can and cannot claim as tax-deductible expenses, what records you have to keep etc. 

 

Normally, you're supposed to issue numbered invoices/bills for each job - receipts might be fine if you're accounting by cash received instead of invoices issued.

Re. tax-deductible expenses: basically, anything that is entirely for the business is tax-deductible (e.g. equipment, paints/chemicals, advertising, professional liability insurance etc.)

If working from home, you can also claim a proportion of household bills for any room used exclusively for the business: e.g. if you have 5 rooms and set 1 aside for her work, you can quote 1/5 of gas/elec/water/council tax etc. as tax-deductible business expenses. Though she/you will only benefit from that if above the tax/NI threshold.

 

One thing to be careful of, if she starts working more hours in future: self-assessed tax is calculated in arrears and then partly projected forward based on previous earnings......so if your earnings rise significantly from one year to the next, you can suddenly face a big tax bill to make up for your earnings being higher than projected - better to budget for this in advance if it happens. Again, though, that won't apply if she's only going to be earning a few hundred quid.

 

I've been self-employed for 19 years now and have never had a tax return challenged or had HMRC show the slightest interest in my returns, apart from accepting tax money. Years ago, I asked a Tax Office bod about this and he said that I wasn't earning enough for them to bother querying my returns.....I certainly wasn't earning megabucks but was making a F/T family income out of it (until recently), so I assume they'll be even less interested in someone earning a few hundred, unless she starts claiming large rebates or something.... 

[Guest Electric Yetis]

6 minutes ago, Alf Bentley said:

Yep, that personal allowance sounds correct for self-employed income tax.

However, you start paying National Insurance at about £6200 p.a. (still unlikely to affect you, by the sound of it).

You can pay voluntary contributions, even if your income is lower, if you want to clock up qualifying years for state pension, benefits etc. (though voluntary contribs are set to rise sharply, I think).

 

If your partner is only going to be earning a small amount, it's not likely to be worth her while hiring an accountant. I've never done so and I was F/T.

For a very small business like that, the accounts/calculations required are pretty simple and can be done on-line.

 

I'm sure there is info online and leaflets from HMRC about what you can and cannot claim as tax-deductible expenses, what records you have to keep etc. 

 

Normally, you're supposed to issue numbered invoices/bills for each job - receipts might be fine if you're accounting by cash received instead of invoices issued.

Re. tax-deductible expenses: basically, anything that is entirely for the business is tax-deductible (e.g. equipment, paints/chemicals, advertising, professional liability insurance etc.)

If working from home, you can also claim a proportion of household bills for any room used exclusively for the business: e.g. if you have 5 rooms and set 1 aside for her work, you can quote 1/5 of gas/elec/water/council tax etc. as tax-deductible business expenses. Though she/you will only benefit from that if above the tax/NI threshold.

 

One thing to be careful of, if she starts working more hours in future: self-assessed tax is calculated in arrears and then partly projected forward based on previous earnings......so if your earnings rise significantly from one year to the next, you can suddenly face a big tax bill to make up for your earnings being higher than projected - better to budget for this in advance if it happens. Again, though, that won't apply if she's only going to be earning a few hundred quid.

 

I've been self-employed for 19 years now and have never had a tax return challenged or had HMRC show the slightest interest in my returns, apart from accepting tax money. Years ago, I asked a Tax Office bod about this and he said that I wasn't earning enough for them to bother querying my returns.....I certainly wasn't earning megabucks but was making a F/T family income out of it (until recently), so I assume they'll be even less interested in someone earning a few hundred, unless she starts claiming large rebates or something.... 

Thanks for the reply. All very useful.

[Buce]

 

A question on a similar theme:

 

Is there a lower age limit for running a business? My daughter is 15 and planning to go to uni, but in the meantime would like to earn money with a business venture.

[Strokes]

Just now, Buce said:

 

A question on a similar theme:

 

Is there a lower age limit for running a business? My daughter is 15 and planning to go to uni, but in the meantime would like to earn money with a business venture.

Not that I’m aware of buce, the only stumbling blocks may be any licences or credit if needed (which are unlikely).

What is she planning on doing?

[Buce]

1 minute ago, Strokes said:

Not that I’m aware of buce, the only stumbling blocks may be any licences or credit if needed (which are unlikely).

What is she planning on doing?

 

She's asked me to teach her what I do.

 

I'm willing to do that but I think it's important for her self-esteem and character development that my input is restricted to a minimum.

[Strokes]

2 minutes ago, Buce said:

 

She's asked me to teach her what I do.

 

I'm willing to do that but I think it's important for her self-esteem and character development that my input is restricted to a minimum.

That sounds fantastic, I love teaching my kids things, to help guide them into a business would be a great achievement.

[Buce]

1 minute ago, Strokes said:

That sounds fantastic, I love teaching my kids things, to help guide them into a business would be a great achievement.

 

Yeah, I think it'll be good for her - there is more to education than what they teach in the classroom. Going to uni can open a lot of doors but it doesn't come with any guarantees, so having another string to her bow will be a useful safety net.

[Houdini Logic]

If your profits are low, which it sounds like they will be, then you/she can fill out a 3 line tax return rather than the whole Self Assessment form. It takes minutes, once a year.

 

Just keep a log of all money in and out. You will probably have no liability at all with low profits, so definitely worth being registered correctly with HMRC and definitely do your own accounting IMO

[Strokes]

1 hour ago, Buce said:

 

Yeah, I think it'll be good for her - there is more to education than what they teach in the classroom. Going to uni can open a lot of doors but it doesn't come with any guarantees, so having another string to her bow will be a useful safety net.

Definitely, I’ve often thought that making education choices that can shape your life at such a young age is hard, especially without any real life experience. 

So giving kids as much exposure to life and decisions away from the curriculum, is essential to help them choose wisely. Best of luck too you both, let me know how it goes please.

[Buce]

1 minute ago, Strokes said:

Definitely, I’ve often thought that making education choices that can shape your life at such a young age is hard, especially without any real life experience. 

So giving kids as much exposure to life and decisions away from the curriculum, is essential to help them choose wisely.

1

 

I'm sure you're right. I left school not having a clue about what I wanted from life but soon realised that working as a wage slave wasn't it.

 

1 minute ago, Strokes said:

 

Best of luck too you both, let me know how it goes please.

1

 

Thanks, bro, I will.