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Costs involved with being registered as a business (Haize)HaizePerennial Joined: 13 Apr 2006 Posts: 389 Posted: 20 May 2006 06:42 am Post subject: Costs involved with being registered as a business -------------------------------------------------------------------------------- I found out once before that there was a fee (£100?) per year to have your business registered. Can anyone explain to me at what point you *have* to do this, as if you were making, say, £200 per year from a sideline, it would not seem right to have to pay the £100! Also, do you automatically have to do the full tax return type forms? However, I also understand that there are benefits to being registered, like for instance, sometimes being able to buy things from people at reduced costs (my sister does this with her washing liquid and so on, despite being a cake decorator ). Anyone care to discuss their own experience of this? _________________ Status of our house: No heating, no bathroom, no kitchen. Washing machine, fridge, and boiler sitting around in boxes. No door on room with toilet! http://www.manicfish.com/myblog.php?bbn=haize Back to top Haize Perennial Joined: 13 Apr 2006 Posts: 389 Posted: 20 May 2006 08:52 am Post subject: -------------------------------------------------------------------------------- Quote: If you are not sure whether this work counts as self-employment, ask yourself these questions: * Do you present your clients with invoices for the work that you do for them? * Do you carry out work for a number of clients? * Are you responsible for the losses of your business as well as taking the profits? * Can you hire other people on your own terms to do the work that you've taken on? * Do you have control over what work has to be done, how the work has to be done and the time when and place where the work has to be done? * Have you invested your own money in your business or partnership? * Do you provide any major items of equipment which are a fundamental requirement of the work you carry out? * Do you have to correct unsatisfactory work in your own time and at your own expense? If you can answer "yes" to most of these questions then you are probably self-employed already, and should let HMRC know this immediately if you have not already done so. You may be fined £100 if you fail to register within three months of becoming self-employed. There is no fee for registration. Still not sure about NI yet though. _________________ Status of our house: No heating, no bathroom, no kitchen. Washing machine, fridge, and boiler sitting around in boxes. No door on room with toilet! http://www.manicfish.com/myblog.php?bbn=haize Back to top Lottie Evergreen Joined: 16 Feb 2006 Posts: 740 Posted: 20 May 2006 08:54 am Post subject: -------------------------------------------------------------------------------- If you only have a £200 a year turn over is it worth registering? It depends on your turnover and other taxable income. If it is below the tax thresh hold, so long as you keep records for inspection to prove it, then (unless the law has changed) you do not have to register as a company but do as self employed - you need to check this out. You can now register a company on line there are lots of sites that will do this for you and the charges vary. You do not have to pay an accountant if your turnover does not warrant it. I don't know this threshhold as I no longer do the accounts for small businesses, but you can easily find out. And there is a phone number you can call to find out all these things. If you are a limited company each year you have to pay to keep the company name registered and you have to send in all your accounts. You will need one director and one company secretary (minimum) You will need a bank account which you can not open unless you have registered and you have to show your compay registration certificate to open the account. Most banks off a new small business free banking for the first year - but there after you pay bank charges for each item that is listed on your bank statement. It is not worth registering for VAT purposes below the recommended amount set out by the Inland Revenue - unless you are setting up a business with high start up costs that incur a lot of VAT that you would be able to claim back. For instance - plant and machinery - or office equipment etc. Bear in mind that you have to do VAT returns and also charge VAT on goods that are VAT able - which is most things these days including services. The best advice I can give is to get proper advice which is readily available and usually free. The CAB should be able to point you in the right direction with contacts if you can't find them in the phone book or on the web. Your other message popped up whilst I was typing this. You can of course be self employed and do your own accounts etc and submit them yourself - but I thought you were talking about opening a company _________________ I am at that purple age! Back to top Haize Perennial Joined: 13 Apr 2006 Posts: 389 Posted: 20 May 2006 09:01 am Post subject: -------------------------------------------------------------------------------- Thankyou Lottie Was a bit confused about the difference between being a sole trader and starting a limited liability company... And £200 per year was just my example to express my question of what the threshold is before you need to be registered and so on. I'd hope to make more than that _________________ Status of our house: No heating, no bathroom, no kitchen. Washing machine, fridge, and boiler sitting around in boxes. No door on room with toilet! http://www.manicfish.com/myblog.php?bbn=haize Back to top Jesse Site Admin Joined: 02 Feb 2006 Posts: 2188 Location: West Sussex Posted: 20 May 2006 10:00 am Post subject: -------------------------------------------------------------------------------- It costs nothing to be a sole trader, all you need to do is register with the Inland Revenue within 3 months of trading as self employed. Being a sole trader will mean keeping records of your incomings and outgoings and completing a self assessment each year, you can do that yourself or have an accountant do it for you. Accountants fees vary but ours charges in the region of £300 per year for doing the tax returns and furnishing us with an audited set of accounts (useful if you ever need to prove your income for loans, selling your business etc). You can employ staff if you are self employed. If you do choose to employ staff then you need to do their tax and NI each month and file paye returns each year in May. You also need to have employers liability insurance and it would be worth checking health and safety issues. If your business is in the construction industry then there is the construction industry scheme which you would have to familiarise yourself with too. If you are self employed it is worth registering for class 2 NI (approx £8 per month), the rest of your NI contributions will be worked out and paid for in your self assessment. To register as a limited company it costs approx £180 through an accountant, you can do this yourself and it would cost less, from vague memory I think it's around £50. Our accountant charges £1000 per year to submit a set of accounts to Companies House. There are exemptions for small businesses from submitting audited accounts but an accountants report must still be submitted, there's information about that here: http://www.companieshouse.gov.uk/about/gbhtml/gba3.shtml#four scroll down to chapter 4, audit exemptions for small companies. This website will have a lot of information about forming a limited company: http://www.companieshouse.gov.uk/about/gbhtml/gbf1.shtml The VAT threshold changes each year (so it seems) but last time I checked it was in the region of £56K, if your turnover expects to be above that then you must register for VAT and submit VAT returns etc. Read up on this, some businesses are better off registering for VAT (even if their turnover is below the threshold) and some businesses are better off not registering for VAT. Consider carefully because I've heard that once you register for VAT it's very difficult to de-register! There is some useful information here http://www.hmrc.gov.uk/businesses/tmastarting-up-in-business.shtml Setting up as a sole trader is the easiest, cheapest and quickest way of starting a business. Often people start as sole traders and then move on to registering as a limited company once the business is working and making a reasonable turnover. There is an awful lot of information available through the inland revenue website, get it and read it. A lot of it might sound daunting but once you get to grips with all the paperwork it isn't that bad and the helplines I have found very friendly and helpful...of course they would be, they want your money at the end of the day! Back to top EchoChild Moderator Joined: 05 May 2006 Posts: 48 Location: Devon and Dorset Posted: 20 May 2006 10:42 am Post subject: -------------------------------------------------------------------------------- In addition to everything that jesse said..wow !..the simplist way to keep accounts is using a daily cash book. Open up an account for the business and try to use cheques for everything you buy for the business (stock bills etc..) and make sure you invoice for everything you sell..so you will have BCF (balance carried forward from previous day) C/O (cash out today stock etc) C/I) (cash in) you can then reference this against invoice book for cash in and bank statement for cash out you can either use 1 page per week or day...and is the accountants prefered way..( sort of a double entry system but very simplified and easy to trace) then if you pay once a year to have a P&L and end of year trial balance drawn up, Providing that everything is in order youve got all of your receipts, statements and invoices, I would be surprised if your accountants bill reaches £200! If that is still a little too complicated there are great inexpensive software packages out there Your best bet is too speak to an independant accountant they rarely charge for advice as they are after new customers( my wife is an independant accountant and always helps new businesses startup..she finds the repeat business is great ! ) Good luck again! _________________ Barrie L Clarke Founder EchoChild Project www.echochildproject.com Back to top D Moderator Joined: 15 Feb 2006 Posts: 528 Location: North Yorkshire Posted: 20 May 2006 11:09 am Post subject: -------------------------------------------------------------------------------- I would agree with everything said above. My business is registered and I have an accountant. Lots of people said it was possible to do my own accounts but it is a bit more complicated for me because of my teaching work, ie this is taxed at source, as is the NI & my Teacher;s Pension contribution ( one of the better schemes around!) Another reason I have an accountant is for the simple reason that my business is concerned with art work/calligraphy etc and it is pretty focussed activity. If I am working I have my creative/concentrated/focussed head on and I do not like to be interupted/side tracked, ie if I had to fill in forms for the tax man this would stress me out and my work would suffer, hence paying my accountant to do it and keep everything above board. Dx _________________ my new blog is here...early days yet! http://www.manicfish.com/myblog.php?bbn=mrsnesbitt Back to top Lottie Evergreen Joined: 16 Feb 2006 Posts: 740 Posted: 20 May 2006 01:38 pm Post subject: -------------------------------------------------------------------------------- You are quite right there D. Each to their own skills. That is why I was a a Financial controller and not an artist. To have been an artist would have been far pleasanter! (Bad grammar sorry). Jesse has certainly done the research Haize - all the info is just a click away - but a lot for you to digest. But is it not as daunting as it first looks. Just sit down - which you have already done I guess. Make a simple business plan - ie. what you want to do etc. Costs, income, blah blah then just look up the areas that apply to your needs. Jesse - that was great getting all those sites - I reckon it might be good to have it as a reference topic on its own. _________________ I am at that purple age! Back to top D Moderator Joined: 15 Feb 2006 Posts: 528 Location: North Yorkshire Posted: 20 May 2006 03:50 pm Post subject: -------------------------------------------------------------------------------- Quote: Make a simple business plan Yes so true Lottie! Keep it simple and basic. If you need a hand shout up! Dx _________________ my new blog is here...early days yet! http://www.manicfish.com/myblog.php?bbn=mrsnesbitt Back to top |