When to officially start trading?

Lee, I don't know if this is any help but, I was told only this week by my local tax office, that you must register within 3 months of becoming self employed. Now I explained that my new venture would be run alongside my current employement, and would definately make a loss to sart with. They replied it made no difference, because I was "starting a business" I was "technically" self employed and could be fined upto £1000 if I didn't declare it within the 3 months. They went on to expalin tha because my name would be attached to the business, it was sill a business (if you follow that!) and therfore had to be registered. Regards Woody.
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chuntering along in his own inimatable style, using 100 words when 10 would do!

Woody is correct about the 3 month trading rule - although I have never heard of anyone who has been seriously fined for not declaring start dates where they are not actually earning. The only way around this is if this can be classed as a hobby. As you are not charging a fee, it could be seen in this light. However if the intention all along is to charge, then this wont wash. However the more fundamental question is what income exactly is it that you will be losing ? If its unemployment benefit, then you have to be available to work to claim. If it is incapacity benefit you can still work for 15 hours a week (ish) and get it so long as you tell them what you are up to and you don’t earn very much. On a commercial point of view, you will be joining one of a large number of people offering very similar services. I do wonder how this model of yours (ie no fee until you have a client base) would actually work in practise. I would want a fee for the work I had done, as you clients may well all disappear. I don’t know what % of start up net businesses fold within the the first year, but it must be huge. You could end up with having done one heck of a lot of work, for no return. Finally you say you are going to be a sole trader. Have you considered the tax savings of a Ltd co. set up ? This might also assist with keeping under earnings thresholds, as you can pay yourself in dividends..... its funny I had someone ring me today asking similar Q's must be a popular theme ! James Smith Chartered Accountant www.uktaxshop.co.uk 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

James, I'm very interested in your post. I'm running a web development team currently and I'm seriously considering creating a limited company but I don't really understand the tax implications (or benefits?) of this which I see mentioned quite a bit. Could you maybe expand on your comment at the end of the last post? Aaron Pollock Project Manager - www.aarpol.co.uk All the web services your startup business needs - at realistic prices Domains, hosting, web design, e-commerce, online communications
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Aaron Pollock
BoSPEAK">href="http://www.bospeak.com">BoSPEAK Ltd

Lee, A 2 year deferred payment invoicing structure needs a very good contract and some legal advice! Why not use our free service to ask some questions on the pitfalls and benefits of this sort of arrangement?
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Lee Schwartz Lime One Ltd www.limeone.com 01244 852550

James,backing up Aarpol, could we persuade you to part with a little of your knowledge and just enlighten us a bit more? I too have heard about it but really not sure how it might benefit me. Kind Regards, Woody
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chuntering along in his own inimatable style, using 100 words when 10 would do!