samy007 started this topic @ 08:12 on 06/05/2008
Hi I have a friend who has a spare-time business - an online dating website he started with another friend abut a year ago. The website allows free and premium (paying) members. They currently have only about 15 paying members - but in the last 6 months have earned approximately £500 from paying memberships. They haven't formed or registered any kind of company in the UK yet and are trying to work out how to take the business forward as they have some advertising campaigns coming up. My question is it it illegal for them to be earning money from the website or have the business running without it being registered as a company? I think it is but he thinks that as they have not earned much money it is not necessary to register or form a company until they do. What about the income - does that have to be taxed and who would it be taxed under if there are only 2 people in the business and even if it is only about £500 for the year?
RE: Is it legal to be earning money from a website business but not be a registered or incorporated company?
Anna Chandley | 02/06/2008 01:42 PM
You do not need to form a company to run a business. A business can be run as a sole trader or as a partnership which would be the case for your friends.
It is however necessary to register with HM Revenue and Customs as self employed within 3 months of commencing trading. Tax returns will need to be submitted each year regardless of the level of profits. If a business is run as a partnership then a partnership tax return needs to be completed and the income also shown on each individual partners' tax return.
Self employed individuals are also required to pay Class 2 national insurance although you can apply for an exemption for low earnings which is probably the case here.
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Anna Chandley ACA
www.BegbiesChettleAgar.co.uk
