Tax etc whilst in full time employment

You raised a lot of issues here so I will try to cover a few:

- You only register with companies house if you are setting up a company, which you have said that you are not.

- Both you and your partner(s) must inform the Inland Revenue with 3 months of starting the business. You can find out more about this at the HMRC web site here:

http://www.hmrc.gov.uk/selfemployed/iwtregister-as-self-employed.shtml

HMRC also produce a really simple book for start up businesses like yourself, which I suggest you read. It sounds boring but it really will not take much of your time and will avoid any mistakes / fines etc

Follow this link for the book:

http://www.hmrc.gov.uk/selfemployed/fagir28.shtml

- The next thing is to make sure you keep your accounts, which the above book explains how to do.

This is the simple answer for now and as things progress you will probably need to get some professional help.

Hope it all works out for you and good luck.

Similarly to BHAVIT1 Before I dive in to being self employed as a sole trader and fully employed also, I have a few specific questions I'm strugling to answer.

1) I'd obviously have a seperate account for the self employed purposes, with my employed wage being paid to my normal current account.
If I was to put money in the self employed account before I start trading would I have to pay tax on that "investment" amount?
Additionally would I have to pay tax on any other funds I put in from my personal account should the business need it?

2) I'd like to keep a percentage of incoming funds to pay the tax bill, what percentage should that be? (I currently earn £17.5K pre-tax in my employment if that has a bearing).

2b) Should that percentage be of profits or all incoming funds?

3) Would I need to pay more N.I.? as I currently pay this in my full-time employment.

4) I do intend to get an account to look over everything each year, I'll keep a book of all sales & purchases / invoices & bank statements, and provide them with this to perform the tax return, will that be me covered with regards to tax?

5) I understand a tax return needs doing each year after I register as self employed, will it be possible to return to normal (no tax return) if it doesn't work out and I cease trading?

6) Are there any resources / websites you can suggest so that I can get further information about dealing specifically with this "Dual Status"?

Any info appreciated.

Trinode,

1) Any capital you put into the business is not taxed - only profits are taxed.
2) 1/3
2b) Profits
3) Yes, this is included inthe 1/3. You may also need to pay class 2 NI (£2.05 per week) if your profits exceed £5k per annum
4) Should be - I would suggest you speak to your accountant now so you can ensure you are keepign the right records. Not much point asking 18 months later and having a nightmare doing the books again from scratch! I have some free excel templates if you need them. Drop me an email if you would like a copy.
5) Yes
6) There isnt really anything special to do that you dont do as a self employed person.

Hope thats helps

Regards,
------------------------
James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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

re: 3) is that still applicable even though I'm exceeding £5k in my other employment?

If so that's the kind of thing I'm worried about, little things that would catch me out, allowances already used etc.

Is it generally once per year small businesses need the accounts doing? (obviously book keeping would be done daily.) and all the NI and tax paid in a lump sum?

What would you say would be the average cost for you to do the return for a sole trader with decent excel sheets covering say 1000 transactions? (100 customers for 10 months).

It's nice to see a professional helping others with no strings attached.

I'd like to see those spreadsheets, but am reluctant to post my e-mail address here, last time I did that (different forum) I got so much spam I had to abandon the e-mail account.

Are you reachable at the general e-mail address on your website?

Thanks,

Anthony

Anthony,

Glad to be of help.

Re 3, it’s only the profits on the business that are relevant not other earnings. This NI (the £2.05) is due quarterly and is normally collected by HMRC via DD. The rest of the tax along with your tax return is paid annually. Self assessment is an annual process, with your first period ending the 31/3/08 if you are starting a business now.

As I’m sure you will understand I can’t really quote you publicly and without discussing your business in more detail with you, but some guide prices are on my website here, it shouldn’t be very costly to have this done.

http://www.jamesesmith.co.uk/fees.htm

As I say if you would like a copy of the excel sheets please send me an email either using the address on the site or the contact form, all of which will get to me. I quite agree about not posting email addresses publicly on the forum.

http://www.jamesesmith.co.uk/contact.htm

Regards,

------------------------
James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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