Starting My Own Business

In terms of structure, in your position I would generically suggest being a sole trader until you have proven your business model, it isn’t that hard to switch later on.

You may well be able to register a company for £25, but this is highly deceptive - it will cost you the best part of £1,000 getting the thing run properly and all your accounts filed. This is not something most people are able to do themselves - I actually file accounts for several qualified accountants who know enough to know they don’t know how to do it properly. For a sole trader you may just about be able to do your own tax return, although if you want to get it done properly you would be talking a couple of hundred pounds.

Not being a limited company does however make it a little harder with suppliers - some may insist upon it. Merchant accounts won’t be a problem.

The real question however I think you have is why do you think you can make any money in this market? Margins are wafer thin and you won’t have any real buying power? What is your niche? You have chosen a huge area there. Why will people know about you? Why will they buy from you? How are you going to compete? If you can work out what the major players dont do properly you may be onto a winner, if you try and compete head on withthe likes of CD-wow and Amazon you anrt likely to be doing this for very long. Dont mean to sound negative but this is such a competitive area, and you need big money to get enough stock cheap enough to even breakeven, let alone turn a good profit.

Regards,

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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

If you register as Sole Trader, you have to declare it with the IR and then you will start paying an extra £2 something a week (usually by invoice every 3 months - I am now on direct debit). Then at the end of the tax year, you have to complete your self-assessment (make sure you keep records, receipts and purchases, from day one). The IR run free courses, whether you are registered or not, and you can find out what records you need to keep. It's a good idea to have a system from day one. Excel can be enough to work with the first year.  The Accountant then comes in handy to decipher all the figures!

If you are concerned about your current employer, I was as welll, but it hasn't changed a thing. I thought my tax code would change straight away and it hasn't and it's actually not affecting it.

To have a Merchant Account, you need to open a Business Account with a Bank. There are a lot of costs there again.

It seems a lot of work just for £100 a month though.

Bear in mind you'll have to advertise, etc.

Hi Nick,

Please let me know if you need help with setting up your online site and start trading online.

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Kind Regards,

UniTechnology Limited

http://www.unitechnology.co.uk

There isn’t really a threshold as such for what you need to earn before you declare it.

Technically ALL income is declarable if it is trading income. E-bay sales are fine IF you are simply selling off second hand items you already own. I.e. you are not trading. If you are specifically buying goods with the intention to resell this is a "trade" and reportable. Whether you sell on ebay or not it makes no difference at all. The same rules apply to ebay as any other trade, it is not a special case.

The only exception to this is if you don’t have a job or any other taxable income. In this case if you earn less than your personal allowance £5,035 for 2006/7 then the tax man won’t be very interested. If however you have a job AND a small trade on the side this income will be declarable as a “sole trade” on a self assessment tax return.

Hope this helps.

Regards,

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

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