PDA

View Full Version : will i be taxed more?


fjmlc
07-12-2005, 11:45 PM
i work part-time and am thinking of starting up a home-based; internet based business selling kids clothes. How will this affect the tax from my normal job/income?

Simon Nolan
08-12-2005, 09:41 AM
Set it up as a limited company, dont pay yourself a salary and any profits take out at the end of the year as a dividend. You will obviously be taxed on the dividend but it would make your life easier if you could do it this way. You will still have to fill out a tax return at the end of the year.

Obviously you will have "expenses" that you could pay yourself monthly, car pence per mile etc...

Bottom line is if you earn more you get taxed more...

Good old gordon brown.........................

James Smith
08-12-2005, 10:15 AM
For a micro business I wouldn’t normally suggest a limited company, I would start as a sole trader. What this means fjmlc is that you would trade in your own name (or a trading name) and need to fill in a self assessment tax return once a year.

You would continue to pay tax via PAYE on your current part-time job, and then pay any more that is due on your profits as part of the 'self assessment' process. If you start trading now, your first period would be from today to the 31st March 2006. You would need to do a tax return before the 30th September 2006 if you want the HMCE to calculate the tax. If you are calculating the tax (or your friendly accountant :D ) you have until the 31st January 2007 to complete your return and pay any tax that is due.

The only other thing you need to do if you decide to start as a sole trader is to register as self employed. The easiest way to do this is to ring 08459 15 45 15. You must do this within 3 months of starting to trade, so I would generally advice people to dip their toe in the water first, just to make sure you are going ahead, before registering.

You can set up as a limited company, but this is a lot more complex, and only really suitable if you expect to make £20k+ per annum. It is something you can move to later on if things take off for you.

I hope that helps. Your current employer wouldnt be made aware by the HMCE that you have this other income.

Regards,

fjmlc
14-12-2005, 09:11 AM
Hi James
is it possible to register as self employed even though I'll be working part-time?

James Smith
14-12-2005, 10:13 AM
Most certainly and it's a "must" and not an option!

There is a £100 fine for late registration.