Start Up Legal requirements

[bubbledesigns]

Hi there,

I have recently decided to offer my design skills to other people. I have set-up a website etc and am working on my first client.

I just want to know the legal requirements around this. I am working full time for a company and doing this in my spare time.

I know nothing about Tax returns, ltd companies, insurances etc and as I am only creating designs for other companies, i dont know what i need to do to cover myself.

I have looked on Business Link but I am confused as to what i should do? Can anyone please advise?

I am sorry if this has been covered before but I couldn't find anything.

[Peter W]

This is a very good starting point:

http://www.hmrc.gov.uk/startingup/index.htm

[m8internet]

If you are working from home, then make sure your current buildings and contents policies allow and permit use of a room, rooms, or property for business purposes
Most policies allow basic admin use

If you are in a position to start trading, then inform the Inland Revenue and register your business with them

You do not need to worry about Income Tax, at this stage, unless your earnings are likely to exceed your main employment
In your first year your costs are likely to exceed your business income so in this case you are not likely to be liable for any additional tax, and in most cases you get a small refund
If you do indeed start operating at a profit, then ask your bank for a high interest business account and reserve about 25% of this money for future tax bills

Keep good records, of all income and all costs
There are some good record keeping books if you do not have experience of this and can be used for the whole year, they are about £10
At the end of the year you then total up the boxes provided in the book and transfer those totals to the Tax Return

One other consideration is insurance
You may need a policy that covers any advice, contracts, and so on
A good annual business policy shouldn't cost more than £150

[Eagle]

Originally posted by m8internet
...reserve about 25% of this money for future tax bills

I'd say nearer 35% to be on the safe side - you'll get spanked for Class 2 and/or Class 4 NI contributions too.

[m8internet]

You should know what the NI bill is in advance though, so need to keep a working reserve

Tax can be a bit hit and miss
With some business high interest accounts the interest alone can make up about a further 5%