New Ebay shop and tax
Discussion
My wife and I were thinking of starting an Ebay shop to raise a little extra cash. I work full-time on an average wage but the wife only works part-time earning only approx £3k per year. The intention is for one of us to be a sole trader, but are we better off launching the business in the wife's name to save on tax? I want to do it all legitimately so intend notifying the HMRC and keeping a separate bank account. Do I need a business account or is an existing separate current account suitable? I then understand we do a self-assessment once a year. Any advice welcome. Thanks.
It's your business.
It should be in your name.
As it is being set up as a trading entity from the outset (i.e. set up with a view to making a profit), then HMRC will have to be notified within three months of commencement of trading. Once that has been done, the trader (whoever it is) will be requested to make a self assessment tax return for the relevant tax years the business is in operation.
They will also be expected to sign up for Class 2 NI contributions.
There is no specific requirement to set up a business bank account - although sometimes that is a good idea if you want to keep business finances away from your normal day to day finances. Again, if you are trying to pretend that the business isn't yours, setting up a separate bank account in someone else's name could be problematic.
It should be in your name.
As it is being set up as a trading entity from the outset (i.e. set up with a view to making a profit), then HMRC will have to be notified within three months of commencement of trading. Once that has been done, the trader (whoever it is) will be requested to make a self assessment tax return for the relevant tax years the business is in operation.
They will also be expected to sign up for Class 2 NI contributions.
There is no specific requirement to set up a business bank account - although sometimes that is a good idea if you want to keep business finances away from your normal day to day finances. Again, if you are trying to pretend that the business isn't yours, setting up a separate bank account in someone else's name could be problematic.
Edited by Eric Mc on Tuesday 1st July 09:39
Thanks for the response. At the moment there is no pretence that the business isn't mine because there is no business, although admittedly I am the one who posted the question on here.
We thought it could benefit us - as a couple - if the wife became a sole trader. After all, she has more time on her hands for running it (fewer hours at work) and more experience of managing the finances/accounts etc. We were enquiring about the tax benefits/pitfalls too.
We are simply looking for advice and tales of experience that would benefit us both - and any other Pistonheader interested in the topic - before we took the plunge (if we ever do at all). Can anyone recommend any useful books or web links?
We thought it could benefit us - as a couple - if the wife became a sole trader. After all, she has more time on her hands for running it (fewer hours at work) and more experience of managing the finances/accounts etc. We were enquiring about the tax benefits/pitfalls too.
We are simply looking for advice and tales of experience that would benefit us both - and any other Pistonheader interested in the topic - before we took the plunge (if we ever do at all). Can anyone recommend any useful books or web links?
Books on what?
Running a business?
Running a business on eBay?
Dealing with HMRC?
Basic accounting and book-keeping?
Tax planning?
Perhaps a chat with an accountant might be more beneficial. It may even be free if it is just a general run through by the accountant on what running a small business entails.
As regards to whose business it is - that will be borne out by the facts, not whose name is plonked on the tax return or on letter headed paper.
If YOU are doing the buying and selling. If YOU are negotiating with customers and suppliers. If YOU are the person who directs. controls and manages the business - it is YOUR business, not anybody else's.
Do you or your wife already submit self assessment tax returns?
Are either of you higher rate taxpayers?
Is the business going to generate profits or losses - especially in its early years?
Running a business?
Running a business on eBay?
Dealing with HMRC?
Basic accounting and book-keeping?
Tax planning?
Perhaps a chat with an accountant might be more beneficial. It may even be free if it is just a general run through by the accountant on what running a small business entails.
As regards to whose business it is - that will be borne out by the facts, not whose name is plonked on the tax return or on letter headed paper.
If YOU are doing the buying and selling. If YOU are negotiating with customers and suppliers. If YOU are the person who directs. controls and manages the business - it is YOUR business, not anybody else's.
Do you or your wife already submit self assessment tax returns?
Are either of you higher rate taxpayers?
Is the business going to generate profits or losses - especially in its early years?
daemon said:
You are required to tell HMRC as soon as you start trading, not within 3 months.
There is a three month window within which you can notify HMRC WITHOUT receiving the £100 Late Notification penalty.HM%RC decided on a three month window because the notification is connected to the payment of Class 2 NI - which is paid either monthly by direct debit or quarterly (i.e. 3 months) by cheque.
Of course HMRC will expect people to notify them as soon as they start trading - but the 3 month window allows them to set up the Class 2 NI schedule.
Eric Mc said:
daemon said:
You are required to tell HMRC as soon as you start trading, not within 3 months.
There is a three month window within which you can notify HMRC WITHOUT receiving the £100 Late Notification penalty.HM%RC decided on a three month window because the notification is connected to the payment of Class 2 NI - which is paid either monthly by direct debit or quarterly (i.e. 3 months) by cheque.
Of course HMRC will expect people to notify them as soon as they start trading - but the 3 month window allows them to set up the Class 2 NI schedule.
Eric Mc said:
As it is being set up as a trading entity from the outset (i.e. set up with a view to making a profit), then HMRC will have to be notified within three months of commencement of trading
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