Starting a part time business
Discussion
Hey, I'm back in the business forum 
As many of you know, I've had a colourful past as a Recruitment Consultant... Nope, I'm nothing like that knob from 'The Apprentice'... well not much
I've been contacted by a couple of my old clients, and there is an opportunity to earn a supplementary income in my spare time.
A few questions then...
1). Is it essential to set up a business account?
2). Sole Trader, Ltd Liability or just declare my income from a personal account?
3). I have no issues paying tax, well I do... but I'm not trying to be a dodgy bastard (My line of work is FSA regulated, It would go down like a carrier bag-full of cold sick
). How will I be taxed? I'm not concerned with taking money out, as my salary is sufficient and I'm quite comfortable. I would most likely keep any profit in the account to fund any future projects.
4). Do I have to declare my business area... ie; Do I have to just stick to one business area? I would want the flexibility to change. Maybe 'KingRichard' trading as...?
5). Is it worth talking to 'small business advisers' at the banks? I know what I want to do, and don't need a loan of any kind... Have a horrible feeling they will just waste my day off selling insurance and leasing plans??!
Any help greatly appreciated
David
As many of you know, I've had a colourful past as a Recruitment Consultant... Nope, I'm nothing like that knob from 'The Apprentice'... well not much
I've been contacted by a couple of my old clients, and there is an opportunity to earn a supplementary income in my spare time.
A few questions then...
1). Is it essential to set up a business account?
2). Sole Trader, Ltd Liability or just declare my income from a personal account?
3). I have no issues paying tax, well I do... but I'm not trying to be a dodgy bastard (My line of work is FSA regulated, It would go down like a carrier bag-full of cold sick
). How will I be taxed? I'm not concerned with taking money out, as my salary is sufficient and I'm quite comfortable. I would most likely keep any profit in the account to fund any future projects. 4). Do I have to declare my business area... ie; Do I have to just stick to one business area? I would want the flexibility to change. Maybe 'KingRichard' trading as...?
5). Is it worth talking to 'small business advisers' at the banks? I know what I want to do, and don't need a loan of any kind... Have a horrible feeling they will just waste my day off selling insurance and leasing plans??!
Any help greatly appreciated
David
1) No
2) You can run your own business in any format you desire - i.e ltd co, sole-tradership or even a partnership (if appropriate). If remaining as a sole-trader, it is up to you to decide if you want to open a separate business bank account to cover your sole-trading activity. If operating through a limited company, you would need to set up bank account in the name of the limited company.
3) as a sole-trader, you are taxed on the business profits deriving from your sole-trading activity. Note, the tax is charged on the PROFITS of the activity BEFORE you have drawn any moneys out for yourself. Therefore, if you made a profit of £10,000 but drew nothing, you are still taxed on the £10,000. If you made £10,000 profit but drew £15,000 (it can be done), you are still only taxed on the £10,000 amount.
You would return the business profit details on a Self Assessment tax return and the tax due would normally be payable on 31 January and 31 July each year. The amount payable will also include Class 4 National Insurance contributions.
You may also need to make regular Class 2 NI payments, usually each month although, if your Self Employed profits are small or you are already paying the maximum Class 1 NI through your salary, then you can opt out of paying the Class 1 NI.
The situation is very different if using a limited company. The company pays its own tax on its own profits - through a self assessment system. The owner/director of the company will pay personal tax on the income he drws from his company. If in the form of salary, he will pay PAYE and Class 1 NI (basically as an employee - although there are some significant differences). If he can pull money out through dividends (as a shareholder) he will still pay income tax but will escape NI (although the Revenue can challenge such arrangements).
When running a business through a ltd co, the directors do need to be aware of matters such as IR35.
4) why do you think you need to "declare" your business area? To whom would you be making this declaration.
5) banks are mainly interested in selling you their products. Any "advice" they give has to be taken on board with this in mind. Very few people who work in banks have any genuine business experience so their advice can be rather dubious. I am sure there are some good bank advisors, but be aware of their limitations.
Although I am biased, I can only recommend that you talk to a suitably qualified accountant at the earliest opportunity.
2) You can run your own business in any format you desire - i.e ltd co, sole-tradership or even a partnership (if appropriate). If remaining as a sole-trader, it is up to you to decide if you want to open a separate business bank account to cover your sole-trading activity. If operating through a limited company, you would need to set up bank account in the name of the limited company.
3) as a sole-trader, you are taxed on the business profits deriving from your sole-trading activity. Note, the tax is charged on the PROFITS of the activity BEFORE you have drawn any moneys out for yourself. Therefore, if you made a profit of £10,000 but drew nothing, you are still taxed on the £10,000. If you made £10,000 profit but drew £15,000 (it can be done
), you are still only taxed on the £10,000 amount. You would return the business profit details on a Self Assessment tax return and the tax due would normally be payable on 31 January and 31 July each year. The amount payable will also include Class 4 National Insurance contributions.
You may also need to make regular Class 2 NI payments, usually each month although, if your Self Employed profits are small or you are already paying the maximum Class 1 NI through your salary, then you can opt out of paying the Class 1 NI.
The situation is very different if using a limited company. The company pays its own tax on its own profits - through a self assessment system. The owner/director of the company will pay personal tax on the income he drws from his company. If in the form of salary, he will pay PAYE and Class 1 NI (basically as an employee - although there are some significant differences). If he can pull money out through dividends (as a shareholder) he will still pay income tax but will escape NI (although the Revenue can challenge such arrangements).
When running a business through a ltd co, the directors do need to be aware of matters such as IR35.
4) why do you think you need to "declare" your business area? To whom would you be making this declaration.
5) banks are mainly interested in selling you their products. Any "advice" they give has to be taken on board with this in mind. Very few people who work in banks have any genuine business experience so their advice can be rather dubious. I am sure there are some good bank advisors, but be aware of their limitations.
Although I am biased, I can only recommend that you talk to a suitably qualified accountant at the earliest opportunity.
Eric Mc said:
1) No
2) You can run your own business in any format you desire - i.e ltd co, sole-tradership or even a partnership (if appropriate). If remaining as a sole-trader, it is up to you to decide if you want to open a separate business bank account to cover your sole-trading activity. If operating through a limited company, you would need to set up bank account in the name of the limited company.
3) as a sole-trader, you are taxed on the business profits deriving from your sole-trading activity. Note, the tax is charged on the PROFITS of the activity BEFORE you have drawn any moneys out for yourself. Therefore, if you made a profit of £10,000 but drew nothing, you are still taxed on the £10,000. If you made £10,000 profit but drew £15,000 (it can be done), you are still only taxed on the £10,000 amount.
You would return the business profit details on a Self Assessment tax return and the tax due would normally be payable on 31 January and 31 July each year. The amount payable will also include Class 4 National Insurance contributions.
You may also need to make regular Class 2 NI payments, usually each month although, if your Self Employed profits are small or you are already paying the maximum Class 1 NI through your salary, then you can opt out of paying the Class 1 NI.
The situation is very different if using a limited company. The company pays its own tax on its own profits - through a self assessment system. The owner/director of the company will pay personal tax on the income he drws from his company. If in the form of salary, he will pay PAYE and Class 1 NI (basically as an employee - although there are some significant differences). If he can pull money out through dividends (as a shareholder) he will still pay income tax but will escape NI (although the Revenue can challenge such arrangements).
When running a business through a ltd co, the directors do need to be aware of matters such as IR35.
4) why do you think you need to "declare" your business area? To whom would you be making this declaration.
5) banks are mainly interested in selling you their products. Any "advice" they give has to be taken on board with this in mind. Very few people who work in banks have any genuine business experience so their advice can be rather dubious. I am sure there are some good bank advisors, but be aware of their limitations.
Although I am biased, I can only recommend that you talk to a suitably qualified accountant at the earliest opportunity.
2) You can run your own business in any format you desire - i.e ltd co, sole-tradership or even a partnership (if appropriate). If remaining as a sole-trader, it is up to you to decide if you want to open a separate business bank account to cover your sole-trading activity. If operating through a limited company, you would need to set up bank account in the name of the limited company.
3) as a sole-trader, you are taxed on the business profits deriving from your sole-trading activity. Note, the tax is charged on the PROFITS of the activity BEFORE you have drawn any moneys out for yourself. Therefore, if you made a profit of £10,000 but drew nothing, you are still taxed on the £10,000. If you made £10,000 profit but drew £15,000 (it can be done
), you are still only taxed on the £10,000 amount. You would return the business profit details on a Self Assessment tax return and the tax due would normally be payable on 31 January and 31 July each year. The amount payable will also include Class 4 National Insurance contributions.
You may also need to make regular Class 2 NI payments, usually each month although, if your Self Employed profits are small or you are already paying the maximum Class 1 NI through your salary, then you can opt out of paying the Class 1 NI.
The situation is very different if using a limited company. The company pays its own tax on its own profits - through a self assessment system. The owner/director of the company will pay personal tax on the income he drws from his company. If in the form of salary, he will pay PAYE and Class 1 NI (basically as an employee - although there are some significant differences). If he can pull money out through dividends (as a shareholder) he will still pay income tax but will escape NI (although the Revenue can challenge such arrangements).
When running a business through a ltd co, the directors do need to be aware of matters such as IR35.
4) why do you think you need to "declare" your business area? To whom would you be making this declaration.
5) banks are mainly interested in selling you their products. Any "advice" they give has to be taken on board with this in mind. Very few people who work in banks have any genuine business experience so their advice can be rather dubious. I am sure there are some good bank advisors, but be aware of their limitations.
Although I am biased, I can only recommend that you talk to a suitably qualified accountant at the earliest opportunity.
Where are you based Eric?
KingRichard said:
Eric Mc said:
1) No
2) You can run your own business in any format you desire - i.e ltd co, sole-tradership or even a partnership (if appropriate). If remaining as a sole-trader, it is up to you to decide if you want to open a separate business bank account to cover your sole-trading activity. If operating through a limited company, you would need to set up bank account in the name of the limited company.
3) as a sole-trader, you are taxed on the business profits deriving from your sole-trading activity. Note, the tax is charged on the PROFITS of the activity BEFORE you have drawn any moneys out for yourself. Therefore, if you made a profit of £10,000 but drew nothing, you are still taxed on the £10,000. If you made £10,000 profit but drew £15,000 (it can be done), you are still only taxed on the £10,000 amount.
You would return the business profit details on a Self Assessment tax return and the tax due would normally be payable on 31 January and 31 July each year. The amount payable will also include Class 4 National Insurance contributions.
You may also need to make regular Class 2 NI payments, usually each month although, if your Self Employed profits are small or you are already paying the maximum Class 1 NI through your salary, then you can opt out of paying the Class 1 NI.
The situation is very different if using a limited company. The company pays its own tax on its own profits - through a self assessment system. The owner/director of the company will pay personal tax on the income he drws from his company. If in the form of salary, he will pay PAYE and Class 1 NI (basically as an employee - although there are some significant differences). If he can pull money out through dividends (as a shareholder) he will still pay income tax but will escape NI (although the Revenue can challenge such arrangements).
When running a business through a ltd co, the directors do need to be aware of matters such as IR35.
4) why do you think you need to "declare" your business area? To whom would you be making this declaration.
5) banks are mainly interested in selling you their products. Any "advice" they give has to be taken on board with this in mind. Very few people who work in banks have any genuine business experience so their advice can be rather dubious. I am sure there are some good bank advisors, but be aware of their limitations.
Although I am biased, I can only recommend that you talk to a suitably qualified accountant at the earliest opportunity.
2) You can run your own business in any format you desire - i.e ltd co, sole-tradership or even a partnership (if appropriate). If remaining as a sole-trader, it is up to you to decide if you want to open a separate business bank account to cover your sole-trading activity. If operating through a limited company, you would need to set up bank account in the name of the limited company.
3) as a sole-trader, you are taxed on the business profits deriving from your sole-trading activity. Note, the tax is charged on the PROFITS of the activity BEFORE you have drawn any moneys out for yourself. Therefore, if you made a profit of £10,000 but drew nothing, you are still taxed on the £10,000. If you made £10,000 profit but drew £15,000 (it can be done
), you are still only taxed on the £10,000 amount. You would return the business profit details on a Self Assessment tax return and the tax due would normally be payable on 31 January and 31 July each year. The amount payable will also include Class 4 National Insurance contributions.
You may also need to make regular Class 2 NI payments, usually each month although, if your Self Employed profits are small or you are already paying the maximum Class 1 NI through your salary, then you can opt out of paying the Class 1 NI.
The situation is very different if using a limited company. The company pays its own tax on its own profits - through a self assessment system. The owner/director of the company will pay personal tax on the income he drws from his company. If in the form of salary, he will pay PAYE and Class 1 NI (basically as an employee - although there are some significant differences). If he can pull money out through dividends (as a shareholder) he will still pay income tax but will escape NI (although the Revenue can challenge such arrangements).
When running a business through a ltd co, the directors do need to be aware of matters such as IR35.
4) why do you think you need to "declare" your business area? To whom would you be making this declaration.
5) banks are mainly interested in selling you their products. Any "advice" they give has to be taken on board with this in mind. Very few people who work in banks have any genuine business experience so their advice can be rather dubious. I am sure there are some good bank advisors, but be aware of their limitations.
Although I am biased, I can only recommend that you talk to a suitably qualified accountant at the earliest opportunity.
Where are you based Eric?
Eric lives in Farnborough I think.
Eric Mc said:
1) No
If I set up a business account, would that have any advantages over a personal account for business? ie; charges, credit etc...
Eric Mc said:
3) as a sole-trader, you are taxed on the business profits deriving from your sole-trading activity. Note, the tax is charged on the PROFITS of the activity BEFORE you have drawn any moneys out for yourself. Therefore, if you made a profit of £10,000 but drew nothing, you are still taxed on the £10,000. If you made £10,000 profit but drew £15,000 (it can be done
), you are still only taxed on the £10,000 amount.How does this work then? I take it you mean expenses etc.
Eric Mc said:
tax due would normally be payable on 31 January and 31 July each year. The amount payable will also include Class 4 National Insurance contributions.
I thought you had to state an area of business in the articles of association (iirc) when setting up a limited company? Clearly this doesn't apply to a sole trader...
Sorry to pick your brains mate
As already mentioned, I am in Farnborough, Hants.
Your taxable profits are calculated by deducting allowable business related expenses freom the total of the value of the work you did during the year. In most businesses, the value of the work done in the year is arrived at by totalling the Sales Invoices raised.
There are no legal restrictions on the geographical area covered by a business unless you are dealing with an "illegal" country or a country with which we are at war.
Your taxable profits are calculated by deducting allowable business related expenses freom the total of the value of the work you did during the year. In most businesses, the value of the work done in the year is arrived at by totalling the Sales Invoices raised.
There are no legal restrictions on the geographical area covered by a business unless you are dealing with an "illegal" country or a country with which we are at war.
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