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Trading and the Tax Man!

Discussion in 'General Business Forum:' started by Silver Firefly, Jul 18, 2009.

  1. Silver Firefly

    Silver Firefly Senior Member

    As I've said, I'm starting up as a freelance web designer (WordPresser if you like!) and I'm just sorting through the details of doing that.

    One concern I have is trading and the tax man. Do I need to inform the tax man before I start trading or can I wait until I start to turn a profit first? I tried to find this information via Google but I just got confused.

    Could one of you freelancers kindly talk me through the process you used when you started up please? Legal jargon just confuses me. :confused:
     
  2. Renniks

    Renniks Senior Member

    I'm interested in this too, also whats the situation with earning money on a website where you sell virtual items (for example an online game). Whats the process for not ending up breaking the law
     
  3. Silver Firefly

    Silver Firefly Senior Member

    Or WordPress themes, perhaps?
     
  4. Anon.

    Anon. Senior Member

    You'll need to register yourself / business with the tax office as soon as you start. If you start earning money before you register you'll have to pay a fine.

    If you expect your annual income to be less than £5,000 you can fill out a small earnings form which means you won't have to pay tax.

    You should be able to find everything you need here: HM Revenue & Customs:First steps to register as self-employed

    Hope that helps :)
     
  5. Silver Firefly

    Silver Firefly Senior Member

    Thanks. Perhaps I should hire an accountant. Will an accountant deal with all of that for me?
     
  6. Russell

    Russell Member

  7. Silver Firefly

    Silver Firefly Senior Member

  8. Greg

    Greg Active Member

    You have upto 3 months from starting work to inform the HMRC/tax man, you'll also need to pay additional National Insurance contributions, I think the NI payments are optional, but recommended, I pay £2.10 a week approx.

    It would also be worth getting a system setup for invoicing and billing now from day one as this will make your accounts at the end of the year much easier. Also start keeping copies of all invoices/receipts for things you buy/use for the business as some of this expense will be able to be offset against your income to reduce your final tax bill.

    This link on the HMRC site should help, check out the PDF booklets in the further information part - HM Revenue & Customs:Starting in business

    Hope that helps :)
    Greg
     
  9. Greg

    Greg Active Member

    It's exactly the same as any other business
     
  10. Silver Firefly

    Silver Firefly Senior Member

    Thanks. That helps. :)
     
  11. Greg

    Greg Active Member

    No problems SF, when I first started up I went to my local drop-in tax office, and spoke to a very helpful lady there, if you have one nearby it might be worth doing that, I think you can then get all the relevant forms whilst you're there.
     
  12. Anon.

    Anon. Senior Member

    Ah yeah I forgot about that! Sorry, I made it sound like you'll be getting a knock on the door from the tax man as soon as you start you first job :D

    As for an accountant, I wouldn't know sorry, I don't use one, and at the moment don't really need to. As Greg said, keep good records of all your invoices and receipts and everything should run smoothly. Good Luck with it all by the way :up:
     
  13. Silver Firefly

    Silver Firefly Senior Member

    Thanks for the information guys. I'll definitely look into it all.
     

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