Trading and the Tax Man!

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:
 
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
 
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 :)
 
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
 
renniks said:
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
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Silver Firefly said:
Or WordPress themes, perhaps?
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It's exactly the same as any other business
 
Greg said:
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
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Thanks. That helps. :)
 
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.
 
Greg said:
You have upto 3 months from starting work to inform the HMRC/tax man...
Greg
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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:
 
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