Starting a Business |
BUSINESS FAQS
Do I have to register my business? When?
Within 3 months of starting you should tell the Inland Revenue.
How do I register for tax?
By filling in 2 simple forms, CWF1 and CF10.
Do I need a business bank account?
Far better to separate business and private banking although not legally necessary. If you open a Business Account, the bank will probably charge you, you might be able to get away with a separate Personal Account.
What is a sole trader?
A person working alone in business.
Do I need a partner?
Not necessarily, but it can have tax advantages.
Do I have to pay National Insurance?
Yes if your profit goes above an annual threshold, currently ?4825.
How do I pay National Insurance?
By Direct Debit – a form to be obtained from the tax office.
How much will it be?
?2.30 per week.
Do I need a licence to work from home?
No, and there is no need to tell any local authority.
Do I need an accountant?
It certainly helps – find one who fully understands your business.
Taxation
Do I have to pay tax?
Yes if your profits added to other sources of income exceed an annual threshold.
How much can I earn before I pay tax?
The present tax-free amount is ?6035. Above this you’ll pay 20% up to ?34800 per annum and above this at 40%.
Running the Business
Do I need to keep receipts?
Yes, these will enable you or your accountants to prepare your accounts.
What can I claim for?
Everything spent on behalf of the business, both running costs and buying cars, computers and office equipment.
Can I offset some of my household bills if I work from home?
Yes, you can claim a proportion of Council Tax, heat and light, certain insurance and decorating a room to be used as an office. Ask your accountant.
What else can I claim?
It’s quite a long list! Products bought for resale or to be used in the business, motor and business travel expenses, telephone costs, stationery and printing, advertising and employing people to help in the business including family members.
Special Situations
Do I pay self-employed National Insurance if I am already paying it in my employment?
Yes you do if your profit is over the threshold of ?4825.
I am getting maternity pay from my employer…is this affected by my self-employment?
No, the business is new and has no relevance to your existing employment.
I am getting maternity allowance from the Benefits Office…is this affected by my self-employment?
Probably – you can work for 10 days without losing out, but this is not much when trying to run a business!
Will self-employment affect my tax credits?
Possibly, but it depends on each person’s own circumstances. A profit may reduce your claim whereas a loss may increase it.
Does self-employment prevent me from claiming tax credits? Or starting to claim?
No, the business is just another source of family income to be taken into consideration.
What if I use any products personally in my business?
Normally these cannot be claimed as a taxable expense, but you should keep a record of any used for samples or demonstration purposes, which can be claimed. Also if you open a container to give a small product sample from it, which means that the opened product cannot later be sold, then the whole cost can be claimed even if subsequently used by yourself.