Forum

topBanner
First Previous - Page 1 of 1 - Next Last

Starting as a sole trader

  • Fellow PM.Dip
  • Practice Licence
  • Practice Licence
  • 36 posts
  • # 74818

Hello

I have a close family member contemplating setting up as a sole trader buying and selling cars, he has money to fund the venture initially but is thinking he will carry on with his full time job to start with until the business can support a wage, can he do this without affecting his current tax code etc with his current employer whilst starting this as a sole trader?

I can keep the records for him and initially it will be just purchasing and selling the vehicles with some transport costs only, would HMRC want something more than just the difference between the VAT paid out and charged, can anyone advise on this please?

Thanks for any advice! Smile
Lady M
  • Fellow PM.Dip
  • Practice Licence
  • 258 posts
  • # 74824

Hi Kasey,

I'm afraid you would need a practice licence before you can keep any bookkeeping records for your family member.

With regards to your other questions, at his full time job his tax code will not be affected for this year, but he will need to register as self-employed with HMRC within 3 months of becoming self employed.

Once he has submitted his first self assessment tax return, he may be able to choose to pay the outstanding tax through his tax code or as a lump sum but please double check with HMRC.

If he is registering his company for VAT (he doesn't have to be VAT registered if his turnover is less than £73,000 for the year), he will need to complete quarterly VAT returns and charge VAT to his customers.

It is better he uses a qualified bookkeeper to help him with this.

Edited at 03 Oct 2011 06:05 PM GMT
Liz D
  • 273 posts
  • # 74840

Hi Kasey & Lady M

HMRC now require you to register self employed immediately not after three months anymore.

Also, you can help him keep records without a practice licence if he employs you.  I note you are an affiliate, what does your other body say on the matter of bookkeeping without practice licence. 

Kind regards

Liz
Peasie
  • Member PM.Dip
  • Practice Licence
  • 481 posts
  • # 74842

I think HMRC are making things more difficult in that it is not very clear WHEN you have to register. 

On this page (below) it says "as soon as possible"
http://www.hmrc.gov.uk/selfemployed/register-selfemp.htm


How and when to register with HM Revenue & Customs (HMRC)

It's important to let HMRC know that you're self-employed as soon as possible - even if you already fill in a Self Assessment tax return each year. If you don't tell them, you may have to pay a penalty.

You can let HMRC know about your self-employment by completing the Self Assessment registration forms. HMRC will use the information to set up the right National Insurance records for you too.

Registering for Self Assessment

Following the link above it then says

Why and when you need to register for Self Assessment

Before you complete a tax return for the first time, you must register for Self Assessment to give HMRC the information they need to set up the right records for you. This helps to make sure you pay the right amount of tax and National Insurance at the right time.

If you already complete a tax return and you become self-employed (as a sole trader or partner in a partnership), you can use the same registration forms to tell HMRC so they can update your tax and National Insurance records.

For other changes in circumstances, simply complete the relevant boxes or supplementary pages on your Self Assessment tax return.

When to register

It's best if you register with HMRC as soon as your circumstances change. The latest you can register is by 5 October after the end of the tax year for which you need a tax return. The tax year runs from 6 April one year to 5 April the next. So if, for example, you have tax to pay on rent from a property in the 2010-11 tax year, you need to let HMRC know by 5 October 2011.

If you register late you may have to pay a penalty.


Does anyone have a link to clear guidelines as to when you have to register? I've changed the HMRC text to blue to keep it separate from my own.

EDIT : I've been getting "self employment" and "self assessment" mixed up myself there. 



Edited at 04 Oct 2011 02:29 PM GMT
First Previous - Page 1 of 1 - Next Last
bottomBanner
loading