Folksy Ltd

Registering with HMRC query:

(Susannah Ayre) #1

Good morning.
Apologies as I’ve seen the odd thing on here before regarding registering. I was just hoping that someone would be able to provide me with a little information first.

Basically- I work full time (37 hours a week) in a permanent job. I therefore pay (a lot!) of tax and NI through my wages.
However in my spare time I obviously make and sell. For a while it was just for fun to friends & family and not making a profit. But since August last year I’ve been selling with an aim of making a profit.

I’ve looked on the HMRC website where it says 'Register as soon as you can after starting your business. At the latest, you should register by 5 October in your business’s second tax year.'
So I’m still within that time frame.

But my question really is over the amount of tax that will be paid.

Does anyone have any idea? I’m now making about £200 roughly a month (sometimes a bit more, sometimes less) on my artwork (on top of my normal wages) but that £200 may not all be profit due to material costs, postage (which I always take a hit on) fees, mounts/frames etc.

Basically I just don’t want to get a shock at the end of the tax year. As far as I’m concerned I pay enough in tax and NI anyway through my normal job.

Also- are filling out self assessment tax returns easy enough? It says on the website I don’t have to register for VAT or anything (as unfortunately my artwork doesn’t make over £28,000 a year) so that’s something I guess.

Sorry for all that- just wondering if someone has done it recently and can offer some info or advice!

Thank you!! :blush:


(Deborah Jones) #2

The way I understand it is you need to register as self employed for your crafting business and pay the NI stamp for that ( or maybe get exempt if earnings are small enough ) you will also need to pay tax on your profit as your personal allowance will have been used up by your day job.
So it is important to do your accounts and work out exactly what your profit is.
I find it is worth reinvesting as much as possible into the business ie new tools etc as the tax man takes so much - it makes the tools about a third cheaper.

I don’t do my own tax return , but plenty do so I don’t think it is that complicated , just time consuming. My thinking is I can pay an accountant to do it ( I hate paper work ) or do it myself and give the money to the tax man .

(Jo Sara) #3

Self Assessment forms are easy if you’ve been keeping on top of your paperwork through the year. If you’re not sure how much of your takings are profit, you’re probably going to need to start keeping some proper accounts for your self employed work or you could end up paying tax when you don’t need to if you’re not noting down all your costs. Plus it would be useful for you to know how much money you actually are making on your art after you’ve taken the postage, mounts, frames, materials etc. You might need to increase your prices to cover them.


(Eileens Craft Studio) #4

It’s quite easy you register and then fill in the forms the forms lead you along from one section to the next.

If you are owning more than your allowance then yes you might have to pay a wee bit of tax.

Don’t forget if you don’t use up your allowance you can end up getting a tax rebate that happened to me.

You must register otherwise you will get into serious trouble including fines and court appearances.

Also I you file late you can be charged £100 penalty even if you do not owe them any tax.

You either file via a paper form but they are very lax in sending that out when you register and ask for the form.
I know because I asked 3 times and still never receive my form.

I do mine online. If you do it online you get longer to file it. Also it allows you to go back to the previous screen if you’ve done something wrong so you can keep correcting it until you get to the end and hit the file/send button.

Be aware when you apply to do it online you have to wait up to 7 working days for HMRC to send you via the royal mail a special unique security password which you’ll need to be able to get into your online account to file in your form.

Hope that helps

(Julie Evans) #5

you must keep track of your expences and keep all receipts , phone hrmc , you will have to fill in a tax form, any extra money made must be accounted for even if you do not make a profit you still have to do accounts , if earning a wage already any profit made is fully taxable at 20 percent on what you sell if you earn above 10,600. at your full time employment. You are lucky because you work full time you do not have any insurance stamp to pay because your main job pays it .When phoning hrmc , just have all your questions ready ,write them down so you dont forget any, they really are helpful .I hope this helps you and yes we all pay enough tax .here are a few expences you can put down, so much for waste as we always get waste when making… you can claim up to around16.00 in total for heating , lighting etc if working from one room .expences for your tools .then the products you have bought to use , but you must do a stock take every year regards Julie

(Julie Evans) #6

I send off all my receipts, and the amount of stock left over to an accountant and thats the best way to go because they can save you money in the long run , no wasted time means you can spend more time crafting ,and they are quick to keep up to date with any new changes .Shop around for an accountant , they can be very reasnable if you have all your paper work ready for them .

(Diane Mc Kechnie) #7

At the beginning I went to an accountant and he showed me what kind of book to buy and what to put into it and he did my books for a couple of years then I did it myself and find the tax return very easy to fill in. But my income isnt complicated

(Susannah Ayre) #8

Thanks for all the information folks.
I’ve only found the HMRC website slightly helpful. It seems to show me what I need, but then very quickly goes into being self employed full time.

So far I have kept an account of all the money coming in and going out. But don’t have receipts for things like mounts and frames as my friend does all of those for me so we don’t bother with reciepts. Things like postage as well, up to now I’ve kept the reciepts until I know the print has been delivered, but then I throw it out (but still take note of how much it’s cost me).

I earn a fair bit over the 10,600 threshold- which is why I pay enough tax as it is. So definitely reluctant to pay more. But hey ho- that’s life sadly isn’t it.
I looked into registering a little while ago, but had a lot going on at the time and saw that I had a while before I needed to register- so sort of put it off a bit.

Looks like that’s what I’m doing this Easter holiday though!! Thanks for the advice and formation folks. It’s really appreciated. :blush:

(Marg) #9

If you have any questions ring HMRC, I found them very helpful. I questioned what to do with savings interest I had received which was taxed and they told me which form to complete (on line) and I got my tax back, but I’m retired and don’t earn above my tax allowance. So it’s worth speaking to them. I do my return on line, but I first print off the form, complete it and then use that to fill my online form in, I find that much easier.

(Susannah Ayre) #10

I’ve been speaking to a friend who has recommend a local Business Factory who should be able to answer all my questions and even help me set up if I want. So that’s good.

Thanks again for everyones advice! :slight_smile:

(Eileens Craft Studio) #11

Oh I forgot to say they have a huge help file that helps explain and what to put into each page of the form.

You can print it off as a reference or do what I do. Have the form open on my laptop and the help file open on my Husbands laptop so I can see them side by side incase I get confused.

I do keep my receipts/invoices and keep a sales/purchas ledger so all my figures are up to date all the time.

(Charlotte ) #12

I complete my tax return online and find it very straight forward. When completing online it only asks you questions relevant to you, whereas the paper form has all sections, some of which wont be relevant. It takes me maybe 45 mins to complete each year. As everyone else says, the most important thing is to keep your books up to date, then filling out the tax return is the easy bit.

Charlotte x

(Cade & Co Design) #13

Could you recommend a book to use only I’ve been trying to do mine using a software package I downloaded but to tell you the truth I don’t understand it & tried to run a report & it asked me who I wanted to invoice. I therefore think I’ve done the whole darn thing back to front. To be honest I am terrible at doing my books I hate maths! As a result the whole thing is a total mess. So using pen & paper may well be the way forward & at least that way I can work everything out. I know I’m a long way off being in profit so won’t owe any tax but at least if I have done the books I can prove it!

(Louise Foot) #14

Dianne, there is a book that was recommended by a new business course I went on. Its called “the best small business accounts book” - the yellow one is for non VAT registered businesses. I bought one a year ago & had a brief look at it, but it does seem simple. I too hate maths & dreading doing my first year of accounts I need to confront my fear as it really does stress me out. This question goes out to anyone - am I right in thinking I need to print of receipts for all electronic purchases (to sit along all my tatty receipts from face to face transaction - do I photocopy those too?) Thanks in advance for any replies. Pleased this thread is running :smile:

(Eileens Craft Studio) #15

Yes it’s best to print them off. Also be aware that most till receipts from shops are light sensitive so over a couple of months all the details on them fade away. So good idea to photo copy your till receipts.
Don’t forget your profit from each sale you make is not the gross amount ie the invoice total.

You have to subtract the postage and packing costs and the Folksy fee, plus the paypal fee,

You need to subtract any receipts for the materials you’ve bought that includes if you’ve bought equipment/tools to make something. These are some of your outgoings, the costs of running a business.

For example for this tax year I have to deduct one Taylor’s dummy, one new sewing machine, one of those foot mannequin plus new rotary cutters and patchwork templates.

(Louise Foot) #16

That is really helpful, thanks Eileen. I pay my self “drawings” each month (basically from my own money I put in to my business account), they are less than min wage. I also did paid work as an employee for a mere 3 weeks in the tax year. Will this make doing my accounts more complicated to fill in online or is there a separate page?

(Eileens Craft Studio) #17

There is a separate page for those 3 weeks I think it might come up under any other earnings or something like that.

I have things like dividends from my share’s in an overseas bank, and I have income from being a landlady as well so I have to declare those.

(Sasha Garrett) #18

@trawdensoapkitchen Last year I had 2 months working as an employee so had to fill in the employment section (you get the details to go in it from your p45 or p60) and the rest of the year I was self employed so had to fill in the self employed section (with info from my accounts) as well, it will be the same for you. Its really simple online (but I don’t know what the paper version is like). I keep paper and electronic copies of all the invoices I generate (to go with sales), keep paper and where possible electronic copies of all receipts to go with purchases/ expenses and a spreadsheet with it all entered into so I can keep a track of it all. So long as you are organised its easy, I’ve already sorted out nearly all of my accounts for the forth coming tax return just waiting on the interest tax certificate thingys from the bank. (I will admit to liking maths and I did spend my teenage years helping my mum out with my parent’s business accounts so I am used to this sort of thing).

(Louise Foot) #19

Hi Sasha, many thanks. Organisation is where I’ve fallen short but what I WILL address from new tax year whilst tidying up my chaotic records of the past 12 months. I hope my printer is feeling co-operative. I’m so grateful for this input - it’s starting to feel a little less daunting. Did you devise your own excel sheet ? Lucky you liking maths :smile:

(Sasha Garrett) #20

Hi Louise, Organisation is easy if you start with it at the begining, tomorrow is the start of the new tax year so get organised now. I have 4 ring binders, one each for bank statements, sales, purchases and petty cash (for small things like postage costs where all the receipts go into a plastic wallet so they don’t get lost). Invoices and receipts get printed off and given a unique identifier when incurred, they are then entered into the appropriate file with the details written onto the monthly cover sheet (each month gets its own coloured cardboard divider as well so that I can easily flip through to find them). They are then entered into the spreadsheet (5 columns, date, reference, brief description, debit, credit). When the bank statement arrives it is checked against the monthly cover sheets and at the end of the tax year it is all double checked (only takes about an hour with a cup of tea) and then the credit and debit columns on the spreadsheet can be added up (auto sum is my friend at that point) and the credit total minus the debit total is my profit for the year. No complicated maths required.
Payslips from other employments are kept in a separate folder as they go in a separate section of the form.