Starting up

Hello,
Just starting set up my shop and I stuck full of doubts if am I doing the right thing.
First, I want to change my personal account on PayPal to bussines but I do not have company (I’m just full time employee with a will of selling on-line). So not sure what to do. Can I just set it even if I don’t have registered bussines?
Second, if I will not earn more than £1000 in tax year then I assume all fine but if I do then I understand that I need to pay tax and highlight myself to HMRC as self- employed? But I am employee so I do not understand it? Can I be both?
So confused as never had anything in common with proper accounting etc.
Can someone enlighten me please?
Tanks in advance

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Pretty sure you can just set the PayPal account to business and its as simple as that, I have 2 PayPal accounts - one personal & one business, just need different email addresses

HMRC - yes there is no tax due up to £1000 after that just let them know and you will have to send in self `assessment at end of year. if you are already employed and paying tax automatically you will only have to pay tax on the additional money you make selling. There is a space on Self Assessment to fill in details of your employment and tax you have already paid and you can get those figures from your P60 that your employer should give you at the end of the tax year.

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You will need to let HMRC know that you will be self employed, easy to register online. Even if sales of under £1K keep records just in case you have an audit.

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Yes, register as self-employed. That is your starting point. It sounds like a huge deal, but it’s not, and once you have done it, everything else makes a bit more sense.

I have been self employed for many years, but during that time I have also had other jobs, so when I get my tax return, I fill out a section for my job where I am an employee, and a separate section for money earned as self employed.

Best of luck with your shop Daria, I hope you like it here as much as I do. xxx

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Thank you - you highlighted something important - I probably need separate email for my Folksy shop (same for Paypal and Stripe)
Hope I will be able to change that tonight.

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Thank you. Do you think that HMRC can give advice on-line?

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I’m both an employee and making money from my jewellery so I registered with HMRC as self employed, my tax return has a section for the money I earn from being an employee (that gets autofilled when the college submits my P60 to HMRC) and a separate section for the money I earn from my jewellery.
If your turn over (not your profits) is under £1000 HMRC don’t expect you to do a full tax return, you can simply state that your turn over was under £1000. Keep records of everything you sell/ buy for your business - I have a spreadsheet.
I’ve found that HMRC give great advice but you need to phone them up and speak to someone.

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HMRC offer great advice … just be prepared for a long wait for your call to be answered!

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Hi Daria and welcome!

I was in exactly the same position as you. I work full time and after reading pages and pages of hmrc information I was confused and scared about getting things wrong to the point that it stopped me from doing anything.

I had a free one-to-one with an accountant via the Norfolk Business and IP Centre and I had the most amazing half hour session asking all the questions I needed answers to.

He told me you get a £1000 allowance on top of anything you earn in full-time employment and you don’t really need to register until the October after the tax year in which you go over that threshold. But you should keep records of your business income/expenditure. I was so relieved I could just get on with things without worrying. A lot of it is jumping in, having a go and learning while you do everything.

It’s worth having a look on eventbrite to see if there are any business support sessions in your area. BIPC is a national incentive so there may well be. Or can your Folksy Local ambassadors point you in the right direction for local support?

Good luck with your new business. :blush:

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Am I right in thinking that if you are unemployed, you have the personal allowance tax-free? In which case, the £1000 trading limit is not applicable?

Depends what benefit you are on. Some like universal credit are done by thresholds. The best course of action is to speak maybe to citizens advice or the benefit office itself. If claiming unemployment benefit always used to be you could not earn either or employed or self employed whilst claiming.

Thanks @Caroleecrafts. The only money coming in is carer’s allowance.

The £1000 turnover limit is merely the limit below which you are not required to submit a tax return. It’s not in any way related to tax allowances.

If your business turnover is greater than £1000 in a year, you have to submit a tax return, however, you will not necessarily have to pay any tax. My turnover is enough that I have to do a tax return every year but, ever since I gave up my full-time employment, I’ve never earned enough from my business to have to pay any tax because I haven’t reached my tax allowance.

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Ah, I get it! Thanks @PocketfulCreations. My assumption was wrong in thinking that submission meant expectation of paying tax.

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You’re welcome - I’m glad I could help :blush:

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Thank you for advice

Thank you for advice, it’s great support.

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