Been done to death but still need to ask!

[SmileNails]

I know its been done A LOT, and i have searched for it on here, but still need help regarding tax, NI payments etc....

Ok so this is the sticky side of business.... Off to do my spray tan course (very excited) but the glow is wearing off now im thinking about tax etc.

How does it all work?? Yes, il contact HMRC, and going to speak to citizens advice, but would like some info from those who are already paying it etc! I know i have to declare myself as self employed.

I will be advertising via facebook, local newsletter, business cards etc, but i only live in a small area and dont expect to earn a lot. More pocket money really!

So is there a limit you have to make before paying tax?? What about expenses?? National Insurance?? Its really getting me down to point im wondering if its actually worth it??xxx

 

[Miss Pink23]

Dont panic.
Is this your only source of income? If so, everyone has a personal tax allowance per year that you can earn before paying any tax - its £6075 for 2010-2011, so if you dont earn this much then you wont pay tax.
When self employed you have to pay class 2 and 4 ni, but if you dont expect to earn more than £5075 per year you dont have to pay class 2 and can get an exemption certificate from the tax people. If you dont earn more than £5715 you wont pay class 4 either.
hth's
x

 

[Jenx]

I automatically started to get charged for NIC as soon as i informed them i was self employed, you can contact them and ask for exemption from NIC if you expect to earn a profit of less than £5715 (as ststed above). If you pay the NI contributions then you will need to wait until the next tax year to claim them back. If you do earn more than expected then you can just give them a call and they will back date your NIC payments.

 

[SmileNails]

Oh thank you!! That helped a lot!!

Its MY only source of income, in that i dont work - however my husband works. His wage bracket is approx £26,000 p/a. How would this affect things? I have my own bank account in which my child tax credits gets paid into but its only minimum which every parent gets....xx

 

[SmileNails]

thank you Jen.... i dont expect to earn that much, im not in a particularly 'beauty pride' area! I think il be used for special occassions, not as something people come back every couple of weeks for.xx

 

[Miss Pink23]

YOUR tax payments are not affected by your husbands earnings.
I dont know how your earnings will affect your child tax credits if at all, but definitely wont affect your tax.
If you dont expect to earn that much, then simply register as self employed, ask to be sent an exemption certificate and then just fill in a tax return at the end of the year.
have fun on your course

 

[SmileNails]

oh, and also - initially i wont start making ANY money as itl be used to pay back the price of the course, equipment, products etc.... how can does that work in regards to the tax cos surely i cant be taxed when im not making money - iykwim!! :irked: xx

 

[SmileNails]

thanx miss pink - uv just said it as simple as i needed!!! Will ring for an exemption form and do the tax return at end of year.... Oh lordy thatl be a tricky one!!!!xx

 

[Miss Pink23]

No probs.
Oh thats fine, I panicked before I started, but actually its fine, half the boxes are left blank anyway as they dont apply to small businesses.
x

 

[Susie H]

oh, and also - initially i wont start making ANY money as itl be used to pay back the price of the course, equipment, products etc.... how can does that work in regards to the tax cos surely i cant be taxed when im not making money - iykwim!! :irked: xx

Everything you buy for the business needs a receipt, write on the back of each receipt, what it is for, how much and the date. This is because, ink fades, till receipts sometimes don't say what they are for, e.g. desposible knickers might just say consumables, leaving you scratching your head as to what the heck you bought.
When I say everything I mean everything, training, fuel going to and from clients, or training Keep a note of millage too.
The clothes you wear and shoes when you work.
I've only ever used a cash book.
I open at a double page, left page is what I've paid out, right page what's come in.
So it would be:
Jan 2nd 8oz acrylic £** Jan 3 pink and white Acrylic nails £**
Jan 5th Minx x4 £**
And so on for the week And so on for the week
bottom of page Add up the costs on the left and the profit on the right.
I keep all my receipts in envelopes, one for each month with the month written on the outside.
The self assesment on line form is very straight forward.
Just remember on the bit that says other income, it is not asking for your husbands income, or your tax credits it is asking for any other taxable income that YOU receive, taxable savings etc.
So if like most of us you have none, don't put anything in this box.
Once you start the new tax year. Put the last ones in a box and store somewhere safe, the tax man can ask to see your books going back 7 years, so that's how long you need to keep them, just incase.
I recently got a tax demand for the year 2005/6 and was able to prove that they were trying to get me to pay tax on my working families tax credit. Had I not kept all those bits of paper I would have had to have found nearly £500! Their mistake, not mine!

 

[sugar&spice]

i only started last yr ive had to do a tax return but i didnt need to pay tax or insurance, but still have to fill one in! so fill one in just incase and hun dnt worry i buggered my tax return up today lol i bought a cd from ebay it was beauty salon book keeping ive found it very good and helpfull x

 

[tina]

how does it work then if beauty is my bit on the side from my main job, so i have a full time job which I clearly earn over £5000 so would I automatically have to pay tax because someone told me that I dont have to declare my beauty work because its pocket money and no way earn over the tax threshold with that.

 

[SJK]

how does it work then if beauty is my bit on the side from my main job, so i have a full time job which I clearly earn over £5000 so would I automatically have to pay tax because someone told me that I dont have to declare my beauty work because its pocket money and no way earn over the tax threshold with that.

When you declare yourself as self-employed, it will trigger HMRC to send you a tax return form. You will have to pay tax on your beauty earnings, because the total earnings from that and your full-time job are over the tax threshold.

If it were the case that you don't have to pay tax on your beauty earnings because they are under c£5000, then what would stop you getting several jobs each earning under £5000 and not paying any tax at all? Unfortunately it doesn't work like that and HMRC look at your cumulative earnings from all jobs.

 

[LadyGray]

Everything you buy for the business needs a receipt, write on the back of each receipt, what it is for, how much and the date. This is because, ink fades, till receipts sometimes don't say what they are for, e.g. desposible knickers might just say consumables, leaving you scratching your head as to what the heck you bought.
When I say everything I mean everything, training, fuel going to and from clients, or training Keep a note of millage too.
The clothes you wear and shoes when you work.
I've only ever used a cash book.
I open at a double page, left page is what I've paid out, right page what's come in.
So it would be:
Jan 2nd 8oz acrylic £** Jan 3 pink and white Acrylic nails £**
Jan 5th Minx x4 £**
And so on for the week And so on for the week
bottom of page Add up the costs on the left and the profit on the right.
I keep all my receipts in envelopes, one for each month with the month written on the outside.
The self assesment on line form is very straight forward.
Just remember on the bit that says other income, it is not asking for your husbands income, or your tax credits it is asking for any other taxable income that YOU receive, taxable savings etc.
So if like most of us you have none, don't put anything in this box.
Once you start the new tax year. Put the last ones in a box and store somewhere safe, the tax man can ask to see your books going back 7 years, so that's how long you need to keep them, just incase.
I recently got a tax demand for the year 2005/6 and was able to prove that they were trying to get me to pay tax on my working families tax credit. Had I not kept all those bits of paper I would have had to have found nearly £500! Their mistake, not mine!

I just wanted to thank you for a fabulously useful post! THank you!

 

[perfect10kb]

Just wanted to say be VERY careful about the NI exemption . When you have a child you have a period where your contribution is credited for you ( think it is till the child is 16 but check)


However if you go dowm the exemption route then you will probably find that your State pension ( I know it may seem along way off but it will come quicker than you think :-( ) may be effected .


I did just that and was exempt for many years untill i find that out . Now you can pay class 3 ( I believe ) and that is only about £12 per month . If you don't do that when you come to retire you may find you will not recieve the full state pension as you do not have enough 'accredited' years


Kind Regards
karen