advice on keeping receipts for business accounts

[blush09]

hi there

i have spent a small fortune over the last 12 mths on training, on my "practice" kit and on various bits and pieces for my business, although i dont actually plan to start trading until oct 09.

some of the receipts will be 18 mths old by then, ie my college course receipt, will i still be able to submit it as part of my startup costs?

also, is it a legal requirement to register with companies house as i shall be only be a sole trader

many thanks
blush09

 

[loubylou]

As a sole trader you only need register with the inland revenue.
You can claim for the receipts that you have that will go back 18 months, you just put them all in one folder and hand them to your accountant who will off set them against your first years books,
the only training course that you can not claim for is the very first one that you took,
all courses after the first one can be claimed for, hth :hug:

 

[blush09]

i did phone the inland revenue and they more or less told me not to bother them until im ready to start trading, i asked if they could send me some info anyway and the woman reluctantly said yes - that was 3 weeks ago!

just to make things complicated, i shall still be working full time for the first year or so to support myself and may still have to work part time after i break even - presumably the tax i will eventually pay on my business is totally seperate to the tax i pay through my employment or will they say i have already reached my tax allowance .. hope you get what im asking, im even confusing myself!

 

[catsaremad]

Shortcut to: 5 things you must do when you go self-employed

Hi

The above is the link to the inland revenue website with Tips to being self employed. You usually have to inform the Inland Revenue that you are trading within three months of starting trading. However after speaking to my collegue (I work for a firm of Accountants !) we think that although you won't be trading until Oct 09 you may be better off to start trading from 6th April 2009. That way any even if you are making no 'sales' training courses and expenses are automatically considered 'trading' costs.

Therefore your first tax return will be due (if its done online) on 31st jan 2011. This will incorporate your income and expenditure to 05/04/2010 and your P60 (from your employer) as at 05/04/2010.

What usually happens is that your trading profits/loss for the year are added onto your gross salary then that years allowance is deducted to get to your taxable income. The tax due is then worked out on this amount.

I would suspect that in your first year trading due to pre trading costs and capital allowances you would make a loss and would probably be due a refund !

Also remember that you can claim back for such business cost as using home as office, mobile phone costs,travelling costs, professional subscriptions,internet and accountancy fees etc. The trick is to be reasonable !

Do shop around for a good accountant, the more you do yourself, the less you should have to pay ! At the most I would say that a tax return will cost £250.00.

Well I hope thats helpful !!!

 

[wah-nails]

Even if you are not trading you can be registered as self employed. But from your situation the only problem is that your receipts needs to be dated WITHIN your registered self employment and if you havent registered yet you need to back date it.

Soooooo my advice would be :

1 - Call 0845 915 4515 and say " i want to register as self employed from xx/xx/2008" this date should be when you did your first bit of training. Even though they SAY you are meant to do it within three months they tend NOT to fine you. I registered after 8 months and had no fine. So this date can go way back.

2 - Then start keeping all your receipts into piles of food/travel/phone/training/equipment and those piles into a folder for each month.

Then in the future you need to keep a record of all profit.

3 - You wont have to do your tax return til this year (oct 31st 09 for paper, jan 31st 2010 for online) for the first financial year - which for you will be xx/xx/08 - april 4th 2009. It doesnt matter if you havent made any money. In fact its better. My tax bill this year was crippling

Hope this helps.

 

[Susie H]

I would just add, get into the habit of writing on the back of you receipts what you bought, how much you spent and the date. I say this because some places just give you a cheap till receipt and over time the details fade so if its on the back you won't get in a muddle.
Have a look at the self assessment form on line, I used a book keeper the first year, cost me £300 and when I looked at the form I found that it was easy enough to do the job myself, thats £300 that I got to spend on stock etc.
I kept a simple cash book, one page for income and the other for out goings and just took one figure from the other each week.
The first time I took it all to my local tax office and their adviser went through it all with me to make sure I'd got it right, they are very helpful:lol:

 

[wah-nails]

I agree with Susie - write what you bought, i always forget then cant justify the expense. And yes, its very easy to do it yourself. Mine cost £357 and i seemed to do all the work for her...totally agreed.

I would also reccommend setting up a separate bank account for these transactions, make it easier to see what you spent. doesnt need to be a business bank account, as these can cost you.

 

[joe90]

the only training course that you can not claim for is the very first one that you took,
all courses after the first one can be claimed for, hth :hug:

Now I was told differently from the Tax Office:

Any courses that give you a new skill cannot be claimed for. However, if you took a basic waxing course for instance you couldn't claim for that but any subsequent waxing courses are adding to your already gained skill and they can be claimed against tax.

Sorry to muddy the waters here but I would check this out with the IR as we all seem to be given different info. Make sure though that you get the person's name that you speak to, also make a note of the time and date of your conversation as the IR have a reputation for denying everything at a later date!

 

[catsaremad]

Joe90 is correct, under the IR regulations you are not allowed to claim as expenditure your first course due to the fact that at that point you can not be trading. You can claim back for refresher courses and further training in the area that you have taken the previous course for. ie Beauty therapy, college course in beauty therapy not able to claim but futher course on eg dermologica facials is ok !