Do I need to register as self-employed?

[Rhona_]

Sorry guys, I know variations on this kind of thing have been asked countless times, but I've exhausted the search function tonight and still don't really know what I'm meant to do.

I'll be finished with my beauty therapy college course in June. I've just started to look for part-time salon jobs, and by June I'm hoping I'll be able to find something full-time. For the time being, I want to be able to do some mobile treatments for friends/friends of friends etc.

I'm just not sure whether there's a fine line between "doing treatments for friends" and running a business, or if it all just counts as the same thing (legally)?!

I'll probably try to get a wee Facebook page organised and print up some cheap business cards for my Mum to hand out to friends etc. I don't expect/want to be busy, just something to keep me entertained, maintain my skills and get some money through for doing tans, eyelashes, threading and waxing, maybe like 1-2 appointments per week. Obviously I'll be getting insurance sorted but what about the rest? Registering as self-employed? Taxes and NI? Registering whatever name I choose to print on my business cards?

Please help!

 

[meme1234]

i think its better to register, even if your only doing a small amount. you can get a small earnings exemption certificate for ni contributions (so you dont have to pay) and if your going to have a facebook page/business cards etc it's better to register as hmrc can you social media to check up on people (if that makes sense )

 

[ballyboo]

ANY income has to be declared in the form of a self assessment tax return. This doesn't mean you have to pay tax if you earn less than the tax threshold but you have to declare everything x

 

[Rhona_]

Thanks guys. Luckily I've got a day off today so I'll try to get the ball rolling.

I really hope it's not too complicated because that would probably put me off doing it altogether to be honest..!

 

[izzidoll]

When you call HMRC they are always very helpful, and they also run free courses to help you with all aspects of running your own business and doing your 'books' . When you keep yourself right there is no need to be afraid of the taxman lol!
Good Luck.

 

[Rhona_]

Thanks Izzi! I'll probably give them a call later today, or maybe pop into Business Gateway. I suppose all these extra bits just makes it all a bit more exciting and "real"!

Although, it does make you realise how many people don't do it "properly". I know far too many girls who go around doing mobile treatments, or rent beauty rooms, without taking care of any of the legal side of things. That's what made me wonder!

 

[j.smith1981]

I am in a completely different area of work but just wanted to help out as it where but in the great scheme of things they don't really notice small amounts of increase in your personal income to be brutally honest.

The worry is when you start to think what if, but if you think about it logically they would notice say one month when you have say £100 increase in income against say £5 (which to be hones they wouldn't be that bothered about).

But you should yes declare everything to stay legal, you can claim against things you used of course, I don't pay for any of my books for work, the taxman does, all my reference books I keep at work are mine but I don't pay tax on them, my Internet access I get sort of paid for by the taxman. My uncle in Australia claims his computer against his tax.

There's all sorts of things you can get the taxman to pay for and is perfectly legit, take even a uniform say as an example, they should legally provide you with washing facilities at work then you wouldn't have to get a tax rebate on the washing of your uniform, in the great scheme of tax you can get rebates for the washing of your uniform, it's not much but it's a reduction in your tax each month. At the end of the day you can try things and all they can do is say no it's when you lie about any financial things that's when it's wrong and imorale, my mother got her computer paid for by the taxman but they wouldnt give her it all in one go so their spreading it over 3 years and 2 years has already passed. She gets the bigger proportion of her tax rebate at the end of this financial year in March.

They won't though fine you for not delcaring anything in your expennditure that you could have used for a tax reduction, since it's more money to them to be fair, it's just you lost out on some money you could have saved.

 

[Rhona_]

Thanks for your perspective! It's a lot to think about. I think I'm going to have to talk to someone in person/over the phone about it all before I get it all sorted - just to make sure I'm doing it right!

There won't be a huge difference in personal income for me. I earn/spend like crazy in the first place and the bank never picks up on it. Which is why I wish I could just do a couple of treatments for friends here and there without officially becoming a business! But oh well.

 

[j.smith1981]

To add even more complexity to the issue about taxable income or business income (like VAT) is that on your personal income on your tax it's done as an estimate.

Well I mean say you worked for 3 months, you paid tax on that income because you'd use up all your allowance, I was a Senior Banking Officer at RBSG (The Admin side of RBS) for nearly 3 years left to go to University, by that April I could then get a tax rebate on my income for from the end of October to March because they would have taxed me from the previous start of the financial year to October asif I would have been working from the end of October (I think it was) to the end of March.

So I would in a sense have paid too much tax and as I was not going to be working or hadn't worked the previous tax year I wouldnt have got that back as a rebate should I have started working again, if I had started working prior to the end of the year I would have got the previous tax I had paid as a rebate of the percentage of tax I owed (it's complex but it's all really logical honestly).

It's easier when your payroll department if you work for a company that has one, because they have a flowchar for your income tax but when it's just you it gets a little more tricky. In the US I think it's a system where you are required to do this even if you do have a payroll department, that's when you get systems like Sage and all that kind of stuff.

I mean you are in inverted comma's supposed to declare it but, if say its £100 in a whole tax year and that's all you've done, could probably get away it's a bit of a grey area but hey can try, I mean you can make a claim that if you where fined for it (which they will do since they insist you know this), that you could claim you can't afford it in one go so you can pay it over a certain period, should you be out of work that's when the whole thing gets a bit tricky.

I mean one taxman would say hey somethings up here and one person would be like ahh thats fine and not really bother.

 

[Rhona_]

So here's my plan of action for now.. Could anyone tell me if this looks about right?! Or am I missing anything obvious?

- Register as self-employed with HMRC and sort all things VAT/NI/tax-related.
- Look into business banking (is this a necessity?)
- Sort insurance including professional indemnity insurance, public liability insurance and amend my current car insurance
- Design business cards and price lists
- Create a business e-mail and Facebook page
- Keep a record of all incomings and outgoings, including mileage

Any help appreciated!

 

[j.smith1981]

I think it's all covered but I mean I wouldn't say I am an actual self-employed person, but logically thinking about it should be ok the list you have.

Someone else might have a better opinion who's actually done this of course.

The very best of luck with it too!

 

[Rhona_]

Thanks for your help! Hopefully I'll get some other replies too.

 

[Baggybear]

No need for the business banking. You will probably be dealing with cash in hand and using your own money to purchase things as well as what you've earned, (so IF you were to be investigated they would look at your personal bank anyway to verify your spending ect.).

You can print off and send your NI exemption aplication.
http://www.hmrc.gov.uk/forms/cf10.pdf

 

[Rhona_]

Good!! So glad to hear that, didn't want to be faffing about with another account just for a few pennies.

And thanks very much for the link!

 

[Baggybear]

Oh and you do have to register as self employed when you start charging people but you have 3 months from your first paying client to do this so if you decide to wait until after you have done a client or 2 that is fine.

 

[izzidoll]

Baggybear is right you don't need a business bank account when you start out.
It is best to have a seperate bank account to keep your business money seperate from your personal money, but that is something you can sort out later once you are actually earning money!
You definitely don't need to worry about VAT as you dont register for that until you are making over £30,000 a year, or thereabouts I can't remember the threshold off hand.

As Baggybear has said you have 3 months from going self employed before you need to register.

Looks like you have everything else sorted, there are lenty threads on here about Insurance and everything lese you mentioned so do some searcheson here and you will be fully clued up in no time.

 

[Rhona_]

Thanks Cheryl, I thought I'd seen something like that in another post, that's good to know.

While I've got you here....! Do you know if the standard beauty insurers (The Guild, BABTAC, Salon Gold etc) cover the professional indemnity insurance & public liability insurance aspects in their policies? As in, does it all roll nicely into one or am I meant to be looking for three policies?

Sorry to keep this thread going & going.. But hopefully it'll be helpful for someone else to look back on if they get searching for the same kind of thing!

Edit - Thank you to Izzy too! You're all so helpful. I was a bit worried this thread was going to get swept away unnoticed so I really appreciate you taking the time to help. Luckily I'm just about clued up now..!

 

[j.smith1981]

I think would make sense for them to charge for such an account too, I mean with a merchant account setup they give you paid for services as to why yea you should not really be using a business bank account to start off with, like financial forecasting at the larger end of the spectrum of businesses or financial advisor's that kind of thing, which expect to be paid of course for their work.

Unless you don't have the capital to start with in which case you go into the idea of loans but as of course the economy being the way it is that's a really bad area to go into. Though having said that loans are not impossible but their more reluctant to give them out because theirs a tightness on the Bank of England issuing money to the banks but that's going into the political banking system and that's not really entirely relevant here.

I say that because I have taken out a loan in the last 2 years in the sense of a mortgage so they will give out but only if you have a good credit file to go off in the first place.

 

[Baggybear]

I am with Salon Gold (freelance policy) and the one policy covers me for all I need being mobile. Last year I added extra cover for my equipment & products too but decided not to renew that this year.

(I was unsure when I started out, just how much of my kit might be in the car at any 1 time and so I got the extra cover incase of it all being in there and getting stolen. It has turned out though that the cost of my excess was more than the value of all the equipment I ever had in my car at any one time).

 

[Rhona_]

I've seen a lot of mentions for Salon Gold so I'll need to check them out ASAP. Thanks again, so helpful!