Would anyone be able to talk to me on the phone about this? I understand the rules for paying tax etc but it's just this one service that I'm not 100% understanding :/ x
It doesn't matter what service you're doing, they're all the same tax-wise
Ideally you should have a separate business acount and keep everything separate so you know what belongs to where.
For the purposes of tax, you only pay on your profit. So if your bring in £500, but £400 of that goes on supplies then you have made £100 profit. Therefore, you only pay tax on the £100 that you haven't spent on products.
When recording your accounts, you'll have a section for incomings, and another for outgoings. At the end of your tax year you could have Sales totalling £20,000, which sounds absolutely amazing! However, you didn't keep all of that money, did you? Because you had to buy stock in order to do these services.
Based on the above numbers of £500 per service, with £100 profit: 20,000/500 = 40 clients.
40 clients x £400 stock = 16,000.
20,000 incomings - 16,000 outgoings = £4,000 profit.
4,000 profit / 20% tax (lower rate) (40% higher rate) =
£800 tax to pay (£1,600 higher rate)
That is a massively simplified model, because you will also have petrol/advertising/sundried to pay for, so your tax bill may not even be as big as £800 but I hope it gives you an idea?
Forgive me if I'm teaching you to suck eggs but you record absolutely every penny that comes in or goes out of your business. But you only pay tax on the amounts that you have leftover after everything has been paid for.
If you keep your records neat then the tax return is very, very simple to fill out and they will calculate the amount to pay for you, so you don't even have to worry about it
A handy tip is that when you get paid, put 30% of your profit into a separate account and that way, when you come to pay your tax, you won't have to scramble to find enough money
I hope that helps a little?