Money money money!!

[gemmat]

Am i right in thinking that for end of year tax, you have to earn over 5k to pay any tax?

I am begining to think of how much tax I will have to pay, although im not sure if i will pay any as my start up costs were quite high. I started in July and work three days a week.

So basically, I total up all my money coming in, take off my start up costs, rent, stock and any other outgoings (inlcuding uniform, mileage, training, etc) and the figure im left with is my profit?

How much % do you put by each month, or do you just pay it all at once in Jan?

I dont have a business account as I dont see any point yet as Im currently paying off debt that I had to take out to start up. Does this make sense? Am I right to do this?

I will be saving up for a facial machine (not sure which one yet), so any money Im left with will be put aside for this, once my debt is paid off. So in effect, im not taking any profit/wages.

Sorry for the long, boring thread, but could do with some advice from the more experienced business geeks!

Thanks xx

 

[persianista]

You are sort of rightish. Firstly some of your set up costs can be spread over a few years to reduce your tax bill in years to come. Secondly, saving up for a machine is kinda not allowable unless you buy it in that tax year. It will just be counted as cash in the bank.
My best advice to all self employed geeks and salon owners is to get a good accountant. they save you far more money than they cost you.

 

[jes]

Hi, If you mean loans etc when you talk about start up costs, please remember you can only claim for the interest charged on that loan

As for paying tax and NI... if this is your first year then your tax year will end on 5th April 2010. You then have to fill in your tax return, but you wont have to make the first payment until January 2011 and then again in July 2011.

You unfortunately also have to pay double for each of these payment so HMRC has (roughly) your next years payment on account:irked:.

Anyhow, I fear I've made it sound complicated, but really it isn't. You do have the basic idea, but I advise you have a look at the HMRC website as there's plenty of information to download and read. There's even this years self assessment form on there, which will give you an idea of what you'll be filling in next year

jes

 

[Susie H]

You should talk to your local tax office, or your bank, personal bank is just as good as business bank, about taking a business course. These are done as workshops and are usually free to new small business people. The advise above is good and clear. The most important thing is to talk to the tax office, you need to register your business and bear in mind that your NI contributions will be class 2 and 4?. Class 2 is about £3 a week, you can pay this monthly or 3 monthly and set up a direct debit to do so or make one of payments. The other is payable with your tax bill and is calculated alongside it. As already said the real bug bear is that you have to pay your tax 6 monthly in advance and then the following year if the projected profit is not accurate you make adjustments up or down.
My best advise would be to take a course on running your business, my oh has just told me chamber of commerce is another one to check out for business workshops and then before you submit your self assessment form pay a book keeper to look over them. A good one will save you a fortune.:hug:

 

[hippy-chick]

you only pay your tax bill 6 monthly if you are actually counted as having profits.

I have an accountant who returns my tax return for me, so keeps on eye on me.
as I don't have much profit (because I constantly invest in the business) I only pay Class 2 NI and submit my tax return once a year.

Large equipment is counted as capital gains, so you can only claim 25% of it, but then carry that on for another 3 years.

Your set up costs will probably cover your tax bill. For example:

If you have taken £10k
Spent £5k on the business
Take into account you can earn £5k before tax
You won't get a tax bill.

 

[Vetty]

Definitely go on an Inland Revenue workshop, they are so useful. The people running them are really friendly and are there to help you not scare you!

I do my own tax returns and going on the IR workshop helped me enormously.....