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Saturday, April 03, 2010
I have come across quite a few online sellers recently who call themselves "hobby sellers". I have no idea where this term comes from but as far as the tax office is concerned there is no such thing. I have put together this check list of things to do once you start to sell your handmade goods.
Don't let them catch you selling illegally you could face a fine of up to £1,000.
This is for UK sellers only, sellers from outside the UK will need to seek advice from their own countries tax offices.
Firstly are you a business? If you buy items to sell or make items to sell then yes you are. If you are selling your unwanted belongings then no you are not.
1. Register with HMRC for tax and national insurance as soon as you start advertising items for sale. Failing to do so could land you with a fine up to £1000.
You need to do this regardless of any other jobs you may have, or you dont make any profit. Most small businesses run at a loss for the first few years. You could even claim tax back if this is your second job.
Dont worry about VAT, this a completely different thing and you need to be making an annual profit of at least £70,000 to qualify for VAT registration.
2. If you are claiming any tax credits you will need to notify them as soon as possible. Dont worry, your payments will not change if you are not making any or are making very little profit.
If you claim any other benefits i.e. income support, job seekers allowance, housing and council tax benefit then you will need to contact your local benefit offices to let them know. As with tax credits your benefits will not change if you make none or very little profit.
3. Keep records of everything going out and coming in. Print out all invoices for all incoming and outgoing and organize them accordingly. Don't forget things like listing fees, postage, packaging, printer ink, paper. Anything you use for your business can be included.
Doing this makes it easier for you when you need to provide paperwork for the benefits, tax credits and your annual tax return.
I use a ring binder folder with seperators to keep things in order.
4. Tax returns are not as scary as they sound. If you keep all your paperwork in order throughout the year they are in fact very simple to fill in. Keeping all your paperwork in order will also keep you from needing a book keeper or accountant, and save you a lot of money.
5. If you are unsure of anything contact the tax office for advice. They are very friendly and very helpful and will let you know exactly what you need to do if you are confused with it all or have any doubts.
6. That's about it so now you can relax and enjoy your new business. I wish you the best of luck with your new venture.
Useful links
HMRC for businesses
Business link
Tax credits
All other benefits
1 comments:
Great post, and very appropriate! I had to make the decision myself whether to declare myself a business or not, and I decided it was just safer! I sleep much better at night for it, and here in the US at least, I can even make deductions on my taxes for things like my jewelry making tools because they are business expenses!
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