mad4x4
|
| posted on 30/1/10 at 05:05 PM |
|
|
OT : Hobby v Business
SO question is:
We started helping out doing the Odd karaoke and disco about 6 months ago, This has now grown to 1 -2 gigs a week and each gig we (myself and G/F) get
paid about £150 total.
We both currently work with full time jobs.
When does this casual hobby become deemed as a business. And do I have to register as a business and do accounts /vat etc.
we are also starting to advertise with /work with and for another DJ that put his own work through his Taxi company
All advice Welcome
Scot's do it better in Kilts.
MK INDY's Don't Self Centre Regardless of MK Setting !
|
|
|
|
|
Tatey
|
| posted on 30/1/10 at 05:20 PM |
|
|
Personally I would class something turning from a hobby to a business only when I use it as my primary income. So I would still class it as a hobby
for you.
Im not entirely sure about registering it as a business and doing account, but I think it is only when you start earning a certain amount.
|
|
|
Nash
|
| posted on 30/1/10 at 05:20 PM |
|
|
You don't have to register as a business. You do need to declare the income.
The real question is when is it worth registering the business?
An Accountant will advise but as a ball park its to do with Tax, NI, savings you can make offsetting your purchases against tax etc.
Regardless of company status, consider insurance (Public Liability, Professional Indemity, loss and damage).
Good Luck
.....Neil
It's What You Do Next That Counts.
Build It, Buy It, Drive It:
Southern Kit Car Club
|
|
|
iank
|
| posted on 30/1/10 at 05:23 PM |
|
|
I suspect you are deemed a business (rather than as a hobby) by the tax-man as soon as you start earning money.
They probably turn a blind eye if it's just petrol money but £1k a month doesn't sound like a hobby any more.
I think you need to get some professional advise about your business options sooner rather than later, you'll certainly have to start declaring
the cash and paying tax.
[Edited on 30/1/10 by iank]
--
Never argue with an idiot. They drag you down to their level, then beat you with experience.
Anonymous
|
|
|
designer
|
| posted on 30/1/10 at 05:31 PM |
|
|
All extra income has to be declared.
|
|
|
907
|
| posted on 30/1/10 at 05:50 PM |
|
|
You could register self employed as a soul trader. 
Paul G
|
|
|
zilspeed
|
| posted on 30/1/10 at 05:56 PM |
|
|
I know lots of people who 'got away with it' for years.
Then all of a sudden, the tax man approaches them at the gig (yes really) and hits them with the tax bill based on the assumption that you've
been doing it for years. It ruins lives. when it happens like that , so best to not let it happen in the first place.
A good accountant is the first person you should speak to, they will give you the best advice, especially if they're experienced in this field
as many of them are.
I've done work in the past with other guys in bands and some of them actually worked for HMRC, so it's not like they don't know how
it works.
|
|
|
Confused but excited.
|
| posted on 30/1/10 at 07:42 PM |
|
|
If the tax man decides that you owe X years tax based on current income and you say; "but I only earned a little bit each month to start,"
his reaction will be "Prove it!" And you will have to pay it all unless you can.
They take a dim view of 'fiddling'.
Tell them about the bent treacle edges!
|
|
|
JoelP
|
| posted on 30/1/10 at 08:23 PM |
|
|
i was under the impression that new profitable ventures must be declared within 3 months. As said, you may end up with a sore bottom if they catch you
out.
|
|
|
Brook_lands
|
| posted on 30/1/10 at 10:41 PM |
|
|
Good advice above.
You have to register for VAT once you hit £68,000 turnover per year. That's sales not profit. You can register before you get to that level so
you can claim back the VAT you pay but given the type of business you are running I doubt it is worth it.
With what you are doing public liability insurance is a must I'm afraid.
You don't have to become a business as you can operate as a sole trader or partnership.
Keep a record of all income and costs and that can include 40p a mile for travel to and from gigs for the first 10,000 miles and then 25p for every
mile after that in the tax year even if you car cost you less than that a mile. If you get paid mileage from you full time job those miles count
towards your 10,000.
You will then have to fill in a self assessment tax form each year declaring your profit as additional income. Divide it up between you and your GF to
minimise tax.
HMRC will adjust your tax code each year to try and get the "estimated" tax due on your extra earnings through your PAYE so you could see
your main job take home pay drop. This is not so bad if you are doing more or a similar number of gigs each year but if you do a lot less or stop
altogether you could end up paying too much tax. You'll get it all back at the end of the tax year but it can leave you a bit short in the mean
time.
It is quite straight forward to do it yourself but if you keep good records an accountant will charge about £250 - £300 for doing it for you. If you
are not confident about what you are doing tax wise the a few hundred quit spent with a good accountant can save you considerably more.
Get into the habit of putting 25 - 30% of what you estimate is your profit on each gig into a savings account AND LEAVE IT THERE. When a tax bill
turns up you will have the cash to settle it.
If HMRC think you are not being honest or hiding income from them they can make your life very unpleasant and it is generally a case of guilty until
you can prove you are innocent.
[Edited on 30/1/10 by Brook_lands]
|
|
|
mad4x4
|
| posted on 1/2/10 at 12:54 PM |
|
|
I guess I need to decide if it is worht the hassle to continue.....
Also does that mean that I can offset the cost of all our gear etc against the tax etc. About 90% of our gear was purchased new and I have all the
reciepts. Then running cost for my Car at 2x 20 Miles per gig.......
Surely I should be able to get the tax man to pay me....
Or does this get into the VAT realms.
If we opened a company and We both directors and invested about a good chunck back into the business could that help.
Problem I have is I already have a good job and just scrape into the bottom of Hi-tax bracket each year, so if I do just "declare" earning
straight off I will get hammered and be as well not doing it.
G/F is the same she has company car from her real job so will probably get hammered.
JEEES this is getting out of hand quick we both started this as a bit of fun to help out a mate who did disco's and it has mushroomed quickly
....
Scot's do it better in Kilts.
MK INDY's Don't Self Centre Regardless of MK Setting !
|
|
|
jeffw
|
| posted on 1/2/10 at 01:07 PM |
|
|
I do like the idea of a "Soul Trader"...bit like body snatching really 
You do need to declare the income the HMRC...
|
|
|
907
|
| posted on 1/2/10 at 01:38 PM |
|
|
quote:
Originally posted by jeffw
I do like the idea of a "Soul Trader"...bit like body snatching really
You do need to declare the income the HMRC...
Just my little joke, and a bad one at that.
I am registered as a self employed sole trader but the mis speeling was a reference to music. (disco)
The snatching we will leave to the tax man. 
AFAIK you can be registered self employed and be employed as well.
I'll get my coat.
Paul G
|
|
|
NS Dev
|
| posted on 2/2/10 at 11:42 AM |
|
|
quote:
Originally posted by 907
You could register self employed as a soul trader.
Paul G
lol like the tongue in cheek!!
Seriously though that's what we've done.
Actually registering as a business i.e. a limited company is a different kettle of fish, and an unneccesary kettle at that.
First real thing you need to worry about is VAT, and the threshhold is somewhere in the high 60K turnover area iirc, once you need to become VAT
registered then you need monthly accounts, and then the limited company bit is not so much extra workload, and "could" be worthwhile tax
wise, though nobody can tell you that without seeing your accounts
Retro RWD is the way forward...........automotive fabrication, car restoration, sheetmetal work, engine conversion
retro car restoration and tuning
|
|
|
Ninehigh
|
| posted on 5/2/10 at 11:00 PM |
|
|
When I did taxi-ing I kept a record of what I took in each day, and what I spent on stuff each day. I took it right to the wall, petrol of course is
tax deductable along with oil, windscreen washer, redex, tyres and so on under running costs. Also the vacuum cleaner at home would cost me a fiver a
week
Seeing as you've got a good idea of what you take in per year, work out what it costs you to get that money (and I mean everything, not 40p per
mile the actual petrol costs. Fill up before and after and keep the receipts.) You can also deduct the cost of the equipment but if you've paid
for it all up front I imagine it would be a one-off deduction the first year.
Have a look at where you're at then, and I think the tax rate changes for a second job (iirc it's a flat 25% so there's no worry
about higher bracket), see if it's going to cost you overall to run it. HTH
|
|
|
