Setting up a buisness?

[Ben-BSH]

Been thinking alot recently, and i would love to take the current "can you have a look at my PC, ill throw you a bottle or two of booze" further, and start charging properly, for web design (which i am really into, and have several people interested in, wanting sites, and offering money) PC repairs, etc.

 

What is the best way to go about it? i am not the type of person who is just happy to take £500 to make a site, and not declare it, as karma would only ensure (should it be illegal, im not even 100% on if it is or not, to take money to do a website and not declare it as earnings) i would get caught out, and then be put in a lot of trouble.

 

I have seen it looks like about £35 to set up a company via a online website, which just seems to good to be true, im sure there are more hidden costs (of course i know i would have to pay tax on my earnings) but is there anything to watch out for? or more importantly a morally and legally correct way to do things like web design but not require all the fuss and hoohah?

 

Thanks in advance

update 1

 

Just an update, have spoke to the line manager, he reckons its much easier, starting off, to simply declare all "extra" earnings at the end of the year, on the big form thingamujiggy (going back to Witch's comments on voting, yes, just coming out of Education, i know NOTHING about tax or voting, or any "life important stuff")

 

What are the benefits of this also? and pitfalls i should look out for?

 

Thanks guys & gals

update 2

 

one thing i did forget to mention, sorry, DOH! i am in full time work already, as an IT Tech, this is spare time stuff working at home.

Edited May 6, 2010 by Ben-BSH

[Ben-BSH]

Just an update, have spoke to the line manager, he reckons its much easier, starting off, to simply declare all "extra" earnings at the end of the year, on the big form thingamujiggy (going back to Witch's comments on voting, yes, just coming out of Education, i know NOTHING about tax or voting, or any "life important stuff")

 

What are the benefits of this also? and pitfalls i should look out for?

 

Thanks guys & gals

[jamesreedersmith]

If you register your company for a 35 jobby this will make you a limited company and liable for submitting annual returns that must be done by an accountant (£££) just register as self employed with the inland revenue and do a self assesment annaully.

 

Cheers

 

James

[Ben-BSH]

one thing i did forget to mention, sorry, DOH! i am in full time work already, as an IT Tech, this is spare time stuff working at home.

[Guest theeldergeek]

Been thinking alot recently, and i would love to take the current "can you have a look at my PC, ill throw you a bottle or two of booze" further, and start charging properly, for web design (which i am really into, and have several people interested in, wanting sites, and offering money) PC repairs, etc.

 

What is the best way to go about it? i am not the type of person who is just happy to take £500 to make a site, and not declare it, as karma would only ensure (should it be illegal, im not even 100% on if it is or not, to take money to do a website and not declare it as earnings) i would get caught out, and then be put in a lot of trouble.

 

I have seen it looks like about £35 to set up a company via a online website, which just seems to good to be true, im sure there are more hidden costs (of course i know i would have to pay tax on my earnings) but is there anything to watch out for? or more importantly a morally and legally correct way to do things like web design but not require all the fuss and hoohah?

 

Thanks in advance

 

Set up as a Sole Trader, you have no need to go limited unless you are going to get involved in VAT.

 

But yes, you can buy a limited company 'off the shelf' for next to nothing. You'll need to do your homework as to who is the best to buy from.

 

As for paying tax, you just need to inform the Inland Revenue (or whatever they call themselves these days) that you are now in business and they will send you a tax return to complete each year. Setting up a business is not difficult by any stretch of the imagination.

 

Personally, don't think of giving up the day job in favour of computer repairs. It's a mugs game these days, in my humble opinion. Far too many 'experts' competing for too little work, all undercutting each other and no-one really making a decent living. The only way you'll win, is to go big and offer full on business services, but with the current economic climate as it is, I'd not chance that even. Added to that, to offer business services, you'd have to give up the day job. No good saying to a business client, "I could pop round after work on Friday"...

 

EDIT : I see you only intend to do this part-time. Wise move.

 

Best way to go about it? Set up as a Sole Trader. No outlay actually required.

Edited May 6, 2010 by theeldergeek

[difinity]

Speaking from experience, it's only advisable to set up or register a LTD company if it's your only job. There is more tax to pay, paperwork is doubled and you need to get an Accountant to do your books.

As a sole trader, there is national insurance to pay, that can either be monthly DD or quarterly, it's currently £3.40 a week. Your books can also be done by yourself.

[Ben-BSH]

so are people in the agreement here that simply continuing like i am, but just declaring it all on the form i get at the end of the year, is not a good way to go? it seemed the simpliest when my line manager explained it to me.

 

i do not need to setup a company, i just thought it was the only legal way to be able to say yes to people asking for web design/ PC repairs etc.

[creese]

so are people in the agreement here that simply continuing like i am, but just declaring it all on the form i get at the end of the year, is not a good way to go? it seemed the simpliest when my line manager explained it to me.

 

i do not need to setup a company, i just thought it was the only legal way to be able to say yes to people asking for web design/ PC repairs etc.

 

Carry on as you are, if you have the time and energy. One day you may have to decide to drop the full time/original job and then would be the time to start a company.

[jamesreedersmith]

Seconded

[difinity]

I think you should be paying National Insurance if you work for yourself. You still declare your earnings at the end of the year. Speak to Inland Revenue, the woman i spoke to recently was very helpful.

[tsky]

Whatever you do , don't go for an LTD or PLC format - that means YOU are PERSONALLY LIABLE for any losses on the backend of work you do...

Just go for sole trader - it costs nothing, talk to the tax man, talk to your local business link direct service (it's free) and choose a trading name to trade under.

 

Pay your NI extra contributions to cover yourself and as long as you earn under something like £30-40K from your work you don't have to worry about VAT.

 

Pick up the phone and talk to the taxman, they'll put you on a self assessment tax return each year in which you'll have to detail main working stuff and your own venture losses and gains.

 

Go for it mate!

[localzuk]

Whatever you do , don't go for an LTD or PLC format - that means YOU are PERSONALLY LIABLE for any losses on the backend of work you do...

Just go for sole trader - it costs nothing, talk to the tax man, talk to your local business link direct service (it's free) and choose a trading name to trade under.

 

Sorry but that is simply not true. LTD stands for 'limited liability' - meaning that the losses that can be incurred are limited purely to the finances within the business, any personal assets are not included. PLC is not possible for a small company anyway, as you need to float on a stock market and most have entry requirements. If you stay as a sole trader, if you make a loss and owe money to a creditor, you are personally reponsible for that debt, and as such if you own, say, a house - you could lose it.

[tsky]

It is limited liability yes, but you are personally liable to the tune of several tens of thousands of pounds!

 

For what he's doing though he'll not be using creditors, if he was going to heavily rely on them then it's best to go for an LTD. All he has to do is ensure his SLA's and contracts show he is not liable for anything...

[localzuk]

It is limited liability yes, but you are personally liable to the tune of several tens of thousands of pounds!

 

You are only liable for the amount you put in to the business. So, if you set up an LTD, and were working with 3 other people, each of you is only liable the amount you put in. So, if you say you'll put in £10k, and only put in £5k, you are liable for the remaining £5k should the business fail. ie. the liability is limited to the assets available to it. If you set up an LTD with £10k investment, and pay the whole amount in, you are no more responsible for the future debts than anyone else is.

 

What tens of thousands are you talking of?

 

Oh also, to the OP - have you thought about professional indemnity insurance? If your actions were to lead to someone's computer blowing up, and you didn't have insurance, you'd be personally liable.

[Ben-BSH]

i doubt VERY much i will be earning more than 2k! this is why i was thinking possibily just delare what i do earn as additional income.

 

im on the phone to the Taxman/lady now see what he says, apart from "gimme ma money!"

[Guest theeldergeek]

It is limited liability yes, but you are personally liable to the tune of several tens of thousands of pounds!

 

For what he's doing though he'll not be using creditors, if he was going to heavily rely on them then it's best to go for an LTD. All he has to do is ensure his SLA's and contracts show he is not liable for anything...

 

I really don't think you should be offering business advice as you are clearly giving out bad advice.

 

If he put into his contract that he wasn't "liable for anything", it would undoubtedly fall foul of the Unfair Contract Terms Act of 1977 for a start, as well as probably scotching any chance of getting the business in the first place!

 

If he wants to cover his liability, then he would take out professional indemnity insurance and public liability insurance.

 

For what he intends doing, Sole Trader is the way to go. No question. He will be taken seriously by clients and be able to negotiate business rates on insurances and/or other services.

Edited May 6, 2010 by theeldergeek
tpyo

[powdarrmonkey]

Whatever you do , don't go for an LTD or PLC format - that means YOU are PERSONALLY LIABLE for any losses on the backend of work you do...

 

WTF? I think you have got confused in Business Studies 101.

 

In limited liability, you only stand to lose the money you have invested, you can't be pursued for debts the company owes out of your own pocket. However, companies are more complex to start and run properly.

 

Of course if you're a complete muppet you could be pursued in court for other offences, but not just debts.

[Ben-BSH]

Just spoke to the tax man, after shouting "gimme ma money!!!" repeatedly, he said, if i know how much i will earn, he can add it to my tax code, which i told him i do not know, so no thanks!

 

and then he agreed it might just be best to simply just phone them / go online, and say i have some extra earnings this year, fill out a form to say i have earnt an extra £900 and pay tax on it.

 

or thats the impression i got, sounds easy enough, any advice? i doubt the taxman would lie to me! but at the same time, i know NOTHING! (about tax, or what the future holds) and this year, i could earn an extra £5 or £1500 so it does seem the best solution to me.

[powdarrmonkey]

and then he agreed it might just be best to simply just phone them / go online, and say i have some extra earnings this year, fill out a form to say i have earnt an extra £900 and pay tax on it.

 

or thats the impression i got, sounds easy enough, any advice?

 

(disclaimer: not legal or financial advice)

 

This seems sensible and was the recommendation to me recently. If you want some proper advice in place of Edugeek Hearsay™ I will put you in touch with a small business/sole trader specialist.

[creese]

Just spoke to the tax man, after shouting "gimme ma money!!!" repeatedly, he said, if i know how much i will earn, he can add it to my tax code, which i told him i do not know, so no thanks!

 

and then he agreed it might just be best to simply just phone them / go online, and say i have some extra earnings this year, fill out a form to say i have earnt an extra £900 and pay tax on it.

 

or thats the impression i got, sounds easy enough, any advice? i doubt the taxman would lie to me! but at the same time, i know NOTHING! (about tax, or what the future holds) and this year, i could earn an extra £5 or £1500 so it does seem the best solution to me.

 

I have to say you are extremely honest. Anymore from me and I could land in trouble

[creese]

...... Edited May 6, 2010 by creese
Duplicate

[Guest theeldergeek]

Just spoke to the tax man, after shouting "gimme ma money!!!" repeatedly, he said, if i know how much i will earn, he can add it to my tax code, which i told him i do not know, so no thanks!

 

and then he agreed it might just be best to simply just phone them / go online, and say i have some extra earnings this year, fill out a form to say i have earnt an extra £900 and pay tax on it.

 

or thats the impression i got, sounds easy enough, any advice? i doubt the taxman would lie to me! but at the same time, i know NOTHING! (about tax, or what the future holds) and this year, i could earn an extra £5 or £1500 so it does seem the best solution to me.

 

I was under the impression you wanted a part-time business? Would it be correct to now say you just want to earn extra 'pocket money'? If so, then the advice given by the 'taxman' is sound; if on the other hand you are going to be touting for business with a view to being taken seriously, and perhaps expanding over time, then go down the Sole Trader route. You aren't going to run up debts for which you will be liable, are unlikely to break the VAT threshold and adequate liability insurance is cheap enough.

 

 

 

...

Edited May 6, 2010 by theeldergeek
removed comments

[Guest theeldergeek]

......

 

A bug report has been made as the forums seem to have a few issues with duplicate posting today.

[Ben-BSH]

I was under the impression you wanted a part-time business? Would it be correct to now say you just want to earn extra 'pocket money'? If so, then the advice given by the 'taxman' is sound; if on the other hand you are going to be touting for business with a view to being taken seriously, and perhaps expanding over time, then go down the Sole Trader route. You aren't going to run up debts for which you will be liable, are unlikely to break the VAT threshold and adequate liability insurance is cheap enough.

 

 

 

...

 

Yes, it is just a bit of pocket money i am after, sorry, that should of been something i mentioned, i only said the word buisness beacuse, as i will happily admit, Tax etc, i do not understand it all, or the ways and means, all i know is i want to be honest, and earn my living properly.

 

So basically, ring taxman after i finish my first job, let him know i have "extra" earnings, and would like a "self assessment form?" and fill in what i have earnt this year, extra, and pay tax on it. yes?

 

Thanks in advance, you guys have helped so much!