Hi, I'm in the process of setting up a website which will be making websites for people in the local area using wordpress. I'll be putting up advertisements in the local doctors and other places around the area - however will I need to set this up as I would a business or? I'm from the UK. Thanks
If you have any income (not profit) from it then you will have to either: 1) Register as a self employed (a phonecall to HMRC will do the job) and then start doing tax returns 2) Start a company (Ltd) In all honesty it is best to speak to an accountant to talk through the two options and most accountants will give you a free 1/2 hours consultation. In very short; Sole trader - you and your business are legally the same. On all official documents (eg your website or your fliers etc as well as invoices etc) you must state Your Name t/a Your Business Name. If you are sued for some reason then it is you personally that is sued. Accounting is simple as you simply do an annual self assessment tax return Ltd - you and your business are 2 legally seperate entities. Your name doesnt have to appear anywhere. You do have legal responsibilities as a director but in general it is your business that would be sued not you. Accounting is much more difficult with the company and you individually having to make returns but it can be much more tax efficient. Generally, for small hobby businesses sole trader is the norm as the tax savings of having a company are offset by the extra time and costs involved with the legalities of an incorporated entity
Hmm slightly confused. You say if I get any income - but not profit? Whats the difference? If it matters I also have a part time job while attending a full time university course. Thanks.
Income = money received into the business (eg a customer paying for a site) Costs = money going out of the business (eg cost of printing the flyers) Profit = Income - Cost So if you paid £500 for all the flyers but only sold £400 of sites you would have £400 of income but no profit (ie you've made a loss of £100). Despite the no profit element you would still have to be registered as self employed (or incorporate a business) as you have the £400 coming in. If you are a student you need to look into the impact of either being a company director (if you incorporate) or self employed. It is many years since I was a student but remember that being a company director used to impact your student status (I could be wrong but I am sure it was about the excemption from council tax it impacted)