Student starting his first business

[newbeats4u]

Have you got any advice that will help me avoid heavy penalties in the future.
Because im classing it as a company would i have to get a business account?
Would that effect my student finances and council tax if i rent with other students?

Im keeping a balance sheet of my spending but what is the minimum amount until i have to declare to the inland revenue its quite daunting for a poor student like me, plus does it matter that i have a job too?

[Leo-InstallingIT]

Hi

You have to be careful with the word "company", that would suggest a limited company. Are planning on just being a sole trader? If so then you will simply need to register as self employed with the HMRC. You need to do this within 3 months of starting trading.

You wouldn't necessarily need a business account, you can use your own account. But I would recommend getting another account to keep the money separate (be it a business account or another personal one).

It may be worth having a chat with an accountant to begin with to check you are collecting all the required information; before you have problems trying to fill in your end of year return. It doesn't matter that you have another job, you will just declare the amount you earnt on your return and pay tax accordingly.

I hope this helps,

Many Thanks

Leo

[Scott-CopyandDesign]

If you want my advice, don't bother getting all wrapped up in anything like that until your business is making regular income.

Just concentrate on getting it running and getting the customers in. You don't want to deal with all the bureaucratic stuff and then end up getting nowhere with the business so make sure it's stable, then get an accountant on board.

[Leo-InstallingIT]

If you want my advice, don't bother getting all wrapped up in anything like that until your business is making regular income.

Just concentrate on getting it running and getting the customers in. You don't want to deal with all the bureaucratic stuff and then end up getting nowhere with the business so make sure it's stable, then get an accountant on board.

I personally would disagree with this, for the extra effort of registering and paying the bit of NI every week it gives you piece of mind.

Many Thanks

Leo

[newbeats4u]

when i say company or business to begin with it is just a website and the only way i will be generating money will be through advertising so i will not directly be selling anything as to begin with it will just be a community driven website but will grow into a site where i make revenue from other aspects.

Does it cost to register with HMRC.

As far as an accontant my flat mate who is graduating in econominics and business this year so i feel he should be able to support me , or point me in the right direction at least for now. I do know a proper accountant though so hopefully i can get myself a free session.

[Leo-InstallingIT]

Hi

No it doesn't cost to register.

However once you register you will need to pay class 2 national insurance at a flat rate every week. If you expect your earning to be very small you can apply to be exempt from NI. But to be honest for the amount I wouldn't say it's worth the effort of the form etc!

Once you register you will receive a tax return every year for you to declare your profits etc on; and pay the tax accordingly.

I hope this helps,

Many Thanks

Leo

[newbeats4u]

i was told that their was a minimum amount you had to earning to have to fill out a tax form, but when a tax form was needed you would have to go back straight to the start of your financial books.

I dont expect to be making big bucks in the first year and i first hope just to cover my costs of mainly hosting as my site requires alot of bandwith.

With myself being a student who recieves the maximum amount would this extra income go against myself?

Another hyperthetical question is this, if i was to become successful from this then would that count as an income and then would the debt i have acquired from my student loan,be paid through that? I imagine owners give themselves a salary? and not just take it out the funds when they need something?

Sorry for all the questions

[Scott-CopyandDesign]

I personally would disagree with this, for the extra effort of registering and paying the bit of NI every week it gives you piece of mind.

Many Thanks

Leo

Piece of mind against what? As you said people have three months anyway.

I just know if I was a student I'd rather focus on getting my first few clients, making them happy and seeing if my business idea is viable instead of registering and getting taxes and NI contributions sorted before I've even made my first penny.

Just my view of course.

[Leo-InstallingIT]

Hi

You will need to fill out a tax return no matter what your earnings. But if you are below the personal allowance you won't pay any tax on it. The allowance is something like £6,475 this year.

It wouldn't count against you really. Your student loan only has to start to be paid back a) if you earn over something like £15,000
and b) after the April following your graduation

Many Thanks

Leo

[Leo-InstallingIT]

Piece of mind against what? As you said people have three months anyway.

I just know if I was a student I'd rather focus on getting my first few clients, making them happy and seeing if my business idea is viable instead of registering and getting taxes and NI contributions sorted before I've even made my first penny.

Just my view of course.

Mainly just the piece of mind that it is done.

I agree, you could leave it a month or so to check that your idea is viable. But once you have made your first sale you are going to have to register anyway; so why not do it ASAP?

But obviously this is only my view, and yours is a perfectly valid one too :)

Many Thanks

Leo

[newbeats4u]

I think both points are valid and both extremely helpful and thanks to you both. I think i will look into both solutions but i think the tax is putting myself off for now as i think it would be best to see if the demand is there and i have something that works and in that case generates money, i dont want to put myself into debt, as i guess i am already on borrowed money with my degree.

I was advised to go to the bank for a grant too but again i dont think that is wise either because my idea might not work. I have great belief in my concept and i see the bigger picture that it can grow to, it just depends if i can do the simple things right first, which i guess my first 3 months will be for.

If i was to register my business and use my student home as base, as i have no offices as it is online based would that effect my council tax exemption or my house mates or even my land lord as that would also be a major factor

[Leo-InstallingIT]

Hi

Being self employed is no reason on its own to have to pay council tax. It should go on your earnings more than anything. But it is probably worth checking with your council. Where abouts are you located?

Many Thanks

Leo

[newbeats4u]

would selling advertisement space count as a legitimate sale? it sounds like a daft question and i think i already know the answer i think but im just double checking

[Leo-InstallingIT]

Hi

Yes it would. Anything that involves you bringing in money would be classed as a sale.

Many Thanks

Leo

[newbeats4u]

well il be regestring pretty much staright away then because i need to cover my hosting costs at least. But i think i will be applying to not have to pay NI until i reach the threshhold. I couldnt thank you enough LEO as you have given myself free invaluable advise that has stopped me falling flat on my face.

Thank you scott for your input too, i much prefer your way of not paying anything but it seems i will have to register when i sell my first advertising slot. which might take 3 months anyway

thanks to you both

[Leo-InstallingIT]

Hi

It's no problem at all. Glad I could help.

Another little tip, if you are going to register pretty soon (and we are in April). It may be worth putting the date that you started trading at the 5th April. This is only a little thing really, but it may make your life easier in the long run as everything would be in sync with the UK financial year.

I hope this helps, feel free to contact me if you need any other help now or in the future.

Many Thanks

Leo

[newbeats4u]

thank you very much indeed, im not in a postiton to call it a business yet as work has only really just began i still have a bit of market research left to do and the actualy website to build so i probably wont be trading for another 2 or 3 months, its a bit of a part time project due to my studies but in the summer i will have more time to dedicate to it