question on starting another small business

[puravida]

My wife, who is also a director and employee of Loose-Fit (our surf business) wants to set up a small business of her own to run from home.

It would be a really small start up - probably just taking a couple of hours a day and not really requiring registering or ideally even a business bank account etc.

Can she just run it under her own name to see how it goes for a few months? And take payments made out directly to herself?

[Alpha]

As far as setting up the business is concerned the answer is yes providing that she declares it on her tax return and if required pays NI.

A bank may allow her to put a few transactions through her personal account but if they suspect that it is being used for business purposes then they will require a business account to be opened.

[puravida]

Many thanks for that Alan.
Would I be better to set it up to take payments through my existing business do you think??

[Joyous]

It would be a really small start up - probably just taking a couple of hours a day and not really requiring registering or ideally even a business bank account etc.
Regardless of how small the business is she will need to register it with the Inland Revenue within 3 months of starting to trade. A separate business bank account is also a good idea because banks don't like people running businesses out of personal accounts, plus it's always advisable to keep your business and personal dealings totally separate in case the tax man comes knocking.

Can she just run it under her own name to see how it goes for a few months? And take payments made out directly to herself?
It's certainly advisable to test the business out by running it as a sole trader first. As a sole trader she can take out however much she likes from the business but she will have to pay the tax on it when self assessment time comes around.

Regards

Joy

[Joyous]

Would I be better to set it up to take payments through my existing business do you think??

You can do but I wouldn't advise it.

If, horror of horrors, you're ever the subject of an enquiry you'll have to explain where the extra income came from and convince them that it's not undeclared trading profits of your own business.

Regards

Joy

[puravida]

Great advice - many thanks both of you - I really appreciate it!!

Sounds like a new biz bank account is the way forward and then just see how it goes for a couple of months.

[profitxchange]

Go for it, BUT keep all the records of income and costs including travel, pencils etc eg a simple set of books. this will enable you to show to any inspector that you were not able to take the whole income as taxable income.