When do I register as Self Employed?

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Keepsakes

Free Member
Feb 16, 2008
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gorleston, great yarmouth, norfolk
  • #1
    This is my first posting, so please bear with me.....

    I have probably done this all the wrong way round but here goes. I am currently an adult tutor claiming Job Seekers Allowance, due to grant cuts and poor funding in my locality. I have been out of work for 10 months now.
    Having had time to myself and realising the ammount of hours I was doing at home unpaid, I would like to start up on my own with a personalised party favour business.
    So far I have completed a business plan, completed all of my marketing resources and website (almost completed) to be able to do all of this I have had to open a business bank account. As you all know it is more professional to allow people to write cheques to a company rather than an individual. Therefore my account was opened last July. I am only just starting to get my advertising out there. My account was opened with money (£500) given to me by my mother and has only been used to buy supplies, so far all of the things that I have made have been given away i.e at clubs, pubs, exhibitions etc to get the name out there. I have not sold anything yet and the £500 is now down to about £79.
    SO TO MY QUESTION:redface:
    I have not registered as self employed yet as I am terrified that my JSA will end and I will not have any money to pay the mortgage, bills etc. I cannot get any help or advice from my local Job Centre except that they will allow me to work up to 16 hours (and earn no more than £15) but I will have to advise them how much I have made etc. Having been on the Inland Rev site they say I should register within 3 months of starting........starting what.......the bank account, selling something, what? I don't want to inccur a fine of £100 or lose my JSA until I can either get a full time job or I know the business will pay. Any suggestions please..............I am at a complete loss as what to do, I know I have to pay NI contributions, I have no qualms about that, but do they expect me to pay more money from my JSA as we all know a new business won't grow for at least the first year. I am still looking for work, to help with the finance but in the meantime how do you integrate trying to work for yourself and signing on at the Job Centre and being legal with the Inland Revenue?
    A baptism of fire to your forum...........I will appreciate any replies.
     
    L

    LOUBELOUUK1

  • #2
    Hi

    As far as I am aware as soon as you become available for work then you must register as self employed, you have to register within three months or else you will face a fine!

    You cannot claim benefits and declare yourself self employed at the same time!!!

    If I am incorrect then I am sure someone will correct me but I am more or less positive that is the case!

    Goodluck :)
     
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    K

    Keepsakes

    Free Member
    Feb 16, 2008
    14
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    gorleston, great yarmouth, norfolk
  • #3
    I have been told at the Job Centre that I can register as self employed but as long as I don't spend more than 16 hours on my own business it won't upset my Job Seeker Allowance, but I have to declare any monies that I have had from my business as that will be taken into account and may be taken from my benefit. Apart from that I haven't had any advice at all from them.

    What I really want to know is when the Inland Revenue decide that I have begun being self employed, is it from when I opened a business bank account, physically registered as self employed or when I sold my first order? I just can't find out this dilema...... Apparently they charge you a £100 fine if you don't register within the first 3 months of what?????

    Thankyou for answering so quickly but I am still at a loss......
     
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    frockery

    frockery

    Free Member
    Aug 15, 2007
    408
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    Angus, Scotland
  • #4
    As I understand it, you have to register as self employed with the IR within three months of when you start trading (however that is defined). What you have done so far sounds like market testing rather than trading as you haven't sold anything for profit as yet.

    I'm sure some of the experts will be along soon to give you definitive advice, but meanwhile you might find some useful info on the Business Zone site.

    Regards, Alison
     
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    Jenni384

    Jenni384

    Free Member
    • Oct 1, 2007
    4,851
    1,539
    Cheshire
  • #5
    Hi Keepsakes

    Firstly, don't panic! :)

    My first thought is that your JSA is affected by the profit you make, not the money you bring in (your turnover). The benefit rules for income and expenditure differ from the tax rules (typical!) and I believe they work on a cash basis, i.e. if you sell £100 in a week and use that £100 to buy more stock for your business, your net income that week is Nil and thus JSA is unaffected.
    If you sell £100 this week and then sell nothing but spend £100 next week, I believe your JSA will be negated the first week (earned £100) without taking into account the 'loss' the next week. Very unfair, so make sure money goes in and out the same JSA week.
    I believe this is the way it works with benefits but I've not been involved with them for a few years, so you may want to double check.

    Registering as self employed will not affect your benefit as stated above - as long as you work less than 16hours and keep your earned money down (e.g. reinvest your takings back into your business ;))

    You can register as self employed from the date of your first sale - everything you spent prior to that can be put through as pre-trading expenses. Don't worry about any fine or that the bank account has been open a while.

    You can also register for a small earnings exception (meaning you don't have to pay your Class 2 NI £2.20 a week) if your earnings are going to be low (profit under approx £4k).

    HTH

    Jenni
     
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    L

    LOUBELOUUK1

  • #6
    See I knew someone would come along who knew more about this..
    I really didnt think you could be self employed and claim JSA so as the old saying goes... You learn something new every day!!!
    Jenni thanks for the info.
     
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    Jenni384

    Jenni384

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    • Oct 1, 2007
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    1,539
    Cheshire
  • #7
    Np Louise. Despite it all being the same Government, it's a bit of a case of Left Hand - Right Hand. :redface:
    HMRC and DWP view work in different ways as they do different things with the information...:rolleyes:

    You can't claim JSA if you are actually earning money from self-employment of course, but if you aren't earning, you aren't earning. Registration as s/e with HMRC is just a separate formality. Gotta love our government eh..?! :|


    Random example: work dries up in January with debtors of £3000. Sign onto benefits. Receive the £3000 in June whilst on benefits. Despite the money being earned when working, they will look to take the 3k into account against benefit payments unless you can spend the 3k on business expenses... *rolls eyes*
     
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    K

    Keepsakes

    Free Member
    Feb 16, 2008
    14
    0
    gorleston, great yarmouth, norfolk
  • #8
    Thanks alot for all of that information, I don't feel so worried now. It's like being in a catch 22...... I need to advertise, obviously, but daren't in case the Social find out and stop my money, but without advertising no-one, except the family and friends know what I am doing!!!

    So next week I will register as SE and be LEGAL, my daughter-in-law is a book keeper so all of that stuff will be handled properly too as far as tax returns etc are concerned, she also has the business bank account cheque book with her name added so that she signs all of the cheques. (Making sure I can't skip the country with all of the profit I am going to make!!**)

    I will let you know what happens. I may have a big order for a local celebration in May, so I need to be properly organised for then, now I know more or less what to expect and how to organise the monies.

    Thanks again
     
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    Jenni384

    Jenni384

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    • Oct 1, 2007
    4,851
    1,539
    Cheshire
  • #9
    If you are actually trading but claiming JSA until business goes into profit (as I understand from your postings) be careful the Job Centre don't say "you are spending your time on your business and so aren't really available for work" and thus try and suspend your benefit. I'd double check with them that what you are doing isn't going to jepordise your JSA as, like I said, I'm not 100% sure about the differences in tax/ benefits.

    Definitely register self employed tho :)
     
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    Keepsakes

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    Feb 16, 2008
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    gorleston, great yarmouth, norfolk
  • #10
    I have not belonged to UKBF long enough to ask for you all to comment on my website. But if you look on my profile my website address is there. I hope I am not doing anything wrong by guiding you this way, but I would appreciate some comments. Websites are really new to me.

    When I started a boarding cattery some years ago there was no such thing as the Internet, all of my custom came through word of mouth and the RSPCA who helped me with the cat rescue. When anyone adopted one of my cats they were automatically put on my boarding list!!!!

    With my experience of putting together teaching resources I hope I have been able to make a user friendly website.

    I will understand if this message is deleted.
    Regards Tina
     
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