Sole trader with some questions

cyberdog · Apr 26, 2005

Hi All,
This is my first visit to this forum, but it looks like the right place for answers to my questions.

I am thinking of furthuring my hobby of 20 years by starting up a sole trader business. This is to enable me to get a cash return from it, and be on the right side of the tax man. I am in full time employment and have no intention of giving up my job, so the buisiness will be a side line.
I have read all the information for sole traders but would all this apply to me. Eg, would i have to make a business plan, also if i am paying National ins already would i have to pay it again for the new business.
Your feedback would be apreciated.
Thanks :?: :?:

Alpha · Apr 26, 2005

Business plan

writing one depends on how seriously you want to take your business. If its just a sideline distraction then no you do not need to. If you want to develop it into something more serious and/or require funding for it then writing one would in my opinion be a pre requisite.

NI

If you are in employment already you willprobably not need to pay class 2 national insurance although you may need to pay class 4 on profits earnt by your 'business'.

And of course you will pay tax on the profits!!

cyberdog · Apr 26, 2005

Hi Alan,
Thanks for that. very usefull. With regards to a business name, as I will only be working local do I have to register the name with anyone? I have checked it against the patent office and there is no entry in their trademark database. However it does appear in the records of Companies House as a limited company at the other end of the country. Will this stop me using it?

Alpha · Apr 26, 2005

Probably not, it all depends on where they operate and how much financial clout they have but if you want to make absolutely certain just change the name slightly eg if limited company is Alpha Limited then call yours Alpha & Co.

bwglaw · Apr 27, 2005

cyberdog said:
I am in full time employment and have no intention of giving up my job, so the buisiness will be a side line

Just to add. It may be worth checking your contract of employment to see if your employer allows you to run a business on your own account.

Also if you have not opted-out of the 48-hour a week rule then you may have to notify your employer if you exceed the 48 hours on average over a 17 week period. This would not be a big issue if you are doing the odd hour here and there.

cyberdog · Apr 27, 2005

HI,
I had not looked at my contract of employment, however I do know some people who have shops and work for the same company. As for the 48 hour rule, from what you say I take it that it not only applies to my main job but any job that I do. Am I correct. I could always just opt out i suppose :wink:

Just to add. It may be worth checking your contract of employment to see if your employer allows you to run a business on your own account.

Also if you have not opted-out of the 48-hour a week rule then you may have to notify your employer if you exceed the 48 hours on average over a 17 week period. This would not be a big issue if you are doing the odd hour here and there

Eagle · Apr 28, 2005

Alpha said:
Business plan
NI

If you are in employment already you will not need to pay class 2 national insurance although you may need to pay class 4 on profits earnt by your 'business'.

Not strictly the case. You'll have to pay Class 2 NICs if you earn (or expect earn) over your basic tax allowance.

bwglaw · Apr 28, 2005

cyberdog said:
As for the 48 hour rule, from what you say I take it that it not only applies to my main job but any job that I do. Am I correct. I could always just opt out i suppose

That is correct - all employment. I still advise you check the contract of employment. Even though others may have their own business does not necessarily mean it is accepted by the employer. It also depends on what work you do and what work your business will do. If you compete with your employer then it can cause problems.

Alpha · Apr 28, 2005

Not strictly the case. You'll have to pay Class 2 NICs if you earn (or expect earn) over your basic tax allowance.

Try again Eagle .....If he is already in Employment he will NOT have to pay class 2 National Insurance!!!

Class 2 NI is paid by self employed people earning over the NI threshold who do not pay national insurance already on other income.

Eagle · Apr 29, 2005

I've just spoken to them again and they state the following:

If you are in full-time employment but also earn part-time income, you are liable for Class 2 NICs on your net p/t income above £4215.

I've enquired about this several times and to different tax offices, (as well as different accountants) so I'm inclined to believe them.

Eagle · Apr 29, 2005

http://www.hmrc.gov.uk/manuals/nimmanual/nim21001.htm

also: http://www.hmrc.gov.uk/manuals/recmanual/popups/rec1115g.htm

Other exceptions

Subsidiary self-employment

A person may not have to pay Class 2 NICs if

self-employment is a hobby that is, not their main employment

and

their net earnings from self-employment are expected to be £1,300 or less in the tax year

and

they are employed and paying Class 1 NICs.

SES disregards self-employment in these cases and does not set up a Class 2 liability for these customers.

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