At what point to register with HMRC?

[Kerwin]

My plan for the last few months was to set up as a limited company, but I realised it would cost me quite a bit of money I can't afford now. I was thinking of setting up as a sole trader instead. I'm wondering when you need to register as self-employed with HMRC. If I open a sole trader bank account but don't make any revenue, do I need to register at that point or only when making revenue or profit?

 

[StevensOnln1]

You only need to register as self employed at the point that you start trading. Even then you have until 5 or 6 months after the end of the relevant tax year to actually inform HMRC.

 

[Kerwin]

You only need to register as self employed at the point that you start trading. Even then you have until 5 or 6 months after the end of the relevant tax year to actually inform HMRC.

Thank you very much.

 

[DontAsk]

It cost peanuts to set up a limited company. What are the costs that you cannot afford?

Just register as soon as you start trading if going door trader. What are you hoping to avoid by delaying?

 

[Kerwin]

It cost peanuts to set up a limited company. What are the costs that you cannot afford?

Just register as soon as you start trading if going door trader. What are you hoping to avoid by delaying?

Sorry. I didn't explain myself very well.

Setting up the Ltd company itself is cheap as chips but I'd have to pay an accountant for the finance side of things. I could be a dormant company and just pay an accountant to do dormant company accounts at the end of the year but I haven't really looked into how much that would cost. I just assumed it would be more expensive than I wanted to spend. I only have a small amount of money I have managed to save up to do everything so I'm trying to penny pinch.

 

[Kerwin]

OK I just found this:

Filing accounts for your dormant company - Companies House

News and updates from Companies House

companieshouse.blog.gov.uk

I see that dormant accounts are free. I guess I'll go with a limited company in that case. Thank you @DontAsk for making me look!

 

[Daybooks]

You have to register as self employed by 5th October of the second tax year of trading. This could therefore be as little as seven months from commencement of trade.

https://www.gov.uk/register-for-self-assessment/self-employed

Trade usually starts when the main activity starts. This could be when you start manufacture or open up for business. Thus it is not when you start receiving income.

If you go down the route of a limited company please remember your duties as a director start from company incorporation; thus there is an element of overhead costs and responsibilities even if dormant.

 

[DontAsk]

If you do your own bookkeeping, etc., You do not have to pay an accountant anything until you need them at the end of the first year.

 

[WaveJumper]

And doing dormant accounts is a breeze

 

[Kerwin]

Thank you all!

 

[Mark T Jones]

To answer your original question. Or not.

I went to a seminar on this hosted by HMRC.

Their official line was -'you have to register as soon as you start trading, and starting trading covered anything that involved promoting or doing business (So in theory, just handing out a business card).

During Q & A, he acknowledged that it would be Ok to wait until there was an actual, financial transaction.

Over coffee afterwards, he was quite relaxed that it could wait until the end of the tax year.

I hope that helps!

 

[Kerwin]

To answer your original question. Or not.

I went to a seminar on this hosted by HMRC.

Their official line was -'you have to register as soon as you start trading, and starting trading covered anything that involved promoting or doing business (So in theory, just handing out a business card).

During Q & A, he acknowledged that it would be Ok to wait until there was an actual, financial transaction.

Over coffee afterwards, he was quite relaxed that it could wait until the end of the tax year.

I hope that helps!

It does help. Thank you.

 

[Daybooks]

To answer your original question. Or not.

I went to a seminar on this hosted by HMRC.

Their official line was -'you have to register as soon as you start trading, and starting trading covered anything that involved promoting or doing business (So in theory, just handing out a business card).

During Q & A, he acknowledged that it would be Ok to wait until there was an actual, financial transaction.

Over coffee afterwards, he was quite relaxed that it could wait until the end of the tax year.

I hope that helps!

One of many problems with HMRC is that their advice often doesn't have the force of law and the "customer" is none the wiser. HMRC used to insist that directors had to complete a tax return, whereas the law didn't. At least this is less controversial - maybe.

 

[Karimbo]

you can find plenty of chartered accountants who do client work on the side. I used an accountant who charges £99 for year end accounts and CT tax returns.

Although I think I will need some tax planning advice so will need to pay more.

When I started my ltd co, I went to see an in person accountant to get quotes, some of them wanted £600+VAT for a very simple business tax filing. Others didn't care and asked me to go to them at the year end.

In the end I found an accountant here who charged £360+VAT. Then I went to my current accountant who charged just £99 (no VAT).

I have a general understanding of accounts and these days the cloud accounting software do a pretty good job of doing most of the work.. Accountants don't like using the p&l produced by them and like to work out their own accounts from trial balance. But that's on them.

The full cost of starting a ltd co is:

£120 (company formation, registered address, mail forwarding, directors service address).
£200 accountant (let's just be conservative with the cheapness)
FREE mettle business bank account
FREE accounting software with mettle bank account

I'd recommend you get formed and get a business bank account opened. Because you cant do anything without a business bank account if you go ltd. I know a few people who couldnt get business accounts set up or had issues. WHen I opened my frist ltd company there were no such thing as "online" business bank accounts. You had to get one from a high street and the account opening was an hour long face to face chat with someone in branch. I had to be really really flexible and take an appointment to whichever branch had availability (I travelled 1hr to a branch far away).

I had a business idea, set up a website, ran some ads on it and I didnt even form the ltd co. Then I had some solid enquieries to my business and I lost out because the company wasnt formed and no bank account opened.

 

[DWS]

£99 ? Cant see much care and attention going into those then, but I suppose you get what you pay for!

 

[Daybooks]

I have a general understanding of accounts and these days the cloud accounting software do a pretty good job of doing most of the work.. Accountants don't like using the p&l produced by them and like to work out their own accounts from trial balance. But that's on them.

Generally it will not be the dislike of the trial balance produced by the Cloud software (although most do leave a lot to be desired) but rather the accuracy of the underlying records. That will be the probably reason why they wish to review it and thus provide a more comprehensive service to you. Often you get what you pay for and that choice is rightly on you.

 

[DontAsk]

£120 (company formation, registered address, mail forwarding, directors service address).
£200 accountant (let's just be conservative with the cheapness)

Like I said, you don't NEED to pay an accountant anything at the time of formatiuon and company formation is 1/12 of what you quote (£12). Tide will even do it for you, for free.

So the cost can be a big fat ZERO.