Setting up as a sole trader while staying employed

[HelpFixMyPC]

Hi all.

I know this has been asked a million times already but all the posts I could find were several years old so I just want to make sure I have the up-to-date information.

I currently work full time for a local government authority in IT. I have been there 14 years and enjoy my work (if that’s possible). I realised a while ago that my skills I have could you be used outside of my employment to the council. After helping out friends and family with their computer problems I thought why not turn this into a "side line" business to earn some extra money. So that’s where I am now and the stage I am at.

I’m guessing I need to register as a sole trader? But when I do, will the online form ask about any other employment and if not how will it know I already work? Maths was never my strong point in school, I was always a more "technical / hands on" type of person so all the talk about NIC class 2 and 4 is numbing my brain and I don't fully understand it.

I have also read about a small earnings exemption which may be something I will need. I’m not expecting to make that much money for the first year or so as no one really knows about me. I do plan on advertising and getting my name out there however. I’m guessing I’ll be making a profit of around £100 a week so would I qualify for that small earnings exemption and would you recommend it? Once I’m established and making a more would then have to tell the HMRC to remove that exemption if I took it out?

As you can see I’m not very business savvy so any help is really appreciated. My long term plans would be to continue working for the local government until the day that having the tow jobs become too much and then take the plunge into full time self-employment. My father has been self-employed since I was born (33 years ago) and has also told me that if you want to earn good money you need to work for yourself. He’s coming to the end of his working life now and currently enjoys a lavish lifestyle so he must know what he’s talking about.

Thanks everyone.

 

[Scalloway]

After you register as self employed you will receive a tax return each 5 April. You will need to include income from all sources, including employment and self employment. You can confirm on that form that you do not want tax on your self employment income to be collected through your tax code.

If your earnings are expected to be less than £5,725 in the period 6 April 2013 to 5 April 2014 you can request exemption from Class 2 NI

http://www.hmrc.gov.uk/forms/cf10.pdf

 

[HelpFixMyPC]

Thanks for the reply. Its starting to make a bit more sense now.

When you say earnings do you mean the profit I make or the total charged for a job. For instance if a job comes to £100, £50 for parts and £50 labour would my earnings for that job £100 or £50 ?(for the labour as the parts I didn't make any profit on?).

 

[Scalloway]

In this case earnings means profit. Remember that you can set other business expenses against tax, as well as direct ones.

http://www.hmrc.gov.uk/factsheets/expenses-allowances.pdf

 

[nelioneil]

Even if you start the self employed route now, you need to make sure this is ok with your employer . If it's not and they find out you have started your own business whilst working , then the consequences might not be good for you! Have a look at your employment contract.

 

[number42]

Even if you start the self employed route now, you need to make sure this is ok with your employer . If it's not and they find out you have started your own business whilst working , then the consequences might not be good for you! Have a look at your employment contract.

Personally I don't see why what you do in your own personal time needs to be disclosed to your employer unless it directly effects them (ie same market or doing this in work hours).


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[HelpFixMyPC]

That's ok I've checked that already. My boss was already aware of it and recently I've started repairing some iPads for the council. They couldn't pay me obviously but once registered (which I just done this afternoon and waiting to hear back) I will be able to invoice them for payment.

 

[arcon5]

There's nothing stopping you invoicing them before completing registration. Although you do need to register and declare the income, as a customer this is none of their business.

 

[HelpFixMyPC]

I didn't think of that but that's a good suggestion. I registered earlier today and backdated it to say I started the beginning of this month. It said it would take around a week, is that normal?

 

[StevensOnln1]

You don't need to wait for anything when you register as a sole trader. You're just telling HMRC that you've become self employed.

 

[Scalloway]

As long as you complete a self assessment tax return for 2013/14 HMRC will be happy.