- Original Poster
- #1
Apologies for the length of my first post. It seemed like a couple of quick questions in my head, and turned into a saga!
First Part:
My partner does massage as a sole trader, and I submitted her 2011-2012 tax return (less than a full year) and her 2012-2013 tax return. These were fairly simple to do online, learning as I went, as all her sales are for services so there was no stock involved.
For 2013-2014 tax year, she joined Neal's Yard, with the intention of using the products in facials. The plan was to also in future place orders for customers and make a profit on these, though this didn't happen until the 2014-2015 tax year. When she joined Neal's Yard, she had to buy a Starter Pack for around £90.
Q1: I'm not sure that all of the items could be used in facials, but now that she has placed her first order for a customer, could any other items be used as free samples? I think they are full size, rather than sample size, so could they be used much like sample bottles in a perfume store, and put down on expenses for 2013-2014 when they were purchased?
Q2: If that is not possible, how do we separate the costs of the items, as they are in a pack rather than listed separately, and were a requirement of joining? As these are perishable, could they just be disposed of? Ideally, rather than waste them, if taken and used personally would they have to be accounted for at full retail price, or can they be sold cheaper as they will be getting close to the Use By Date?
Q3: For the customer order placed in 2014-2015, as it was over a certain amount my partner also received a free gift and an allowance for free/reduced products. In order to hit the thresholds most effectively, we jumbled round the products between the main part of the order and the free/reduced section, to lower the overall cost. The customer paid full retail price (though we also gave her a free gift). My partner will use the other free/reduced products in her facials etc. So can we just account the total cost of the order as a cost and the sale price receipt as a profit? Or by saving money on the order have we complicated the bookkeeping immensely? Obviously, if we had to separate this customer order and my partner's stock into separate orders, the overall cost would have been more, as there would be less or no free/reduced products, and 2 postage charges...
Q4: I also registered with Neal's Yard, as the Starter Pack was very cost effective. The invoice was to me, and I passed these starter products on to her at cost price. Can I just write her a receipt for this?
Second Part:
I registered as a sole trader in 2012-2013 to do a different holistic therapy, but have not had any success. My start-up bundle consisted of equipment and certain bundled consumable items, all of which I included as a cost in that tax year. I planned to use them as part of treatments, but due to lack of success I have many left which I would also like to dispose of in some way. I ended up giving one of each of the 2 consumable lines to my personal trainer, in the hope she would like it and be able to find customers for the remainder, but she didn't like one and didn't end up ordering any of the other.
Q5: The consumables were never declared as stock, as they were never meant to be sold, and were meant to be used alongside treatment. Now that I have given some away, how do I account for that? Do I have to convert some to stock? As with my partner's starter products, what is the simplest way to dispose of the remainder?
Q6: I have had a potential idea - my partner plans to start trading using a Ltd Company from April 2015, but is due to sign a new lease for premises in February 2015, so would have to register the company that month. So, potentially the limited company could purchase any stock which could not otherwise be disposed of in a tax efficient way during 2014-2015. In the new premises there will be a receptionist, so products could potentially be displayed for sale, without having to trust they would not be stolen (believe it or not, Living Social customers which my partner was making a loss on even stole massage and related therapy reference books from reception!). Might this again require an accounting trick (as queried above) for us to convert unused starter pack products into stock, in order to sell them to the Ltd Company?
First Part:
My partner does massage as a sole trader, and I submitted her 2011-2012 tax return (less than a full year) and her 2012-2013 tax return. These were fairly simple to do online, learning as I went, as all her sales are for services so there was no stock involved.
For 2013-2014 tax year, she joined Neal's Yard, with the intention of using the products in facials. The plan was to also in future place orders for customers and make a profit on these, though this didn't happen until the 2014-2015 tax year. When she joined Neal's Yard, she had to buy a Starter Pack for around £90.
Q1: I'm not sure that all of the items could be used in facials, but now that she has placed her first order for a customer, could any other items be used as free samples? I think they are full size, rather than sample size, so could they be used much like sample bottles in a perfume store, and put down on expenses for 2013-2014 when they were purchased?
Q2: If that is not possible, how do we separate the costs of the items, as they are in a pack rather than listed separately, and were a requirement of joining? As these are perishable, could they just be disposed of? Ideally, rather than waste them, if taken and used personally would they have to be accounted for at full retail price, or can they be sold cheaper as they will be getting close to the Use By Date?
Q3: For the customer order placed in 2014-2015, as it was over a certain amount my partner also received a free gift and an allowance for free/reduced products. In order to hit the thresholds most effectively, we jumbled round the products between the main part of the order and the free/reduced section, to lower the overall cost. The customer paid full retail price (though we also gave her a free gift). My partner will use the other free/reduced products in her facials etc. So can we just account the total cost of the order as a cost and the sale price receipt as a profit? Or by saving money on the order have we complicated the bookkeeping immensely? Obviously, if we had to separate this customer order and my partner's stock into separate orders, the overall cost would have been more, as there would be less or no free/reduced products, and 2 postage charges...
Q4: I also registered with Neal's Yard, as the Starter Pack was very cost effective. The invoice was to me, and I passed these starter products on to her at cost price. Can I just write her a receipt for this?
Second Part:
I registered as a sole trader in 2012-2013 to do a different holistic therapy, but have not had any success. My start-up bundle consisted of equipment and certain bundled consumable items, all of which I included as a cost in that tax year. I planned to use them as part of treatments, but due to lack of success I have many left which I would also like to dispose of in some way. I ended up giving one of each of the 2 consumable lines to my personal trainer, in the hope she would like it and be able to find customers for the remainder, but she didn't like one and didn't end up ordering any of the other.
Q5: The consumables were never declared as stock, as they were never meant to be sold, and were meant to be used alongside treatment. Now that I have given some away, how do I account for that? Do I have to convert some to stock? As with my partner's starter products, what is the simplest way to dispose of the remainder?
Q6: I have had a potential idea - my partner plans to start trading using a Ltd Company from April 2015, but is due to sign a new lease for premises in February 2015, so would have to register the company that month. So, potentially the limited company could purchase any stock which could not otherwise be disposed of in a tax efficient way during 2014-2015. In the new premises there will be a receptionist, so products could potentially be displayed for sale, without having to trust they would not be stolen (believe it or not, Living Social customers which my partner was making a loss on even stole massage and related therapy reference books from reception!). Might this again require an accounting trick (as queried above) for us to convert unused starter pack products into stock, in order to sell them to the Ltd Company?
