Starting a fitness class while still employed

[Gymguy]

Hi, I recently became a fitness instructor and did some courses like the kettlebell instructors class to be able to take my own kettlebell classes. I managed to get a few bookings for my classes where I'm being paid not by the person but by the class. Even if nobody tuns up I get paid.

Here is where it gets tricky, I am currently working and don't want to give up my job while uncertain how my classes will go. The class runs for one hour on a week night. Throughout the weeks I want to add more classes each week night. My goal is to eventually do my classes as my full time job. I'm in the process of becoming a personal trainer also so this will help my long term goal on only doing fitness as a job.

My main questions revolve around turning it into a business. I have purchased most of my equipment already out of my own pocket, and have insurance to cover my classes. I will be getting paid by a cheques, so do I need to change my tax code, and if so how soon? Should I open a business bank account yet or leave it to later?

I am a complete novice at this and never started a business before so I apologise for my ignorance in this topic. I'm sure I have more questions on how to turn my one night class into multiple classes and a business. So if you can even help me with this I really appreciate it. Thanks so much for reading my ramblings! I just believe it is time for me to take a chance and push myself.

Thanks everybody

 

[Scalloway]

If you are planning to run classes yourself you will need to register as self employed

https://www.gov.uk/set-up-sole-trader

You will complete a tax return every year after 5 April and pay tax based on your profits and employment income.

 

[Talay]

The classic one is Josh Hartnett in Hollywood Homicide where the cop runs part time classes at what seems huge prices to co-star Harrison Ford.

http://www.youtube.com/watch?v=pWuXwMQVpGA

In practical terms, you need to decide whether you are the business or you want to start a business.

If you are the business, then what happens when you are sick, when you want a holiday etc. Essentially, all business would stop. However, if you run the business, you can substitute teachers.

I appreciate this is all further down the line but it is a hard transition from self employed worker to employer as you essentially have to give up your income to the employee. If you start out as an employer, then you can remain in your current job until your profits allow you to leave your job.

I'd not presume you will be paid by cheque all the time. Perhaps invest £60 in a WorldPay mobile terminal and take cards as well (no ongoing fees).

 

[Christine Hough]

As Scalloway says, your first priority would be to tell the tax office and also at that time to apply to not have to pay self employed NI which you can do if you expect your earnings to be below a threshold ( not sure of the amount)

The next step is to keep clear records and all your receipts for what you pay out and get in.

You may want to talk to a friendly accountant about how to set it up, most will give you a first meeting free of charge. And then the earnings will be declared in your personal tax return. You will pay tax on these earnings twice a year, Jan and and July so you need to plan to have the funds there for that.

I would advise opening a separate bank account for this as it is much easier than trying to sort it out from your personal finances.

If this does become your main employment you may want to look into health insurance issues. But there are policies about.

There are, as Talay says ways for people to pay you apart from cheques. If people are long term, the cheapest is to get them to set up a standing order to you and then you do not pay any charges on it.

 

[Jet Virtual]

You need to make sure you balance your current job and your new business.
You don't want to jeopardise your job in case the business doesn't work out.

 

[billie1]

Good luck with the fitness business, but as you said, don't give up your job until you are certain you can succeed in the fitness business. At the end of the tax year you will deduct all your expenses like the equipment you purchased so you will get taxed only on your profits, so make sure you hold onto all your receipts.

 

[Gymguy]

Thanks everybody so much for your replies,it helps a lot. I am planning to keep on my job as long as possible until I see what way it goes. I plan only to work myself, if I am sick I have a few friends that are qualified and able to cover me. In my first set of classes, I will be paid at the end of the six classes. Do I need to register before I start these classes to say I am self employed?

I hope I am not getting on anybody's nerves here as I am really inexperienced here in taking this step forward. Also will I be taxed a lot more if I keep these two jobs going on as I move forward? I know I will have a lot more questions as I go but thanks everybody for your help so far.

 

[Scalloway]

You need to register with HMRC when you start trading. Your profits will be taxed at 20% until your total taxable income reaches £34,370, when your income over this amount will be taxed at 40%. If your profit is above £7,605 you will have to pay Class 4 NI at 9% on profits above that.

 

[MyAccountantOnline]

Have a read here it explains what you need to do if you want to deal with this yourself.

Do remember to set aside cash for your tax too.

 

[Gymguy]

Thanks everybody for all the help. It has been a while so I thought I will give you guys an update. I registered to be self employed at the start of last month now I'm doing classes. I managed to keep my other job part time so that helps. Some things like self assessment can seem a little daunting, like what receipts do I need? (all diesel receipts or just some?)

Right now I think I have more questions than answers but that its one of those things. Anyway thanks for the help and I will keep you guys informed! Thanks.

 

[Scalloway]

Some things like self assessment can seem a little daunting, like what receipts do I need? (all diesel receipts or just some?)

You should keep all your receipts, though if you are paying by bank card the entry on your statement will provide evidence if any are missing. If your turnover is less than £79,000 you have the option just to claim 45p per business mile. You must keep a record of the date, distance and purpose of journey.

 

[Gymguy]

Thanks for the reply, I am really thankful and humbled for all the help everybody has giving me. I'm constantly trying to learn of the HMRC website by doing their E-learning and e-mail learning they provide so that will hopefully stop the stupid questions I ask.
I just wonder how much you believe I should take out of the business account to keep my personal account ticking over. For example if I get paid £1000 for a ten week course I did, how much do you believe I should take out of that? I obviously will need money there to pay HMRC but will need money to help me live because my part time job will only go so far.
That actually raises a question now I think about it. Will HMRC tax my business more because I'm self employed and working part time also, or do I only get taxed more in my part time job?
Sorry for dragging this out and asking silly questions but I do appreciate it. Thanks everybody once again!

 

[Scalloway]

If you are using up all your personal allowance in your part time job HMRC will tax all your business profits at 20%.

 

[MyAccountantOnline]

...Will HMRC tax my business more because I’m self employed and working part time also, or do I only get taxed more in my part time job?

You will pay tax on your total income.

What will generally happen is that your personal allowance (the amount you can earn each year before paying tax) will be set against your salary/wages.

When you complete your tax return you will need to declare all of your income and your tax will be calculated taking into account the tax you've paid on your part time earnings leaving a balance to pay (or possibly a refund due).

You dont pay any more tax as such you just pay tax on your total taxable income and depending on your level of income may pay tax at 20, 40 or 45%.