Starting my own local ironing service.. What should I do? Please read

[mrszw1]

I'm employed part- time but it's not really enough to cover all my outgoings.

I love ironing (haha strange I know!) and thinking of starting a local ironing service where I collect ironing from local customers and deliver back to them once done. Maybe offer something like 20 items for £20 or similar.

Question is, what would I need to do from a tax/HMRC perspective to get this little venture off the ground? I imagine it would be quite small and very local to home, not anything on the scale where I'd need premises or to hire staff etc.

I just want to make sure everything is above board and that I don't land myself in hot water with the HMRC. Would I need to pay tax on my earnings?

I pay tax on my 'declared' and 'main' job.

Do I absolutely need to register this ironing business (once set up) with the HMRC?

If anyone can advise, thank you! Sammy x

All income has to be declared, although you can off set expenses.

Yes, you need to register with HMRC and you'll need to pay tax. You may also find it's in your contract to tell your current employer about it too.

I think the tax threshold is £7k. So if you earn under that you don’t pay tax, you can also get a small earnings exemption certificate, and opt out of Nat insurance contributions, class 2.

you’ll need to register as a business with Hmrc.

There is a trading / casual income allowance of £1000 a year where you don’t need to register or pay tax: www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#trade

But assuming you expect to earn more than £1000, you should keep track of your expenses and earnings and register to fill in a self assessment tax return.

You can earn up to £1,000 per year through self-employment (within certain rules, but I think you'll be ok - check here) and don't have to tell HMRC.

If you're planning to earn more than this, you'll need to register as a self-employed Sole Trader (see here) and you'll have to complete a Self-Assessment tax form every year. It's not as complicated as it sounds as long as you keep a basic record of what you earn and what you spend.

Before you do anything you would need to see what services are already in your area and question if the demand is there. You should also research what others charge and how they charge as a £1 an item seems extremely reasonable but some items are more difficult/ take longer to iron. You then would need to think about collection and drop off will you be offering that service if so you would need to charge accordingly.
With the current cost of living crisis you may find that the demand won't be there as people will be trying to tighten their belts. Key thing is to research it all I did it years ago leaflet dropped a pretty big area but only had 3 customers eventually it just wasn't worth my time.

Have a look at your local dry cleaners- they usually offer a wash and iron service.

£1 per item... what if an item is a heavy cotton king sized duvet cover?

You need to work out your potential earnings.

If you get 2 clients who want you to iron 1x£20 of ironing each and every week, that's £40 p/w. That's just over £2k p/a (at 52 weeks a year) and would need to be declared. You will need to register as self employed and fill out a tax return. You will need to pay the tax due. It's safest to put 25% of those earnings away to pay your tax bill.

If it's under £1k, no need to register or pay tax.

So start of by figuring out how much you think you'll earn, because you do no want to get to the end of the year having not saved any money for that tax bill l!

You need to register with hmrc as self employed, the main difference is that when you get to the end of the tax year you will need to do a self assessment tax form on which you include your main job's p60 plus everything else (even savings interest excluding isa's). You also will need to pay national insurance for self employed if you reach the threshold (check current levels).

We pay £1.50 per item including collection and delivery, minimum 5 items

Whatever you do please make sure you put away some money you receive from this venture for tax. Make it something you do religiously every sunday evening.
Track all income and expenditure. Do this on a set day each week. It will take minutes.
When you get your tax bill you will be able to pay it and anything left treat yourself to something or stash in savings/something for the kids.
But please please don’t assume every penny you earn is “yours” (although I hope for most part it will be)

Make sure you are adequately insured. If you offer a paid for service and something goes wrong you need to be insured. With the price of fuel for collection and delivery, energy costs and insurance i'm not sure how it's possible to actually make any money unless you do a huge amount of ironing.

Do not have a flat per item rate. Some cheeky sod will turn up with 20 duvet covers, fitted sheets/tablecloths. Then you will make nothing.

You will need to buy business insurance that includes public liability and if you're going to be collecting / delivering the ironing in your car, make sure you also have business use cover on your car insurance.

If you live in an area full of mumsnetters you won't get any business as most mumsnetters don't see any point in ironing

Also, if most people WFH there won't be much call for it either.

Why not put some feelers out on Facebook first and see what kind of response you get?

I would imagine you are planning to bring in more than £1000 of business, so yes you need to register with HMRC. You need to do this within three months of setting up.

I would also set rates per type of item, £1 for each of a tea towel, a shirt and a duvet cover makes no sense.

Don't forget to deduct the cost of electricity! Irons use a lot.

I'd give HMRC a call they'll let you know

My local ironing service charged by weight. You could easily calculate it by using an ikea bag and travel luggage scales. I don't know how you would calculate what to charge per kg though. Maybe weigh a few t shirts on the premise of 1.00 per tee? Then multiply it into cost per kg?

I think it's a great idea. There are no set up costs so if it doesn't get off the ground you haven't lost anything.
You can obtain a UTR code easily from HMRC and the tax return form is quite straightforward.

Of course you could just charge cash for "casual ironing for friends or family" and not declare that or put it through your bank, as it would just be to cover your expenses.

Good luck with your venture

Good luck in your new venture💐

Only suggestion i have is to consider not price per item but price per basket.

Here are some average prices for ironing services taken from the check a trade website. I think bedding and shirts need to be charged at a higher rate than you're suggesting.

You’ll be able to offset loads of stuff against your tax (we do this for our business which is an extra to our main jobs) Eg. You can offset part of your rent or mortgage/mobile phone bill/cost of equipment needed/house insurance/internet. I use an app called quick books from the App Store and it’s really helpful. You’ll probably find you make a loss (but still end up with money) and then you don’t pay any tax.

Can you afford to run an ironing business with the cost of electricity going up almost threefold? I'd look at other jl0art time or remote admin jobs as there's plenty available. I wouldn't set up an electricity dependent business during a fuel crisis. People are going to be cutting back and personal laundry services will be one of those that may suffer.

Make sure you have insurance . Someone will no doubt say you ruined their £500 shirt at some point when it already had a iron mark on!
Also inspect everything before you start ironing.
Have a disclaimer stating this on your paperwork to avoid claims

No I don't trust anyone !, I used to own dry cleaners and I work in retail .. I've seen everything !!

Irons are thermostatically controlled so they won't use power equal to say an electric heater or oven. Once they are at temperature, the amount of electricity to maintain the heated plate is relatively low. The most economical way to iron would be to do the lot in one go so you're not repeatedly heating up a cold iron.