Starting an etsy shop - talk to me about tax please

[BlueKarou]

My friend and I are going through the planning of setting up a small etsy shop, it would contain a number of handmade things which we would be making as a hobby, but with the intent of selling. (Think sewing, jewellery, arts&crafts, etc - nothing expensive)

We are both otherwise in part-time employment (4 days a week for me, and I am over the lower threshhold for income tax, so do pay on my usual income)

Do we have to register as self-employed and do personal tax returns? What if we're sharing the expenditure and (if any) profits?

I'm going through the hmrc pages and will try to find someone there to query, but just wondered whether anyone here had any experience/knowledge.

Thanks!

Not a tax expert but from the basic knowledge I have, I suspect that because you are doing it with a friend you would have to register as a business partnership and account for the expenditure/income from the shop. You would also then have to both register for self assessment as individuals and do a tax return for any share of the profits you receive from the business. I may be wrong though but it might be worth looking at the business partnership pages on the hmrc website as well as the self assessment page.

If you were just doing it on your own, you would just register for individual self assessment - and yes, you do have to do this. It does take a few weeks to get registered and online account set up etc so do not leave it until just before you have to do your first tax return to try and register!

If you currently pay tax, then you will need to save around a third of the profits for your tax bill.

Yes you do need to register as self employed. As a partnership you will split the profits and losses (50/50 of that is how you want to do it) and that will be what is detailed on your tax return.
Be wary of going into business with a friend. I never mix friendship and business. It always ends very badly.
On a side note, you need to also make sure you are trading legally. Read up on the Consumer Contract Regulations. You need to abide by these. It includes things like displaying your trading address and accepting returns. Etsy makes it very easy for you to be compliant.

Yes I tried this and it started to government wrong so I pulled (was turfed) out. Quite upsetting set of events. She still feels the need to tell me how amazingly profitable her business is even though I know from other friends that it isn't and her husband has to do extrashifts nights and weekends to cover costs....