Small business idea - help please

[acupofteamakeseverythingbetter]

I’m currently on maternity leave with my second child and am looking to set up a little side hustle, I know - eye roll!

Just to be clear this would be to hopefully earn a little extra cash each month, £50-£100 would be great. I know this will take me a lot of hours to get everything sorted and set up initially and am willing to put the work in. I will be going back to my corporate job 4 days a week in the summer so would like to get this all up and running way before then in the hope that it would become somewhat of a passive income.

My idea is not a new idea, I’m not trying to reinvent the wheel, but I’m looking to sell digital children’s party invitations on Etsy. I don’t have the space at home to sell physical products and so digital would suit me. I think/hope people are moving away from buying physical invites due to convenience of just sending in the class WhatsApp group and the impact on the environment too

I’m slowly creating each product and hope to have at least 40-50 different designs ready to sell on my Etsy shop once I set that up. I have a brand name that I would like to use which as far as I can see, hasn’t already been used. I also have idea for the logo too.

I need to look into the legal side of things and would really appreciate some advice and guidance on this. Do I need to create the business as a limited company from the very start? Do I need to set up a business bank account from the very start? What about insurance and tax? With regards to copyright, I’m assuming I can’t use any characters? I’m not sure how others use characters and get away with it, or do they hope that it’ll be ok?

I want to do everything properly especially all the legal stuff!

Anything else I should be made aware of? And any thoughts you might have on this little idea of mine. Thanks so much

No, you don’t need to be a LTD company or have a business bank account. I’m self employed and make considerably more than 50-100 a month and I’m not a LTD company because I don’t earn enough to make it worthwhile. You’d spend more on an accountant to help you navigate it than you’d be making in a year. And you can earn £12570 a year without having to pay any tax so don’t worry about that. You’ll need to submit a tax return but you won’t owe anything.

Just register as self employed online. It’s way easier than it seems. All the info is on the gov. website.

Thank you, how does that work registering as self-employed whilst I do still work but am currently on maternity leave? I will have a look into that, thank you

Oh right I didn’t realise you already had a job. That does change things - the extra income will need to be declared if you’re earning from PAYE as well and it isn’t your only income. You can file a tax return still but I’m actually not sure if you need to register as a sole trader.

Scrap most of what has been written above as it is not correct.

You can turnover £1000 per tax year without having to register as anything. This is turnover, not profit.

Over that you must register as self employed with HMRC. You don't need to set up a limited company. You will be required to fill in a tax return every year. In theory, this should pull through your PAYE earnings automatically, but it doesn't always. You will enter your takings and expenditure and tax will be calculated automatically. You will also pay NI if you earn over £6725 from your self employment. Keep a spreadsheet as a bare minimum for your accounting, or you can connect your online shop to software such as Xero or QuickBooks.

You may not be legally be required to have a business bank account, but what your bank says on the matter may differ. Most current accounts stipulate "not for business use". Sure you can risk it, but you risk having all of your accounts closed if your bank takes a dislike to your usage.

Learn about the Consumer Contract Regulations and the Consumer Rights Act. You are required to trade within these laws.

Copyright and trademark, no you can't use anything that you haven't got permission for, whether it is from a big company or a person who just likes doodling. People do do it, yes, and companies run clamp down operations to stop it. This can result in charges being brought against people who "just did it because everyone else does". It isn't worth it.

After all that, is your product going to sell on Etsy? There are over 470,000 listings for digital party invites on there now. Digital products don't matter where you are buying them from so it isn't even something where people will only buy within the UK.

Etsy is flooded with this kind of thing,

Thank you for your comment @DelilahBucket I will have a look into consumer rights act and consumer contract regulations.

You're right, there is a lot of competition and so I don't know if the product will sell or not. I can only put my all into setting up the business and keep working at it. Everyone has to start somewhere and I'm under no illusions that this might not be a success at all. I'm aware that it is going to take hours and hours of work to set up and a long time to start to see a profit if any at all

You can be both an employee and self-employed at the same time.

Registering with HMRC as self-employed is easy, but you don't even need to do that unless your turnover (that is total income before you deduct any expenses) reaches the £1,000 mark. As soon as it looks likely that you will reach that threshold in a tax year, that is the time to register.

Thank you, that's good to know

first line 'I'm currently on maternity leave'.

Might be more lucrative to just go down the instagram route instead of battling to be seen on Etsy. Make your invites, make an instagram or Facebook page, advertise yourself on local Facebook pages and targeted insta ads. Then you can use the ‘support local’ angle as well. Local mum businesses tend to do well around here, £50-£100 is a reasonable target per month, especially if you can make some matching/personalised paper party bags or party signs or something too. Might be tricker to make up the digital item and get the customer to print those themselves though, invites very straightforward.