Tax doesn’t have to be taxing? Really? Help please?

[vsmuma]

I am in the process of setting up my own photography business, I have all the equipment I need, a website, a facebook page and portfolio and I?m pretty much ready to start advertising and taking booking but I don?t want to until I have registered as self employed.

I have a few concerns because I don?t have a clue how much I?m going to earn in the first year but I know it wont be enough to pay tax on, so what happens there? How does registering as self employed affect tax credits if you don?t know how much your going to earn? And will I now get working tax credits?

Also I am going to need to travel to some locations so how do you record your car as an expense because its going to be used for family stuff as well.

This isn?t going to be my career but just a way to make a little extra cash, while my children young and not in school. I plan on doing something related to my degree eventually which is nothing to do with photography!

Anyway could someone please help with my questions? I have looked at the government pages but could do with some advice from mums who have been in the same position as me and have made it work.

Have a look at this....
cgi3.ebay.co.uk/ws/eBayISAPI.dll?ViewUserPage&userid=talkinpeace
written for ebayers but pretty generally applicable

Tax credits - as self employed you declare earnings annually in arrears - so always overestimate and then they owe you money back

chances are you'll never actually make much profit - with the help of an accountant :-)

thank you, that was very helpful. its just so scary that you will get it wrong. I know i'm not going to make enough to pay tax but have to go through all this, filling out forms just to be told you dont have to pay anything.

Registering as Self Employed is as simple as just telling them you are going to (and you can wait until you've done some work - you have 3 months to register). It shouldn't effect your tax credits at all until you have an income.

You can claim your mileage as an expense but not a proportion of any of your other car costs if it's a family car. You claim mileage at 40ppm on your tax return, regardless of what you charge the client.

vsmuma
having just finished the last of this years batch of tax returns,
if it scares you, pay an accountant to do your return in the first year or two.
If you keep your records as per my Ebay Me page you will not go far wrong or pay too much.

ok, thank you ladies. I'm going to phone them today and register so I can get on with things. I dont have the money to pay anyone else to do my taxes for me and this is just a way to make a little extra money not a living.

the ebay link was very good but I have just one last very silly question - with the tax return do you have to send your invoices, recipts ect or just fill out the form and keep your proof just incase they need later?

I am sorry for the stupid question but I really have No idea, what I'm doing .

cheers

Hi vsmuma, no you don't need to send the tax office all the invoices and receipts, but you do need to keep them in case they ever ask to see them. Keep receipts for everything!
When you register as self-employed, you can use the helpline for all sorts of questions and I have always found them to be really useful.

You also dont need to pay an accountant. The forms are not as bad as they seem and the tax office offer free one-day courses on what you can claim, how to fill in the yearly returns form, etc. I found the course to be very useful for all sorts of little bits of info, so it might be worth asking if there are any going on near you.

Good luck and enjoy it!

vsmuma HMRC does several free classes to help you set things up, including one on allowable business expenses, how to claim car expenses, etc. I highly recommend you take it and the one for the newly self employed.

cheers, I thought so. I think the tax office really do want you to get it right because thats just easier for everyone :)

so sorry, I promise last questions, then I will stop and just phone them, here's my Q's -

what happens with student loan company, do i phone them or just leave that?

becuase the tax year is April to April will I have to file a tax return for between April 2010 and April 2011 if I start my buisness now?

also HMRC website says you can't reg before you start working for yourself but what does that mean because I basically have a buisness set up but I havent charged anyone for a service yet so can I only reg after I have had my first client?

I really mean it now I will stop asking questions

They prefer you to wait until you've done some work or got a firm booking with a date I think, as lots of people decide to register as self employed and then never actually do any work!

I guess you probably will have to do a tax return for Feb - April 2011, but you have until the end of Jan 2012 to do that.

Student loan - if you are already repaying it, there is a box for the repayments on your return, just fill it in.

but if you register now that you have started selling and start keeping your records, its amazing how little 'taxable profit' provides a decent living!!

Hence why as an FCCA I wrote the Me page on ebay!
I got bored of typing the same thing again and again
And many of my ebay chums have the latest copy of the me page printed out in the front of their accounts files as an aide memoire. One even caught HER accountant referring to it. Tee Hee.

Cheers me dears, I think I will manage with the tax form, especially as I know that I definitely wont earn over £5000, so not enough to pay tax. The form doesn?t look to bad and my FIL was a bank manager so if I run into difficulty I?m sure he will help.