Sole Trader Self Employed?

[trashpony]

Whether it's worth setting up a company and registering for VAT etc depends to a large extent on how much you're earning.

Business Link are very helpful - I went to some free workshops with them when I was self-employed which were good about the dull side of being self-employed

 

[liberty]

Whether it's worth setting up a company and registering for VAT etc depends to a large extent on how much you're earning.

Business Link are very helpful - I went to some free workshops with them when I was self-employed which were good about the dull side of being self-employed

Sounds like a good idea

 

[A Dashing Blade]

Whether it's worth setting up a company and registering for VAT etc depends to a large extent on how much you're earning.

Above £50k turnover per year is the usual benchmark for going down the Limited Company route.

Above a certain threashold, you have to be VAT registered (again, roughly £50k iirc).

 

[Looby]

The newly self employed helpline ( 08459 15 45 15 ) will be able to answer a lot of these questions for you, including how much you can claim for purchasing a vehicle. I think you can claim about 25% tax relief on the cost of the vehicle per year but I am really not sure.
In terms of what type of vehicle you buy, I know that HMRC are really tight on this now as lots of people are buying jeeps and landrovers and trying to pass them off as work vans.

Others are right an accountant can help save you money and reduce your liability but there are a lot of things that you can find out directly from HMRC and will be free. I would advise most customers, get an accountant for the first couple of years, ask them to provide you with copies of each tax return they submit then you should be able to do it yourself and save a few hundred quid a year.The Business Support Teams also run workshops to help with new businesses, tax returns, keeping records etc. You can call the number above or apply directly on the HMRC site for workshops in your area.

 

[Dhimmi]

So am I right in thinking I have to set up a company as a sole trader. Then as I need to buy a car for the business this and expenses would not be taxed on? How would I start to set up a company if this is the case?

No, a sole trader is a self employed bod working under a trading name, no company needed.
No don't buy a car via a company nor as a sole trader purchase, that loophole has been firmly closed. A car bought through a company is a taxable annual benefit at the original list price, so a humble fifteen year old hatchback would be added to your tax bill at around eight grand, every year. Buy it yourself keep a log of business mileage which you can claim against tax at around 9p a mile.
Best bet would be to find a good accountant via personal recommendations. Do not attempt to do your own books or tax returns, especially not to save cash, a good accountant will at least pay for themselves if not make you an additional small profit.

 

[liberty]

Thanks for all the brilliant advice. There were long discussions last night into going into Partnership with the founder of the company... The main problem is that after 61k is received then you have to register for VAT. The problem being that the service provided could not cope with adding VAT as it would not be possible as it would be priced out of the market. Although 61k a years sounds a lot the approximate expenses a year are around 30k for two people..

I think I am correct in thinking that if two people are involved when you earn over 40k jointly you are not taxed at the higher rate as there are two people and not one?

 

[prunus]

I think I am correct in thinking that if two people are involved when you earn over 40k jointly you are not taxed at the higher rate as there are two people and not one?

Depends how the partnership is set up - partnerships (including LLPs) themselves are not taxed at all (unlike LTDs), the share of the profits of the partnership goes straight through as it were to the partners personal tax returns (assuming all the partners are individuals, which doesn't have to be the case) in the proportions set out in the partnership agreement. So who goes into the top tax bracket depends on what proportion of the partnerships profits each person gets and what other income they have.

 

[prunus]

Thanks for all the brilliant advice. There were long discussions last night into going into Partnership with the founder of the company... The main problem is that after 61k is received then you have to register for VAT. The problem being that the service provided could not cope with adding VAT as it would not be possible as it would be priced out of the market. Although 61k a years sounds a lot the approximate expenses a year are around 30k for two people..

I don't know if it makes enough difference but remember that if you are charging VAT on supplied services you get to claim back all the VAT you pay on purchases.

 

[blues]

Thanks newbie.. In my case I will be starting work walking dogs for / with one other person.. The finance director at my current work said as i will be working for her and not able to be self employed..

You mean this person will be sub-contracting you to help with her dog walking business? I can't imagine it is going to be worth your while to form a Ltd Company, and I'll leave the major details for Mrs M's contact to provide, but all you really need is more than one revenue stream, loosely related - sell old leads on ebay?