Self employment: selling crafts

[LynAnne]

I am hopefully about to start selling wooden signs that I make as home decorations. In the past I have made them as gifts for new babies, weddingsq, birthdays but now with Christmas just around the corner I'm making a wee Christmas decorations batch with the hope of it boosting me into business.

I know that I need to register as self employed as soon as possible but I was wondering if there was a time limit on how long you can be self employed without registering. Obviously not to cut corners but just because I'm not sure when I will literally start selling them yet (I am hoping to at Christmas fayre, etsy, my Facebook page). Does anyone know if there is a time limit before you MUST register?

Also, I imagine I'll have to link paypal to my bank account. How easy is this and does anyone know how long it will take to be set up?

Thanks.

 

[Pearls18]

I'm going to assume it's more about how much you earn rather than a time limit, you won't need to pay taxes unless you earn over £9100 a year I'm guessing? But I don't know anything about this stuff, I have friends that do this on the side though and they're not registered as self employed.

 

[Pearls18]

Oh and PayPal is easy, you just set up an account then follow the instructions to verify it, they put a certain amount of pence in your account or take out a £ and ask how much they put in and what the code is.

 

[Dinah93]

2 years ago it was 90 days but that's from the first business activity, not the first sale. So if you're wanting to purchase a website, or supplies with which you'll make the signs then that's the first business activity. It's in your interest to register sooner rather than later as you can claim tax back on your supplies. I had a craft business about 2 years ago and my self assessment came out that I was due a whopping £508 back (just goes to show how shocking the profit margins were!) - registering is really simple and there is no harm to doing it early. Even if you only make one £5 sale you still need to do a self assessment tax return, it is irrelevant if you get to the level where you have to pay tax on your income or not, you have to declare it to them so that they know you are exempt rather than making the decision yourself.

 

[Pearls18]

2 years ago it was 90 days but that's from the first business activity, not the first sale. So if you're wanting to purchase a website, or supplies with which you'll make the signs then that's the first business activity. It's in your interest to register sooner rather than later as you can claim tax back on your supplies. I had a craft business about 2 years ago and my self assessment came out that I was due a whopping £508 back (just goes to show how shocking the profit margins were!) - registering is really simple and there is no harm to doing it early. Even if you only make one £5 sale you still need to do a self assessment tax return, it is irrelevant if you get to the level where you have to pay tax on your income or not, you have to declare it to them so that they know you are exempt rather than making the decision yourself.

That's really interesting to know, I have quite a few friends who make things and sell them (it's quite prevalent in the military community where it's generally harder to go out to work), where do they cross the line (the tax office I mean)? Like all the people on ebay who make these little crafts are they supposed to? What if you sell loads of thing a on ebay like I know people who buy baby clothes and sell them on? Sorry if you don't know just intrigued lol, I just can't imagine all that many people actually do this although they should. I know the wives don't class themselves as self employed, it's just something they do on the side and make a bit of pocket money from.

 

[Rachel_C]

HMRC have examples of what they consider trading here:

https://www.hmrc.gov.uk/guidance/selling/examples.htm

If people are clearly making/buying things in order to sell them, they need to register with HMRC even if they're well under the limit to pay tax. If somebody sells their kids' old clothes and makes a profit it's not trading (just good luck!) but if somebody goes to a charity shop, buys clothes knowing they are going to resell them straight away that is trading and they need to register. If you're not earning enough to pay tax you shouldn't have to pay National Insurance either but it may still be worth paying National Insurance if you can, since how many years of contributions you have affects things like your state pension.

OP, I'd just register now. It only takes a few minutes and then you don't have to worry about whether you need to do it now or in a week or a month.

 

[Rags]

Once you've registered with hmrc look into getting a national insurance exemption certificate ( for your self employed earning). If you will ear under £3500 a year self employed and have declared this then you won't pay class 2 NI, if your earnings are higher them you will pay NI on them when you do your tax return.

 

[LynAnne]

Thanks for the replies.

This might be a stupid question but when do the take tax from you? Is it a monthly or annual thing? I can't imagine I'll be making very much. My aim is to try and make about £100 a month in profit (so about £1200 a year) but I know that will be hard going, especially in the early stages.

 

[Rags]

I pay yearly, put my tax return in by December and pay by the end of January.

 

[Hope39]

Thanks for the replies.

This might be a stupid question but when do the take tax from you? Is it a monthly or annual thing? I can't imagine I'll be making very much. My aim is to try and make about £100 a month in profit (so about £1200 a year) but I know that will be hard going, especially in the early stages.

They dont take tax from you as such, you complete a self assessment and that calculates your tax due, you can earn £9105 before paying tax so chances are you wont have any to pay but you still have to do a self assessment

I do this for a living self assessments that is x

 

[suzib76]

Watch out with the small earnings certificate as it can be the difference between claiming minimal maternity allowance and being able to claim the full amount (if you pay your ni)

 

[kanga]

You can register on line (HMRC website) for business taxes. And you should do this "as soon as possible " after you start trading. Trading counts as when you enter into business not just when you make your first sale.

Even if you already do a self assessment tax return you'll need to register for business taxes, in addition.

A business or trade is anything that you're doing to make money. If the purpose of the activity is to make a profit then its a business.

Hth x

 

[Rags]

Once you register to do your return on line it's all relatively simple, you just follow the steps. I'm saying this because I know what it's like to keep putting it off and then finding you're right on the deadline. I've done that the last couple of years and feel like kicking myself, it really isn't difficult just a bit daunting.