Business... and Tax... (VAT)?

Question

OK. I am starting (well sort of have started) a gardening business...

I have been doing it off and on for friends etc for a couple of weeks, but all of a sudden ive got so many jobs coming in, ive decided imma do it for proper...

SO... What do i need to do? I am currently considered unemployed (not on the dole or anything... just between jobs)

Do i need insurance?... I clear gardens, cut grass / hedges etc...

(NOTE: i already have class 1 business use on my vehicle)

VAT: i read that you dont need to pay VAT for earnings less than 64000? is this true?

I will be using petrol ETC for my work (traveling between jobs, lawn mower, and other petrol tools) can i claim this VAT back, or can i only claim VAT back if i pay VAT?

I know i need to pay income tax and NI contributions... i simply need to set up a PAYE account for this... correct?

and... BOOKS... HOW Do i keep them? is it ok to simply keep copies of reciepts, / invoices ETC?

Answer 1

Firstly register with the Revenue website and that will start the ball rolling for tax and class 2 NICs which you will pay monthly usually by DD. You will pay tax under self assessment and not by PAYE.

Books do need to be kept and at the very least keep your receipts and invoices, if you are any good with IT keep an Excel spreadsheet with a cash account on. Microsoft provide free templates and you may find a useful one.

You do not need to register for VAT unless your turnover is £67,000 - this is income and not profit ie what you are selling your services for. If you are not registered you cannot reclaim VAT on what you buy but conversely your invoices will not have VAT therefore your customers will be happier with you.

I wish you well.

Answer 2

Hi

All advice above is excellent but...

When Jane L says you should register your new business with the Revenue I don't think the importance was stressed.

You MUST register within 3 months of starting otherwise they will fine you £100 so get on the phone to them soon. You can register by phone on 08459 154515.

On the business records remember to keep them simple but complete. Don't miss anything out.

When it comes to claiming things for tax deduction the rule is that you can claim anything  that is "wholly and exclusively" for your business and for nothing else.

You don't have to be in possession of a till roll, receipt or other paper to claim an expense. Just so long as you really spent the money on business items. For example, "on street" parking meters won't give you a receipt but you can still claim the cost if you were parked for genuine business reasons.

Out of pocket expenses (materials, smaller/loose tools, post, stationery, phone, motor running costs etc.) are usually just deducted from income to arrive at your taxable profit.

Bigger items of equipment (van, computer, large power tools etc.) are subject to a special method for claiming tax deductions. The method is referred to as "capital allowances". This link may help when you come to filling in your claims ....

http://www.businesslink.gov.uk/bdotg/act...

Echo what others have said .... good luck in your new venture.

Answer 3

In this day and age its probably a good idea to get some insurance.  I'm assuming you're not trading as a limited company i.e. a sole trader.  If this is the case, and if something goes wrong when you're doing some work for someone, you'll be personally liable if they successfully sue you.   Compensation and legal costs can run into the thousands.....

To find out what you need and to get some quotes from around the market take a look at http://www.coverzones.com

Answer 4

also, contact your local business link. There are still some grants available for people setting up. If you are younger (less than 25?) then you could contact the Princes Trust as they will support young business people.

Try not to see the tax office as an enemy. They have some teriffic advice lines and also run open days where you can get all the advice you need. Try to get the advice before you start up and then you'll be less likely to make any mistakes.

....and good luck!