Setting up a new business...

No, not me, the girlfriend!

After a lot of talking we have decided that it would be best to get out there and earn some money as a self employed photographer.

We have a website soon to be made (by a friend) for a fee of £0... He's a good friend and does it as a hobby

She has her business cards all made up and now needs to register a company and register as self employed.

My question to you lot is the following.. How the hell do you go about doing all this?!

I've always been employed by a company so have no experience. Can anyone help in perhaps listing the first to last step on how to go about doing this stuff...

Does she need to be VAT registered? Pros and cons of being VAT registered? I did read somewhere that you have to earn over a certain amount before you can begin claiming back any VAT, is this correct?

Any help would be much appreciated!

To register is a piece of urine, ring tax office and give them details.

If your turnover is over £60k per annum, then you have to be registered for vat.

I'd advise against vat if you can avoid it, you instantly become 20% more expensive than another photographer who isn't vat registered, so you're not competitive, if you claim vat, you charge vat, simple.

Make sure you account all her equipment into the business, you're allowed a lump sum, so you won't pay much, if any, tax.


I'd get an good accountant, they will save you a fortune and advise you exactly what you can claim against tax.

[flymo]

some good advice here http://www.businesslink.gov.uk/bdotg/action/home/

first things first.
you do not register a new company and also as self employed.
one or the other.
being self employed is straightforward.
Inform taxman of you intention to become self employed - is she already in work?
There are no costs to this.
If you register a company, this will cost money and you become employee
(also director)
I set up as self employed in 1991 and never regreted it.
you have to ensure that you put away some of earnings for tax which is payable 2 times per year.

VAT -
if you register, you must apply tax to sales i.e. customer pays more.
but you claim back VAT on equipment etc.
If already have gear then you cannot claim VAT back but can put a cost against tax.
I do not know the current threshold for VAT i.e. above that earnings you must be registered whether you like it or not.
I suspect that you would not get registered immediately until you see how work develops (pardon the pun)

These are my thoughts and experience - others may have a different view.
SMcG in Glasgow

[maviczap]

I wish your girlfriend every success with this venture, its what my mum & dad used to do.

Its dam hard work!

It does seem like hard work but looking at what people will spend for a wedding photographer etc it seems as though it could be a very lucrative business if she gets a good reputation...!

I have offered my help (I do sports photography as a hobby) and she will get me for free!

She currently works part time at a golf club while she sorts things out, could she register as self employed and just continue to work there?

This sounds stupid, but as for 'keeping records' how do you go about doing that? What records etc? Does this mean keep every single receipt for everything you buy throughout the tax year that has anything to do with your day to day business?

With all these receipts, what are you entitled to claim back if you aren't VAT registered?

It's all rather confusing... Thanks for the replies so far however, very helpful.

[embee]

... as said above, basically.

Becoming self employed is very simple if you are a "sole trader", in essence just you working for yourself. There's no company, all you do is get in touch with your tax office and tell them you are going to be s/e as a sole trader. If it's the same as when I did it in 1991 it's a sheet of A4 where you give basic personal details, what your business is (e.g. photographer) and what your trading name is. You can use your own name (what I do) with no issues to bother about, even if your name is W.H.Smith no-one can stop you.

You'll need to decide what your tax accounting year is for your tax return purposes, it's often easiest to use the normal tax year dates 6th April-5th April, saves complication

Any routine cost you incur for anything to do with your business is added up and can be taken off your "turnover" (i.e. total money received), so any materials, cost of insurance etc. Equipment is put into a "capital pool" and one way or another you take some/all of it off your turnover. The rules change year to year, last year if your pool value was less than £1k you could take it all off in that year, otherwise you can take a percentage each year (e.g. 20% of pool value is allowed and the remainder is carried over to the next year). Sounds complicated but isn't really. Keep receipts, all of them. I keep a very simple day book (a diary) and note costs/jobs/money in.

You can take costs of a vehicle off too, that's dealt with separately from capital allowances etc. If you use it for personal use also, it's done on a pro rata business/private mileage basis. It includes everything, insurance, fuel, servicing, tyres etc, can be very useful.

No need for an accountant if you are happy to do tax return yourself, though there are accountants who will do simple returns for very modest sums, ask around. You don't publish accounts as a sole trader, just between you and HMRC.

Basic rule is look after the cash flow, avoid paying out lots of money without getting cash in. One bad debt costs you dear, you then need 2 more jobs just to break even, and if you're not careful you end up paying for the privelege of working.

You can be employed and self-employed at the same time, it complicates the tax return a bit but plenty of people do it. The tax office is usually pretty helpful with these things.

She can work and also be self employed.
i.e she will have to fill out a tax return at end of year that shows earnings from golf work (P60) and additional earnings from other sources.
Records
Sales
keep a copy of all invoices for work done.
These must show her name and address, client name and address, unique invoice number, value and date.
You can easily make one up via Excel.
Purchases
keep invoices of all supplies/expenses etc that are required to run the business.
I used to have a big envelope for each month.
Sales - Costs = taxable income
If the turnover is low, you can do the annual accounts yourself (you will soon pick it up)
If turn over good then you can still do the books but then get accountant to lay it all out in format Taxman expects.
If camera is bought then you will get a depreciation each year - this goes as cost so reduces taxable income.
Believe me it is not rocket science.
You do not need an accountant initially - wait until you have records to actually show.
Do not go mad buying things initially.
A negative income is surely to be avoided.
You can always get free advice from me and others.
SMcG in Glasgow

+1 to all yhe above advice and as it's important i'll repeat it, keep all your receipts. If there is ANY way you can link something you buy to the business, down to a pack of pens or a pad of A4 etc then use these as costs at the end of the year.

All the above, good advice.

I'd suggest, if you hav'nt already done so, setting up a business bank account seperate from your private ones. Pay in a suitable "start up" sum which you can take back once the profits accumulate.
As stated, in that line of business, VAT would probably be a bad thing unless you are working on commercial projects for other VAT registered companies.

And definately find a good accountant.