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Author Topic: Going into business UK  (Read 2418 times)

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« on: August 10, 2014, 13:08 »
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Does anyone fromUK especially have any thoughts about at what point its worth treating Mstock as a serious business for Tax purposes etc rather than just declaring the extra income?


Tror

« Reply #1 on: August 10, 2014, 13:54 »
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I am not sure what exactly you are asking but if you pass a certain point of professionalism (have employees, freelancers working for you, a office,d eal a lot with models, ...) it definitely makes sense in terms of limiting liability, organization and tax concerns....but you should formulate your question a bit more specific.

« Reply #2 on: August 10, 2014, 15:51 »
+1
Well you've got to declare your earnings no matter how little, so you'll have to fill in a tax return and you can add all your expenses to get them deducted.

I operate as a sole trader - I can't quite see the advantage of being a ltd. company with all the paperwork and declarations that involves until your earnings are so substantial they make it bearable. There are some financial advantages, but it depends on how happy you are with the extra admin overhead - I prefer to keep it simple, but each to their own.

You don't have to register for VAT even if you go over the minimum threshold (40k? or something) for royalties from an overseas agency according to my accountant.

« Reply #3 on: August 10, 2014, 16:13 »
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Thanks yes I would be a sole trader so is it as simple as claiming "reasonable" expenses (and keeping records of course).

« Reply #4 on: August 10, 2014, 17:32 »
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Thanks yes I would be a sole trader so is it as simple as claiming "reasonable" expenses (and keeping records of course).

Yes, register with your local tax office and it's pretty simple.

« Reply #5 on: August 10, 2014, 18:01 »
+1
VAT threshold is 75k

You need to hang on to your expenses receipts for six years btw

Yes, you should register as a sole trader - even if you end up not having to pay any tax once earnings minus legitimate expenses is calculated. Best be on the safe side - from personal experience I know Her Majesty's Customs are ruthless and unforgiving.

« Reply #6 on: August 11, 2014, 00:42 »
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Thanks for the advice easier than I thought - will be an awful long time before I get anywhere near the VAT threshold!!!

« Reply #7 on: August 11, 2014, 04:22 »
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Does anyone fromUK especially have any thoughts about at what point its worth treating Mstock as a serious business for Tax purposes etc rather than just declaring the extra income?


The main and primary reason you should (besides having to tell HMRC of any extra earnings by law) is:

You can claim all expenditure on photographic expenditure including cameras lenses printers and lighting equipment against your tax burden.

If you have the receipts you can claim a capital allowance on equipment spend up to 5 years in the past.

I did and got a 1250 rebate from HMRC.

You can claim any other expenses such as business travel (0.45 per mile up to 10,000 miles 0.25 after that) printer paper memory cards accountant fees props and so on.

You can claim for books and magazines and if you advertise website fees advertising costs etc.

You can claim a reasonable amount for using part of your home for work i.e. spare room as an office garage as a studio space etc.

Of course you must run it as a business and keep copies of receipts invoices and bills.  A simple concertina folder to store each month's invoices and receipts and a spreadsheet to keep track of incoming's and outgoings.

If you do work other than stock on a business to business basis it is worth registering for the "flat rate VAT scheme" as you can charge VAT on sales invoices but then retain a portion of the VAT to offset against purchases http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5

So for example every 20 of VAT sales HMRC gets 11 of the VAT and you keep 9  :D

And no you don't need to go over the VAT threshold of 75000 per year to register.

It's a lot simpler than the regular VAT process

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm

I am registered on the flat rate scheme because I do business to business sales as well as stock and keep a good chunk of the VAT charged.

Alamy will add VAT to self billing invoices if you are registered and you can retain a portion of the VAT from those sales too.

It's also simple to operate you just record your sales and declare the VAT once a quarter and pay HMRC by direct debit.

I even saved myself 100+ per year by doing my own accounts but you might want to employ an accountant for your once per year tax returns.

« Reply #8 on: August 11, 2014, 04:22 »
-1
 :)
« Last Edit: August 13, 2014, 16:37 by Teddy the Cat »

« Reply #9 on: August 11, 2014, 04:25 »
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And VAT is not applicable to overseas earnings outside the EU so Shutterstock, iStock and all those other none EU agency earnings are outside the scope of VAT rules.

However they are still classed as earnings and need to be declared for normal income tax.

« Reply #10 on: August 11, 2014, 06:54 »
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Thanks for your very helpful reply Teddy :-). Due to personal circumstances I was below the tax threshold but did a self assessment. Combined with some other interests and with the ability to undertake more photographic work I intend to increase income - interesting times!! Not sure about an accountant I'm pretty good at that sort of stuff.

« Reply #11 on: August 13, 2014, 16:36 »
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Thanks for your very helpful reply Teddy :-). Due to personal circumstances I was below the tax threshold but did a self assessment. Combined with some other interests and with the ability to undertake more photographic work I intend to increase income - interesting times!! Not sure about an accountant I'm pretty good at that sort of stuff.

If you were below the tax threshold I'm guessing income tax?

Have you thought of working tax credits? They can be very useful

« Reply #12 on: August 15, 2014, 04:09 »
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Does anyone fromUK especially have any thoughts about at what point its worth treating Mstock as a serious business for Tax purposes etc rather than just declaring the extra income?
You can claim a reasonable amount for using part of your home for work i.e. spare room as an office garage as a studio space etc.

^^ You need to be very careful with this one, if you claim an area of your house is used exclusively for business and take the tax benefits that grants you...if you sell your house that area may now be subject to capital gains tax


 

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