Small Business Legal Lowdown
The subject of HMRC and accounting sends a lot of people into meltdown, it’s perceived as a frightening experience so people shy away from it. However, it’s the most single important thing you’ll do for your business. Here is where our small business legal lowdown should help.
I’ll start by saying this. If you make money from creating or selling products, you must register with HMRC, whether you sell 1 item or 1000 items. Whether you make a loss or you make profit! It really is as simple as that. It’s a common thought that if you only sell one item a week, or only do it in the evenings, or only class it as a hobby, that it’s not a business. In the eyes of HMRC, if there is an exchange of money for a product or a service ? it’s a taxable business.
Registering is painless, and gives a solid foundation to your business. There are a lot of misconceptions about what happens when you register; it doesn’t mean that they’ll take every penny you earn, and it doesn’t mean you’re more likely to get into trouble. HMRC don’t tax you until you hit £7500 (although this may change) a year, and they’re really approachable and friendly. It’s a serious crime to not register and you may receive a fine. Not registering with HMRC is classed as tax evasion. You don’t have to be audited to be revealed for not registering, anybody can report you if they suspect you’re not registered.
Get in touch with HMRC
Ring them. They’re very helpful and answer any possible questions you have, they’re often seen as quite scary but are very approachable. When you register, it’s even easier to maintain. The best piece of advice I can give is that you keep everything to do with your business. Every single receipt, invoice, scrap of paper, bill and so on. Try and keep on top of it, then when it comes to filing your tax return at the end of that tax year, it’s not so much of a trauma. A great example of how to keep your accounts up to date is: File all receipts in a folder clearly labelled for every month, update a spreadsheet with your expenditure and turnover per month. That makes it so much easier to refer to when filling in your tax return.
Find a system
You will find your own system for doing things that fits into your schedule, but that’s a starting point for you to build on. Another option for you to explore is the possibility of getting an accountant to do your tax return, or hiring a VA to do your filing. If it’s within your budget and you’d like to outsource, it can be a real time saver and you can relax knowing it’s in the hands of a trained professional. However, many people do their own accounts, so if you’d prefer to do it that way then you can. For more information, visit the HMRC website.
Speak to Trading Standards
Trading Standards are another useful tool when it comes to owning your own business, especially if you make things. They can ensure your product meets safety guidelines, provide advice on CE testing, they’re able to provide information on customer rights, they implement the consumer contracts regulations and other general business topics. They’re really approachable and in their eyes, no question is a silly question. For more information, visit the Trading Standards website.
Don’t overlook how important insurance is when it comes to business. There are many types of insurance you may need for your business, and they depend on your business terms.
Employers liability, public liability, premises insurance and so much more, but they’re all there for one reason; to protect your business. Don’t get stung if things go wrong. If something were to go wrong, there would be financial and legal consequences, all of which insurance protects you from. You can find out the information you need regarding insurance from a variety of places depending on your business type. Better to be safe than be sorry. The most important thing to remember when running your own business, it’s better to be safe than be sorry.
Register with HMRC to prevent being accusations of tax evasion. Get in touch with Trading Standards to make sure your product meets the safety requirements. Remember to protect your business by getting insurance. If you have any questions, get in touch and we’ll be more than happy to give advice 🙂
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