Starting a small business as second income

[andysimmons]

Hello
I am in full time employment at present and I am considering starting a small business from home as a 'challenging' venture and also as a source of second income. For this purpose I am considering using eBay. I would not be employing anyone.

Can anyone tell me where to start?
Is it necessary for me to register the business no matter how low the income?
What tax am I liable to pay in addition to my current job, I'm currently on about 32K a year.

I want to try and work out how profitable versus much hassle it will be and whether it is worth pursuing.

On the ebay question - are sales on ebay and other online auctions taxable?

Many thanks for your consideration and replies.

Andy

[Instinctive]

You will be treated as self-employed and will be required to register with the Inland Revenue and contributions Agency within certain time limits.

Any profits from self-employment will siply top-up your other taxable income arising in the same tax year. Assuming no other taxable income other than the £32,000 from employment, you have approximately £5,000 profits taxable at 22% and the rest at 40%. You could also pay NIC2 (flat rate £2 per week) and NIC4 (based on profit levels).

Ramnik

[King_Maker]

It depends on what you are selling.

If it's second hand personal stuff, this is more likely to be classed as a hobby and not taxable - but nor are any losses claimable.

As you are already a taxpayer, any profit will be taxable at 22% (and 40%, if relevant). You will also be liable to Class 2 & Class 4 National Insurance if your profits are large enough.

You need to register with the IR within 3 months of commencement of your new business - £100 penalty for non-compliance.

You may wish to consider whether a limited company is a better option.

[deanshepherd]

If you are selling with a view to making a profit (which I am sure you are!) then you will certainly need to register with the Inland Revenue.

If your profit is likely to be less than £4,345 in the first tax year then you will be exempt from Class 2 NIC and not liable to the £100 late notification penalty.

Operating as a limited company is very unlikely to be in your best interests given the administrative burden and costs associated with it.

I would recommend seeking professional advice early as you are likely to save more terms of tax, penalties and interest than you would probably pay in accountancy fees.


Dean Shepherd
dean@mmi-online.co.uk
www.mmi-online.co.uk