A few Sole Trader questions.

[kenboon]

I currently work full time and i'm wanting to start a small online business and I have a few questions i'm not to sure about.

1. Will i have to pay tax upfront when i first start trading, on an esstimated turnover for the year?
2. Will i get a company registration number when i register as a sole trader?
3. Will my tax code change to BR when i register as i have two incomes?
4. Can i register a business name as sole trader?

I really am a complete novice to all this. i have been on the hmrc website and not found any answers to the above.

Thanks Alot

Ken

[rammellconsult]

Hi Ken,

1. No tax payable "up-front" BUT make sure you make allowance for tax payment when it is due following the end of your tax year.

2. Company registration numbers only apply if you register at Companies House to form a limited company. As a sole trader, you have no registration number.

3. Not sure what will happen to your tax code.... possibly it won't change until you complete a year-end self-assessment tax return and declare your additional income.

4. There is no obligation to register a company name as a sole trader. Within reason you can call yourself what you like.

Cheers.
Eldin.

[matthewangelina]

Hi Ken,

Not at all surprised you had no luck on the HMRC website - it's a bit hectic if you dont know where to look!

In reply to your questions:

1. You will need to complete a personal tax return for every financial year (6th April to 5th April). The calculated tax on which is payable by the end of the following January. There will be no estimated tax paid upfront.

2. As a sole trader you are operating as a business and not a separate legal entity or company. You will not have a company registraition number.

3. If you have two incomes one will need to be declared as your main income and will be taxed as per your current employment. The second source of income will be taxed under the Basic Rate BR code which is 22%.

4. As a sole trader you can trade under any unique business trading name you wish. This does not need to be registered although you can apply for a trade mark then no one else can use it.

Hope this cleares things up!

Matthew

[Tina]

Hiya,

I'm looking into this can't answer all your question but do have inform on some.

I haven't come across anything that says you'll be expected to pay tax up front. It is calculated from the self assessment that you will complete and is based on your profit. You can use a trading name instead of your to do business under but there are rules and your name must be associated with it, i.e on your website and stationary etc.

As a sole trader you don;t specifically register from what I can tell the registration is for Ltd companies etc therefore you won't get a registered number, If you register for VAT you will get a VAT number.

This is just my interpretation of information I have gathered so please do check it out but hope it helps in the mean time.

Tina.

[Eagle]

Originally Posted by kenboon

I currently work full time and i'm wanting to start a small online business and I have a few questions i'm not to sure about.
1. Will i have to pay tax upfront when i first start trading, on an esstimated turnover for the year?

No. You'll be 'billed' anually, based on your personal tax code. Register here: http://www.hmrc.gov.uk/individuals/t...sessment.shtml

2. Will i get a company registration number when i register as a sole trader?

No. You won't be a company but someone running a business (Your name trading as "***** ******")

3. Will my tax code change to BR when i register as i have two incomes?

BR? It shouldn't change - you'll just pay more income tax!

4. Can i register a business name as sole trader?

No. Although you can apply to trademark the name. See http://www.ipo.gov.uk/tm.htm
Of course, don't take any of this as formal legal advice but it represents my understanding. Hope it helps.

Mark

[Joyous]

Just to clarify the point about the tax code. Your tax code should not change. When you complete your self assessment return at the end of the tax year you’ll declare your income from self employment as well as your employment income. The additional income tax (or possibly a refund if you’ve made a loss) will then be calculated accordingly.

Regards

Joy

[kenboon]

Thanks so much for taking the time to answer my questions its helped me alot

Thanks again

Ken