Setting up properly as sole trader

[Steve]

I've been doing handyman jobs for a few years now. Little bits here and there alongside a full time job, then later an apprenticeship. I've managed to stay under any tax threshold, only doing odd little £20-50 jobs. I have liability insurance, but no other aspects of business setup.

I recently took on a cosmetic internal refurb job in an empty rental property (for somebody I "met" on this forum in fact). The total bill for labour is likely to be around £2k, as well as materials of £500-600. So I'm straight away over the "allowed tertiary earning" threshold or whatever its called. Added to that, I'm busier than ever with my normal jobs, regular customers asking me back and new customers asking for small jobs. I'm snowed under.

Anyway, going forward I will be qualifying as an electrician during this year and plan to do work in that vein once qualified. But for the time being I want to "formalise" my work as sole trader status and pay my share of tax especially as I'm giving an invoice for this big job. Is it as simple as registering m myself for self assessment and getting a business bank account in my business name for now? Is there anything else I need to do?

Also, dare I ask what I need to do if I've got my dad and father in law helping me on a job?

 

[scbk]

All you have to do really is tell the taxman

Set up as a sole trader

Register as a sole trader with HM Revenue and Customs and legal responsibilities if you run a business as a self-employed sole trader

www.gov.uk

You don't need a business bank account. Your bank would probably prefer if you had one, as they can then charge you for it!

 

[securespark]

You need public liability too.

 

[Steve]

You need public liability too.

Had it from day one. Cheers.

 

[Mottie]

Also, dare I ask what I need to do if I've got my dad and father in law helping me on a job?

'If' you pay them, keep a record and put it down as a legitimate business expense same as you would if you employed a subby. Let them worry about reporting that to HMRC.

 

[flameport]

I've managed to stay under any tax threshold, only doing odd little £20-50 jobs.

You are allowed up to £1000 per year for that, which is very little even with small payments.
One £20 payment per week puts you over that.

 

[Mottie]

You are allowed up to £1000 per year for that, which is very little even with small payments.
One £20 payment per week puts you over that.

Eh? The personal tax free allowance threshold is around £12,500+ a year. That’s £240 a week. Are you sure you are not confusing the £1000 tax free threshold with the interest allowance that you are allowed if you max out on your personal allowance and are a basic rate taxpayer.

 

[flameport]

OP has a full time job, which will take all of their allowance.
For anything up to £1000 year extra they can use the tax free allowance as described here: https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
but over that, it all has to be declared and tax paid.

 

[Mottie]

OP has a full time job, which will take all of their allowance.
For anything up to £1000 year extra they can use the tax free allowance as described here: https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
but over that, it all has to be declared and tax paid.

Ah, right. Didn’t see that they also had a full time job.

 

[Diver Fred]

Find yourself a friendly accountant, one who is used to doing the tax on Self employed people / businesses. They will give the advice your asking for free - expecting you will do your tax returns through them.

 

[mrrusty]

Find yourself a friendly accountant, one who is used to doing the tax on Self employed people / businesses. They will give the advice your asking for free - expecting you will do your tax returns through them.

Definitely find yourself a friendly accountant, but I would suggest looking for a small-medium chartered accountants practice . You will get continuity and they shouldn't charge a fortune. My wife and I use https://smithandgoulding.co.uk/ and their fees are in the order of £250-£450 per person per year (wife alternates between employment and self-employment so is more complicated than mine).

I would avoid the one-man-bands because if they disappear you get left in limbo.

Once you have an accountant, just send everything to them and you have no worries then about tax.

Also, dare I ask what I need to do if I've got my dad and father in law helping me on a job?

For a one-off you can probably wing it, but there is risk. Risk they have no insurance; risk of falling foul of HMRC, risk of liability if they injure themselves on the job. Personally I would stick to jobs you can do by yourself, because becoming an employer or using self employed subbies is a whole new ballgame.

link to taxaid

 

[Steve]

Yes I usually work alone. I have helped an electrician on a job before and billed my time as an insured handyman to the customer separately. For the moment I'm just paying my helpers out of my own money. This has tax implications for me so it's a learning I'm taking forward for definite! And I'm not too worried about insurance for them - I know the person we're doing the work for and it's all pretty low risk stuff - decorating an empty house. And they don't have any other incomes that would take them over £1k tax free allowance.

Thanks for your advice everybody.