Clarifying a few things ...

[MortimerJazz]

Tweet

Hi there, I've been looking through this forum for a while and have a couple of questions about making your affiliate business official and setting up your own company for tax reasons.

Obviously the official line is that you should register yourself as a new company before you even start promotions ... and I (like the majority of new affiliates) haven't done that.

Now that I'm making a few sales every month (nothing to write home about yet!), I'm thinking I should make everything official to avoid any penalties or legal problems.

Having done a bit of research into everything, I know that I can offset any losses I make from affiliate marketing against the tax I pay in my full time job, but even taking that into account I can't help feeling that I'm almost better off waiting until the business has grown a bit more before submitting details to company house ... which I know isn't really right.

That's because there'll still be a host of other charges to pay:

* One off fee to set the company up (several hundred pounds I believe)
* Monthly NIC fees
* Fees for a recommended separate bank account (which I believe are monthly too)
* Accountancy fees at the end of the year
* Tax on all income

There are probably a few other charges that I haven't found out about yet either ...but it seems that by making everything official I'll turn an admittedly small monthly earning into a large monthly loss.

Or am I missing something here??

Many thanks in advance for your help ...

[Mogga]

There's an explanation I think by Keith at HRBS in a previous post on this subject where it's all explained...

Have a look for that and it should explain everything.

[darrenb]

Hi there, I've been looking through this forum for a while and have a couple of questions about making your affiliate business official and setting up your own company for tax reasons.

Obviously the official line is that you should register yourself as a new company before you even start promotions ... and I (like the majority of new affiliates) haven't done that.

Now that I'm making a few sales every month (nothing to write home about yet!), I'm thinking I should make everything official to avoid any penalties or legal problems.

Having done a bit of research into everything, I know that I can offset any losses I make from affiliate marketing against the tax I pay in my full time job, but even taking that into account I can't help feeling that I'm almost better off waiting until the business has grown a bit more before submitting details to company house ... which I know isn't really right.

That's because there'll still be a host of other charges to pay:

* One off fee to set the company up (several hundred pounds I believe)
* Monthly NIC fees
* Fees for a recommended separate bank account (which I believe are monthly too)
* Accountancy fees at the end of the year
* Tax on all income

There are probably a few other charges that I haven't found out about yet either ...but it seems that by making everything official I'll turn an admittedly small monthly earning into a large monthly loss.

Or am I missing something here??

Many thanks in advance for your help ...

I think you are getting slightly confussed with some things. There is no need to register a company with companies house, you do however need to register with HMRC from a tax point of view and declare yourself as self employed. There is a small penalty for late notification in terms of declaring yourself self employed. I would give HMRC a call and see what they say or have a read of the website (HM Revenue & Customs: Home Page), you will find they are pretty helpful on the phone.

The costs involved of registering and setting up as self employed are minimal, the main one being a rerquirement to complete a tax return. A company is only really needed once things take off.

A small business bank account can be opened free of charge with some banks with no fees for the first year (I know Natwest do this for self employed people).
NIC may not be payable if you already have a full time job and pay NIC through PAYE (wages/salary).
Tax is payable on self employed income via a self assessment tax return which an accountant will do for around £100 (and maybe a few hundred more for yearly accounts) or if things are very simple in terms of income and expenses HMRC can assist with completing your tax return free of charge. All you would need to do is keep a simple profit and loss sheet with income and expenditure summarised by type.

Give a couple of local accountants a call and tell them you are considering setting up as self employed, they will give you some advice if you sound as if you are interested in their services, maybe ask for a price for them to complete your tax return.