Starting Out... Should I Register with IR?

[e1seix]

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Hi all,

So I have a very basic question. I know some of this has been answered before, but as a complete novice I need to try and apply these answers to my situation to understand it?

First of all, I have been an affiliate for just over a year now. Because I have spent the majority of the year trying to code my website as opposed to marketing it (I'm in it for the long haul! lol) I have earned next to nothing - less than £100.

From my experiences I have now decided to take what I have learned over the last year and turn my attention to a new website. This will launch in a big way and will instantly start making money. I'm aiming for about 6 months until the launch and am only at the stage of buying domain name etc. I am keen to register a company name with the IR for tax purposes, but here's where I become a novice. Is it too early to do this at this initial stage?

Also, I'm a bit confused as to the whole sole trader and limited company thing? Technically from what I've read it will make more sense as this will be a small second income (as I still work full time) to register as a sole trader. Does this mean that I have to register with the IR in just my own name as opposed to a company name? And also, does this mean that if I wanted to call my company as an example Cool Webdesign, I can't add "Ltd" to the end of it without it actually being a limited company (I know, this is a bit of a no-brainer, but just checking).

If in fact I do register as a sole trader, I have also read that my name must feature prominently somewhere on the website. Is this true?

I just want to do this properly, and don't wanna get into trouble. Also, even with my current website having earned under £100 in the last year, should I still be registering it with the IR?

Many thanks,

Eamo

[hrbs]

Hi

If you are trading you are **legally required** to register with HMRC, otherwise you _will_ be fined £100. HMRC are very, very good at issuing fines/penalties.

The good news is that, if you are making a loss you can offset the loss against your other income and get a tax refund (many of my start-up clients get a tax refund).

The distinctions between limited company and sole trader are many. Visit my FREE info-site at Business tips from HRBS Accountants | Tips and hints for new and growing businesses from HRBS ~ fixed fee pro-active accountants and business advisorsBusiness tips from HRBS Accountantsfor articles on affiliate marketing, starting up in business, tax deductible expenses, limited companies etc. As you are a start-up business and are likely to be making a loss, check out the article on tax deductible expenses at Tax deductible expensesBusiness tips from HRBS Accountants to ensure that you are claiming all you should be.

When you register with HMRC/IR you will be Jay Bloggs Trading As Make A Million A Week. It will not stop anyone registering a company called Make A Million A Week Limited. If you want to protect your business name you can register a limited company and leave it dormant (non trading). You will still need to file dormant company accounts.

There are regular posts on this forum saying I make £20 a year from affiliate marketing do I need to register with HMRC? The answer is YES. If you do, and you can prove your expenses, then with the help of a decent accountant you will probably turn this into a loss (after taking into account domain names, hosting, broadband, PC equipment/software, magazines/books, backup CDs/DVDs/USB sticks, accountancy fees etc) and get a TAX REFUND. I use this same approach with semi-pro musicians who get regular tax refunds as their equipment and expenses far exceeds their gig fees.

I would recommend that you get an accountant, preferably one who knows affiliate marketing/online trading. If you keep good accounts it need not be expensive, is tax deductible and will probably save you both tax and penalties/fines.

An analogy I use quite often ... treat your business like you would treat you car .. get it serviced by a qualified professional. A franchised garage with all the recommended equipment may cost £70+ per hour to keep your car safe to drive.

Unless you have spare hours to spend learning book-keeping, tracking the HMRC, Companies House and various other relevant websites to keep your business upto date with tax legislation, accounting requirements etc, I would suggest you get an accountant. Most of my clients are far more productive developing their websites and using their expertise constructively than dealing with the admin burden of accounting, payroll, tax, VAT, reverse charge (Adwords) etc.

If your idea meets or exceeds your projections, then paying for professional expertise may be more cost effective than you dealing with your financial affairs yourself. You could employ a book-keeper at a lower rate and their figures be checked by the accountant to prepare the year end figures/tax return. This may be cheaper depending upon the complexity of your affairs.

All members of A4U are free to bounce ideas past me, so PM if you have any questions.

Good luck

Keith
Fixed Fee Accountants and Tax, VAT, Payroll Specialists providing proactive, professional service to small businesses - HRBSaccountants.com

[Barry]

Thanks Keith for a concise answer.

- And welcome to the forum Eamo I hope it all goes well for you.

Ta