Resolved Question

Setting up a new business whilst im still employed...help needed?

Im thinking of starting a website based new business selling drawings and paintings. I am currently employed so will only be doing this in my spare time whilst not working. How do I go about starting uo the new business? Usually I believe you would have to register as self employed, but as im currently employed, what happens there? What taxes and costs are involved.....any help/advice would be greatly appreciated??

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Hi, it's perfectly ok, and very common, to be both self-employed and employed at the same time.

It's important to let HMRC know that you're self-employed as soon as possible. If you don't tell them within 3 months of starting your own business you may have to pay an initial penalty.

Once you're registered as self-employed, you'll receive a Self Assessment tax return to complete each year so that you can provide details of your earnings and any other income you get during the tax year (6 April to 5 April). This information is used to work out how much Income Tax you have to pay.

For tax on your income from employment you will still pay via the PAYE scheme which your employer does and NI the same.

Through self-employment you normally have to pay Class 2 National Insurance contributions - you pay Class 2 National Insurance contributions at a flat rate of £2.40 a week if your earnings are above £5,075 per year (2009-10) If you expect to earn less than £5,075 per year you can apply for a certificate of small earnings exception and not pay Class 2 National Insurance contributions. However, you might decide to carry on paying them voluntarily to keep your entitlement to the State Pension and other benefits
If your annual profits are over a certain amount you also pay Class 4 contributions. You pay 8 per cent on annual profits between £5,715 and £43,875 (2009-10) and 1 per cent on any profit over that amount. You work out your Class 4 National Insurance contributions on your tax return and pay them alongside your Income Tax.

All the information and more can be found at http://www.hmrc.gov.uk/working/intro/sel… there are also links to help you register as self-employed and details of the Newly Self-employed Helpline which can help you with any queries.

I hope this tells you what you wanted to know, and best of luck with your new business!
Rebecca

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Other Answers (3)

• There is a government organisation, business gateway, that can help you on your way, explaining what it means to be self-employed, or having a company, and what grants you can get from the government to help you set up (which is always nice).
  
  You can start here: http://www.bgateway.com (Scotland)
  
  or here: http://www.businesslink.gov.uk (England)
  
  Don't register yourself as self-employed just yet!! You will need to start paying your own NI, tax, etc. Totally premature if you ask me!
  
  Also: check your employment contract, many say you are forbidden from doing any other work outside of this job. If in doubt maybe you can ask your employer or manager in confidence if this would mean you are breaching your contract.
  
  HMRC also have some advice online, e.g. how does the finance and also the important tax and NIC side work if your self-employed: http://www.hmrc.gov.uk/startingup/index.…
  
  Good luck!

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• Starting a new business is great way to free your self from your boring job. Working for yourself gives great pleasure and satisfaction. But let me tell you that, this road is not easy for anyone. You have to really work hard. I can assure you that if you work hard and work in right direction, no one can stop you from getting success.
  You can check important book here.
  Shoestring Venture: The startup Bible
  http://www.shoestringventure.com/

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• You don't have to register as self employed immediately. As long as you register within 3 months of starting you're all right. That gives you a chance to find out if the business is going to take off. Otherwise, it's more of a hobby that makes you occasional bits of cash.
  
  Speak to your local Business Link about what you're planning to do. They provide free help and advice on starting. Inland Revenue also provide free seminars on all the tax and national insurance implications of working for yourself. You can also ask them questions on a 1-2-1 basis. There are exemptions from some of the NI contributions if you're not earning a lot from your business.
  
  We started our first business while we were still employed. You end up not devoting a lot of time to it and, depending on who your customers are, you're not always available when they want to speak to you.
  
  You may make more money from your drawings and paintings by attending craft fairs. Check out Oakleigh Fairs for listings of events for the coming year. It means that you're there for your customers when they want you to be there. We've not sold much art via our websites. They're good for people to get an idea of what you do but most like to see the pictures for real before they buy. Poster sales or prints of names like Jack Vetteriano work on-line but lesser known artists have to work a lot harder.
  
  Good luck!

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