I'm going to open my own company (self employed), import goods only from EU and sell them on ebay. I also work (full contract) and I am going to take care about my company only in my free time so I think that I don't have to register as a VAT payer (less than treshold 81 000 GBP). I have a few question about bookeeping (number 1-6). Could you please check the list below and tell me about any mistakes?
A) First - I will register as self-employed with HM Revenue & Customs (HMRC)
B) I'm going to apply for a Certificate of Small Earnings Exception and not pay Class 2 National Insurance contributions (I suppose that I will earn definitely less than 5885.00 per year). (My question: 1) If I also work and earn around 20 000 per year can I then apply for this exception?
C) Import from EU:
Example: I am going to buy goods from company which is VAT payer in their country f.e. Germany and I bought 1 unit of XXX, they gave me an invoice:
"1x unit XXX, price net: 1.00 euro + VAT 23% 0,23 euro = total: 1,23 euro"
I am non VAT payer so I will write this in my ledger book as purchase/expense and use total price: 1,23 euro converted to GBP (~0,98 GBP) (my questions: 2) Which conversion rate can I use?)
(my question: 3) I don't have to pay VAT or duty when I import only from other EU countries - is it true?)
D) Selling on ebay:
F.e. I have sold this unit on ebay for total price 2 GBP + 1 GBP shipping cost (postage, envelope). Then I will send an invoice to my customer (without vat, only total price).
Invoice "13082014001"
1x unit XXX, price: 2 GBP
1 x shipping, price: 1 GBP
total: 3 GBP
and I will write this in my ledger book as sale - 3 GBP.
(my question: 4) Should I treat shipping cost as typical sale and envelopes, postages, etc. as typical expenses?)
E) On the beggining of the new tax year I have to fill the tax return and pay tax.
Is this scheme correct? Or have I forgot about something? Should I remember about any extra cost (except NI contribution (if don't have Small Earning Certificate) and tax after tax year)?
I have also a few questions about expenses.
5) I rent a room, I work every day and I'm going to be self employed only for a small extra earning - can I treat my rent (400 GBP) as an expense?
6) I need access to the internet - can I treat my montly "pay as you go" top-ups as expenses? I top up my phone by internet and I don't get any invoice - can be printed confirmation of top up treat as a prove of purchase for bookeeping?
Thank you for your help in advance and sorry for my english.
A - correct. Should be done within first 3 months of being self employed.
B - Yes you can. As you already pay class 1 through employment it would be daft to pay class 2 as well if your profits aren't going to hit the threshold.
C - EU is outside my field
D - Yes
E - Broadly correct. You have until 31st January after the tax year to complete tax return (online) The sooner you do so the better because you will know your tax liability and still have til 31st January to pay it. You will be aware that whatever profit you make will be taxed at 20% as you have already used your personal allowance in your employment. If you make a profit of more than £5000 you will also have to pay payment on account, which will be an extra 50% in January and an extra 50% in July.
5 - You can't claim the cost of renting a room but you can claim for hours spent on business. https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
6 - Top ups not claimable I'm afraid. The expense must be "wholly and exclusively" for business.
