How long does a sole trader or Ltd Company have to register their business with HMRC from the time they start trading.
I want to know when each has to be registered so I know which to go for? Time is the issue as I have little of it, all records wil be kept when I have time but just need to know which option gives me most time bearing in mind it is going to a part time business as I have a full time job.
I am thinking soletrader option maybe better:
Note 1: As I am full time, this will be a part time business which I hope will bring in £3000-£6000 per year after a few years of trading.
Note 2: I am keeping all the outgoings receipts etc and have no income yet as I am not ready to trade yet.
Correct me if I am wrong bearing in mind I am not ready to trade yet;
I intend to start trading in 1 Jan 2014, but I will have to submit my sole trader tax return for 1 Jan 2014 - April 2014 from April 2014 onwards but my absolute deadline to submit my tax return will be 31 Jan 2015 but I don't need to register my sole trader business until 6 October 2014. I am right or have I got it horribly wrong.
Please advise
Replies (5)
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Deadlines
If you trade as a sole trader, the deadline to register is 6th October following the end of the tax year in which you start to trade. If you intend to trade through a Limited Company I would suggest that you appoint a tax adviser as the compliance obligations are more onerous and professional advice is usually required.
You may of course wish to register sooner
to cover off the Class 2 NIC's, or apply for a Small Earnings Exemption to defer those and Class 4 as you are also employed and paying Class 1.
Telling HMRC you have commenced prior to 6/10/14 is unlikely to have any other effect than to put HMRC on notice that they need to issue a return, and stop you forgetting and missing the deadline.
If you take the self employed route
you are taxed on profits of, not drawings out of the business