HMRC - What you need to know
A lot of people think that if they don't make a huge amount of profit or are hobbyists that they don't need to register with HMRC - WRONG!
Everyone who sells to the public (whether online or face to face) MUST be registered with them as self employed, it doesn't matter whether you're turning over £5 or £500 a month everyone should be registered. It sounds scary and a lot of hassle but here's some pointers and info.
You can be employed and self employed at the same time
If you work whether full or part time, you can still register as self employed as well. Your non taxable earnings however, will more than likely be taken into account by your employment already. At the moment it's £7k but can change as and when the government decide to change it. So, if you work my advice is to set your prices to account for the 20% tax you'll have to pay on every sale.
What can I offset?
There is a whole load of things you can offset against your sales not just the materials you use to make them. Don't forget to keep receipts for EVERYTHING! And use the PayPal option to export to excel just in case you miss anything.
Mileage - To and from the post office, craft fairs, shops it's all counted so keep a record of it. You can claim 40p per mile.
Room - Do you use a whole room in your home for your business? If so you can claim £10 a week for lighting, heating and electricity.
Giveaways - If you give items to charities or businesses as raffle prizes these are also costs as they cost you to make them.
I've got a very basic spreadsheet to record everything in, if anybody would like a copy to get them started let me know.
Why should I bother?
With the economy the way it is, HMRC are looking more than ever to recoup as much money as possible. Ebay is one of the biggest places that they've been cracking down on, and they are starting to look at direct sellers so representatives for companies such as Avon, Body Shop, Partylite etc. It won't take long before they're looking at crafting sites like wowthankyou, Folksy and Etsy if you ask me either. It's always best to get in touch and be honest with them rather than be found out later. Doesn't matter to them whether you're a small or big business, they will see it as tax evasion and the fines for such as massive.
HMRC offer a lot of support for new businesses so make sure you check out their help and support section on their website here
They also have a big section with a lot of information regarding self employment too here
I don't profess to know EVERYTHING about HMRC so the above information should be used as a guide
Everyone who sells to the public (whether online or face to face) MUST be registered with them as self employed, it doesn't matter whether you're turning over £5 or £500 a month everyone should be registered. It sounds scary and a lot of hassle but here's some pointers and info.
You can be employed and self employed at the same time
If you work whether full or part time, you can still register as self employed as well. Your non taxable earnings however, will more than likely be taken into account by your employment already. At the moment it's £7k but can change as and when the government decide to change it. So, if you work my advice is to set your prices to account for the 20% tax you'll have to pay on every sale.
What can I offset?
There is a whole load of things you can offset against your sales not just the materials you use to make them. Don't forget to keep receipts for EVERYTHING! And use the PayPal option to export to excel just in case you miss anything.
Mileage - To and from the post office, craft fairs, shops it's all counted so keep a record of it. You can claim 40p per mile.
Room - Do you use a whole room in your home for your business? If so you can claim £10 a week for lighting, heating and electricity.
Giveaways - If you give items to charities or businesses as raffle prizes these are also costs as they cost you to make them.
I've got a very basic spreadsheet to record everything in, if anybody would like a copy to get them started let me know.
Why should I bother?
With the economy the way it is, HMRC are looking more than ever to recoup as much money as possible. Ebay is one of the biggest places that they've been cracking down on, and they are starting to look at direct sellers so representatives for companies such as Avon, Body Shop, Partylite etc. It won't take long before they're looking at crafting sites like wowthankyou, Folksy and Etsy if you ask me either. It's always best to get in touch and be honest with them rather than be found out later. Doesn't matter to them whether you're a small or big business, they will see it as tax evasion and the fines for such as massive.
HMRC offer a lot of support for new businesses so make sure you check out their help and support section on their website here
They also have a big section with a lot of information regarding self employment too here
I don't profess to know EVERYTHING about HMRC so the above information should be used as a guide
Business Initiative
When I opened my business in February 2011, Business Initiative in Festival Park were offering free self employment courses. It's well worth getting in touch with them as they offer 12 months free advice when you register with them too!
Check them out here
Check them out here
Insurance - What you need to know
Insurance is not optional when you're a crafter selling to the public. Even if you don't sell face to face at craft fairs, what happens if one of your buyers manages to injure themselves on one of your products? Or your stand falls over at a fair and lands on someone? Might sound very extreme but could you afford to cover legal fees and potentially thousands in compensation? I dare say the answer is no.
As with any kind of insurance, you might never need it but it's always better to have it than not.
I do get concerned when I hear business owners claiming that they can't afford the insurance. If you can't afford the insurance how would you manage if something did happen at a fair? Without wanting to sound too harsh, if you can't afford insurance then you really shouldn't be in business. I appreciate that start up costs for any new business are huge but it's something that every business should factor in.
Insurance doesn't have to cost the earth either as there are some options:
A-N
If you look on their website you may think that A-N is just for artists but I emailed them to see whether it covered crafters and it does. I also know that several other craft fair organisers recommend A-N to their stallholders too. How it works is you pay £36 for an annual subscription which includes £5million of public liability insurance.
Ian W Wallace Ltd
This company specialises in craft insurance. I don't know much about them but do know a lot of crafters who use them. I think annual policies range from £50-75. Check them out here
As with any kind of insurance, you might never need it but it's always better to have it than not.
I do get concerned when I hear business owners claiming that they can't afford the insurance. If you can't afford the insurance how would you manage if something did happen at a fair? Without wanting to sound too harsh, if you can't afford insurance then you really shouldn't be in business. I appreciate that start up costs for any new business are huge but it's something that every business should factor in.
Insurance doesn't have to cost the earth either as there are some options:
A-N
If you look on their website you may think that A-N is just for artists but I emailed them to see whether it covered crafters and it does. I also know that several other craft fair organisers recommend A-N to their stallholders too. How it works is you pay £36 for an annual subscription which includes £5million of public liability insurance.
Ian W Wallace Ltd
This company specialises in craft insurance. I don't know much about them but do know a lot of crafters who use them. I think annual policies range from £50-75. Check them out here