disclaimer – rules change and I am not an HMRC employee so if any doubt please do contact them and check any details!
(This one is for my UK readers so please disregard if you’re in another country!)
When you mention tax and registering with HMRC many of us cringe and just don’t want to know about it. I want to encourage your today to get on top of it all and don’t put it off!
Do I need to register with HMRC?
The simple answer to this one is YES! If you are at all planning to generate a profit from your items, and I hope that you are, then you are classed as trading. The HMRC website says that if you are just selling unwanted items, such as on eBay or at a car boot sale you don’t need to register, and also that is you don’t plan to make a profit. So if you are truly a hobby crafter and just charge for materials, you may be ok.
I’m assuming that if you are reading this site then you are planning to generate a profit, so the answer is YES you must register.
How do I register?
Simply go here and follow the instructions!
You will need to create a Government Gateway account. These things can take some time so don’t leave it until the last minute!
When should I register?
I advise that as soon as you know you’re in this for the long haul (and I hope that won’t take you long to get that attitude) then you should let them know. Why? Well, it’s easy to let things slide and forget. You don’t want to leave it too long! If you’re worried about not making a profit then don’t. You would still need to tell them even if you hadn’t made a profit and you won’t have any tax to pay if that’s the case.
You have until the October following the end of the tax year that you started to register. And then your Self Assessment will be due the January after that. (again – keep an eye on the government website for up to date deadlines for this. Don’t just take my word for it!)
What about keeping records? Do I need an accountant?
Always keep records as soon as you start your business. You’ll need to work out what is best for you. Some people go through it all at the end of each month, some at the end of the year. A simple spreadsheet stating money in and money out may well suffice for you.
You don’t need an accountant or a bookkeeper although some people find them useful. For some, the hours saved will be well worth the money. For others it’s simply not necessary.
HMRC and tax aren’t something to worry about. Get yourself registered, don’t wait until the last minute to do your self assessment declaration and you’ll be fine!