Ok im just starting up how do i go legal

[dj-jaym]

How do i go fully legal registering for tax etc ?

DO i get a tax bill at end of year ?

Can i offset what ive shelled out ?

[BeerFunk]

Welcome to the 'hood :cool:

You'd probably get more in-depth answers searching the forum for older posts, then posting any questions you have to clarify things :)

[Solitaire Events Ltd]

How do i go fully legal registering for tax etc ?

DO i get a tax bill at end of year ?

Can i offset what ive shelled out ?

Welcome to the forum.

Start a new thread in the newbies section and introduce yourself properly.

This might help http://www.hmrc.gov.uk/startingup/register.htm

[Ricesnaps]

How do i go fully legal registering for tax etc ?

DO i get a tax bill at end of year ?

Can i offset what ive shelled out ?
To be a little more helpful -and don't take this lightly, this is certainly not a simply topic....

Step 1 - Call you local tax office and tell them what you are doing
Step 2 - I think they send you a form to fill in - fairly easy
Step 3 - Keep EVERYTHING! Reciepts that is, everything you ever buy! It is worth remembering that if you buy a pair of trousers to wear to work and then use them for the disco work too, then you could claim they were business use! (that's a very very very simplified explination!)
Step 4 - Complete tax return (which will be sent to you in a thick package once a year) before 31st Jan (and if you don't GROVEL!!!! and you might save a fine - I did!).

Basically, everything you buy for the business can be set against income. You only pay tax on what is left of your income once you have taken off everything you bought - or nearly!

There is a little thing called capital equipment - which as I understand it would be large items of kit, maybe a van, car etc... Although I can't remember the percentage, you can't offset all of these purchases against your income - I think you can use 50% in your first year and then a smaller percentage of what's left year on year!

Finally, when you have worked out your profit, the tax man will charge you tax - always pay your tax!

By the way, if you are really successful, you may need to also register for VAT - at a certain level of income (not sure what it is) you HAVE to register, but as I understand it, you can register off your own back if you want - which I think means you can clain VAT back on purchases. However as I was always told that is a real pain in the ass, I've never done it.

Tax made easy by Ricey! Hope it helps a little.

Now where are the experts?

[Solitaire Events Ltd]

To be a little more helpful -and don't take this lightly, this is certainly not a simply topic....

Step 1 - Call you local tax office and tell them what you are doing
Step 2 - I think they send you a form to fill in - fairly easy
Step 3 - Keep EVERYTHING! Reciepts that is, everything you ever buy! It is worth remembering that if you buy a pair of trousers to wear to work and then use them for the disco work too, then you could claim they were business use! (that's a very very very simplified explination!)
Step 4 - Complete tax return (which will be sent to you in a thick package once a year) before 31st Jan (and if you don't GROVEL!!!! and you might save a fine - I did!).

Basically, everything you buy for the business can be set against income. You only pay tax on what is left of your income once you have taken off everything you bought - or nearly!

There is a little thing called capital equipment - which as I understand it would be large items of kit, maybe a van, car etc... Although I can't remember the percentage, you can't offset all of these purchases against your income - I think you can use 50% in your first year and then a smaller percentage of what's left year on year!

Finally, when you have worked out your profit, the tax man will charge you tax - always pay your tax!

By the way, if you are really successful, you may need to also register for VAT - at a certain level of income (not sure what it is) you HAVE to register, but as I understand it, you can register off your own back if you want - which I think means you can clain VAT back on purchases. However as I was always told that is a real pain in the ass, I've never done it.

Tax made easy by Ricey! Hope it helps a little.

Now where are the experts?

£60K for VAT Rice.

And the link that I posted will tell you exactly what Rice has just posted without the "I can't remember the percentages" or "I don't know exactly" :teeth:

Also, get an accountant. They will save you money in the longrun and don't listen to anyone who says do it yourself.

Accountants know their business and know a lot more than the revenue will offer you with regard to tax savings.

[DMX Will]

By the way, if you are really successful, you may need to also register for VAT - at a certain level of income (not sure what it is) you HAVE to register, but as I understand it, you can register off your own back if you want - which I think means you can clain VAT back on purchases. However as I was always told that is a real pain in the ass, I've never done it.

You also have to charge VAT if you are registered. Meaning either your prices increase by 17.5% of you get paid 17.5% less :sad: (thats what puts people off)

[Have a disco]

suggest doing it online so much easier and If you want to do it yourself you can just ensure you dont earn a lot as the tax man is good at weeding information out of you

So yep keep a record of every expence made only get an accountant id you feel you cant keep track of it. but there are plenty of software programmes out there you could use that are fairly cheap inland revenue even supply a disc if you get to successful. Below 15,000 a year Id say do it yourself, above that figure get one and don't forget to pay your NI stamp

[Solitaire Events Ltd]

So yep keep a record of every expence made only get an accountant id you feel you cant keep track of it

It's nothing to do with keeping track of it. They know the law, the loopholes and the best way to save you money.

Why would the revenue want you to save money, so they get paid less tax?

[Have a disco]

But if you do not earn more than 15,000 a year its a negligable arguement you could quiet easily do without one. And do it yourself but If you feel you can afford to waste £300+ on an accountant a year then buy all means do so. But at the levels of £3000 - 5000 so far it is not worth me doing so as my costs are currently wiping profit to below even the basic level of paying stamp.

But I am still building my business so I expect it

[Solitaire Events Ltd]

If you feel you can afford to waste £300+ on an accountant a year then buy all means do so.

Yeah, waste £300+ on an accountant to save yourself a lot more in tax....

[dj andy allwood]

remember taxth doesn't have to be taxthing :teeth:

[Dial a disco.co.uk]

Im an accountant so if i can help in anyway let me know

[benlewis13]

dial a disco, as we have just become an LTD company, if we are earning say less than 10000 a year currently, do we have to pay any taxes or NI tax for our company, or for our employees?

[Corabar Entertainment]

The answer is a simple 'yes' - but in reality is much more complex as many factors come into play. Who is this mythical 'we'? What is the '£10,000'? Do you mean the company profits? Do you mean each employee? Do you mean turnover?

My advice to you would be to get yourself an accountant pronto!

[A1DL]

Ben

In full agreement with Angela, get yourself an accountant. As a company director, you will be required to complete a self assessment tax return annually, additionally the company secretary is responsible for filing of the accounts and annual return by the due dates. You will also need to register the company as a new employer, and run a PAYE, ensuring tax and NI (employer and employee contributions) are paid quarterly. There's quite a lot to keep on top of, especially when you're new to it, although it becomes second nature after a few years!

Tony

[DMX Will]

Ben,

Look it like this, you do not want "employees" as such, you want "sub contractors" - the same thing under a different heading basically. You want sub contractors because then you don't have to setup a PAYE system and work through Taxes etc, you simply pay your sub contractor. Technically your sub contractor should be invoicing you for this, so once an amount (say half etc) of the nights earning is agreed to go to your mate or whoever, get them to fill out a simply invoice and do this the same every time you do a disco together.

Keep these invoices as they count towards your company spending. You need to invoice those people you are charging for the disco, and keep a copy of the invoice yourself, with paid dates and methods written down too. You will also need to note down (possibly in an excel spreadsheet or a book) all your expendeture on the disco company, ie new gear, work clothes, cds, music etc.

When the end of the year comes up, you can find out how much your turnover was by adding up the invoices you sent out to your clients (your turn over is basically the money that goes through the company, or rather comes into the company). Once you have done that, you then need to add up how much money you have spent on subcontractors, (which may or may not be half of your turnover.), then add up how much you have have spent on gear/music etc (ie spending) add the two (sub contractor spent and items spent) together and take it away from your turnover.

If like me then chances are that you have spent most of your disco money on new gear/CDs etc at your age. (I'm currently using other forms of income to support the rest of me!!) You may even find that you are into minus figures, ie you spent more on gear/cds in the year than you actually made after sub contractors have been paid.

Your tax is then based around your profit, your profit is the amount left. All of the above is shown below:

INCOME:

5x Disco @ £200 each = £1000
Total Income: £1000
-------------------------------
OUTGOINGS:

New CD Player @ £100
Now 65 @ £15
Black Shirt @ £25
Sub Contractor (Mate @ 50% of Booking Cost) x5 = £500
Total Outgoings: £640
--------------------
Income - Outgoings = £360 PROFIT

Another reason to use your mate or whoever as a sub contractor is because you are not expected to provide things like "a uniform" or black shirt or whatever you wear to discos. It also means there are less complications if you both share the gear ie he does lights you do sound etc.

So remember the TAX MAN will only charge you tax bassed on what PROFIT you make, if its nothing you wont get charged! I'm pretty sure the first TAX bracket is £5,000 anyway, which I'm sure wont be a problem, as you wont be making that in profit in a year.

Hope this helps.

[DMX Will]

Also if anyone can shed light on how this all works out for partners in a bussiness (Tony, I suspect you can!) then it would be greatly appreciated!

Will.

[benlewis13]

Thanks Will, very helpful.

[DMX Will]

Thanks Will, very helpful.

no problemo

[Corabar Entertainment]

Bear in mind that you can't just call someone a 'subcontractor' and make it so: it depends on the situation in which they are being employed. The taxman can decide that they are an employee, even if you call someone a subcontractor, and in that case, you, as the employer would be liable for all their back-tax and NI!!!!!!!!

I am not saying this to scare you Ben - but it really is dangerous for any of us to say 'do this' or 'do that' without knowing all the ins and outs of the way you are operating.

eg - you couldn't call yourself a sub-contractor of the company, could you? However, you do have the choice as a director as to whether to become an employee, or to just take dividends, or both: each have their own tax implications

In our particular situation, employees was by far the better route to go, and if we called our DJs 'subcontractors' and left them to sort out their own tax and NI, then we would end up with a very hefty bill!!!:eek:

Then, you've got to look at the tax of the company: the rules regarding corporation tax have just changed - you used to be able to get £10K 'free' so to speak, but Corporation Tax is now payable by the company on ALL profits.

Will - are you operating as a LTD company?

[A1DL]

Keep these invoices as they count towards your company spending. You need to invoice those people you are charging for the disco, and keep a copy of the invoice yourself, with paid dates and methods written down too. You will also need to note down (possibly in an excel spreadsheet or a book) all your expendeture on the disco company, ie new gear, work clothes, cds, music etc.

When the end of the year comes up, you can find out how much your turnover was by adding up the invoices you sent out to your clients (your turn over is basically the money that goes through the company, or rather comes into the company). Once you have done that, you then need to add up how much money you have spent on subcontractors, (which may or may not be half of your turnover.), then add up how much you have have spent on gear/music etc (ie spending) add the two (sub contractor spent and items spent) together and take it away from your turnover.

If like me then chances are that you have spent most of your disco money on new gear/CDs etc at your age. (I'm currently using other forms of income to support the rest of me!!) You may even find that you are into minus figures, ie you spent more on gear/cds in the year than you actually made after sub contractors have been paid.

Your tax is then based around your profit, your profit is the amount left. All of the above is shown below:

INCOME:

5x Disco @ £200 each = £1000
Total Income: £1000
-------------------------------
OUTGOINGS:

New CD Player @ £100
Now 65 @ £15
Black Shirt @ £25
Sub Contractor (Mate @ 50% of Booking Cost) x5 = £500
Total Outgoings: £640
--------------------
Income - Outgoings = £360 PROFIT

Another reason to use your mate or whoever as a sub contractor is because you are not expected to provide things like "a uniform" or black shirt or whatever you wear to discos. It also means there are less complications if you both share the gear ie he does lights you do sound etc.

So remember the TAX MAN will only charge you tax bassed on what PROFIT you make, if its nothing you wont get charged! I'm pretty sure the first TAX bracket is £5,000 anyway, which I'm sure wont be a problem, as you wont be making that in profit in a year.

Hope this helps.


Sorry, Will, but this is incorrect.

Purchases of new equipment such as a CD player are capital (on the balance sheet) as opposed to revenue (on the P&L) and CANNOT be written off in year one.

Capital purchases are placed on the asset register and a depreciation charge applied to the P&L each year (typically 25% reducing)

[A1DL]

Bear in mind that you can't just call someone a 'subcontractor' and make it so: it depends on the situation in which they are being employed. The taxman can decide that they are an employee, even if you call someone a subcontractor, and in that case, you, as the employer would be liable for all their back-tax and NI!!!!!!!!

I am not saying this to scare you Ben - but it really is dangerous for any of us to say 'do this' or 'do that' without knowing all the ins and outs of the way you are operating.

eg - you couldn't call yourself a sub-contractor of the company, could you? However, you do have the choice as a director as to whether to become an employee, or to just take dividends, or both: each have their own tax implications



Some very valid points Angela, which HMRC are now quite rightly, very hot on. The construction industry was the main culprit for abusing the sub contractor vs employee position.

We had a situation a few years back where we paid an office cleaner some small amount like £15 a week out of petty cash, as a "sub contractor", however our accountant advised us to cease this, since all the cleaner provided was her labour. We provided the cleaning equipment and materials and because of this HMRC would see her as an employee hence she must be on the PAYE

Conversely Ben, if you/your DJ /mate/ is using equipment and music owned by the company and only providing labour, this person is NOT a subcontractor, and as Angela has indicated, if you treat yourself/them as such, your company is likely to end up with a sizeable retrospective PAYE & NI liability, with interest and penalties.

[benlewis13]

Thanks for all the advice.

[Corabar Steve]

Ben

I think your best bet would be to (temporarily) cease trading & do a LOT of research

[Corabar Entertainment]

...just another point to add to the confusion: if you go down the 'sub-contractor' route, you could end up being classed as an 'Agent' and so be subject to all the rules and regs applicable to agencies.

Ben - did you not research all of this BEFORE you decided to incorporate?

[benlewis13]

What has been said is not entirely true. I have today spoken with an accountant, inland revenue and the companies house. As we are classified as a small business we only have to send unaudited abbreviated accounts. We are also exempt from company tax as we currently earn less than £10,000 per year.

My friends dad does tax, and has shown me a loophole in the law, allowing me to class my DJs as sub-contractors, and so we do not have to pay any tax. Just send in unaudited abbreviated accounts.

[Corabar Entertainment]

Ben - I can assure you that the corporation tax rates have just changed, and that it IS payable on ALL profit. Up until the 2005-2006, it was only payable on profit over £10,000, but not any longer. If you don't believe me, have a look at HM Revenue & Customs website here: http://www.hmrc.gov.uk/rates/corp.htm

...and take a note of the 'note' placed beneath the table:-

"*The 2005 Pre- Budget Report announced that the starting rate and non-corporate distribution rate would be replaced with a single banding for small companies set at the existing small companies' rate."

[benlewis13]

interesting that the guy on the phone failed to mention that. thanks

[Corabar Entertainment]

My friends dad does tax, and has shown me a loophole in the law, allowing me to class my DJs as sub-contractors, and so we do not have to pay any tax. Just send in unaudited abbreviated accounts.Out of curiousity, what is this 'loophole'?

Also, how do you intend to pay yourself? How many Directors of the company are there? If more than just you, are they DJs as well? Don't forget that you will have your own tax liabilities as well as those of the company! How many other DJs are there going to be working for you? Are they going to be on term contracts or individual job contracts? Do you intend to just 'find' a DJ for a job once you have it, or will you have a few DJs that will be working regularly for you? Are they going to be using all of their own gear and music or will you be supplying anything?

[A1DL]

Ben

Digressing slightly, have you bought a PLI policy which covers your company for multiple concurrent functions? If not, you need to, as a matter of urgency.

Tony

[Solitaire Events Ltd]

Ben

Digressing slightly, have you bought a PLI policy which covers your company for multiple concurrent functions? If not, you need to, as a matter of urgency.

Tony

And if he is 17, can he do that?

I thought you had to be 18 to get PLI?

Could be wrong though!

[benlewis13]

Yes i have PLI both for this company and as a magician.

sorry cant discuss the loopholes, simply because he asked me not to

[A1DL]

And if he is 17, can he do that?

I thought you had to be 18 to get PLI?

Could be wrong though!

Daz, it would be the limited company that would take out the policy, so Ben's age would be irrelevant in this scenario.

Tony

[Solitaire Events Ltd]

Daz, it would be the limited company that would take out the policy, so Ben's age would be irrelevant in this scenario.

Tony

OK, ta for clearing that up.

But....if he was the only director and still only 17, wouldn't that have a bearing on it?

[Corabar Entertainment]

No - the company is a complete separate legal entity from any of the persons involved with it


sorry cant discuss the loopholes, simply because he asked me not toWell, it's either legal or it's not: and if it is, then it is a matter of public record, so I cannot understand anyone's reluctance to share information with other forum members in this situation. After all, if everyone on here took that attitude, you wouldn't be getting much help from anyone, would you? Most of us are well aware of the situations how and when you can class a DJ as a 'subcontractor'..... however, I wouldn't class any of the rules regarding this as a 'loophole': hence my question.

[DMX Will]

Sorry, Will, but this is incorrect.

Purchases of new equipment such as a CD player are capital (on the balance sheet) as opposed to revenue (on the P&L) and CANNOT be written off in year one.

Capital purchases are placed on the asset register and a depreciation charge applied to the P&L each year (typically 25% reducing)

Thanks for clearing that up Tony. At lest the rest of it was right. Am I right in thinking you simply can't count your spending in the first year to be taken from your turnover, and everything that goes through the company excluding paying sub-contractors/exmployees is classed as profit?

[Corabar Entertainment]

Ben - Your post was deleted because you posted it twice - ie, you've also started another thread on the subject with the same post, and please DO NOT undo something that a mod or admin on this site has done again..... we do things for a reason.

EDIT - Last post deleted AGAIN!

[benlewis13]

sorry, i didnt realise, i couldnt find the first one, i thought it had not been posted.

[Corabar Entertainment]

sorry, i didnt realise, i couldnt find the first one, i thought it had not been posted.:confused: :confused: Strange: because you posted the same post on the new thread almost an hour after you posted it on this thread the first time: but nevermind..... just please don't reinstate something if a mod or admin has deleted it - with or without the little comments about 'could you at least be told' :mad: ..... we really haven't got the time to contact members individually about everything and it's a thankless enough job without having to do everything twice

[symo]

OK, another situation. If the DJing business is suplemental to my main income as a project manager; how do I set myself up. Do I do the DJ gig's over the year and then save all the money I make from DJing seperately along with relevant receipts for filing once a year? Or do I have to register this as a business even though I only plan on doing this as a sideline to my main employment (Note I am not setting up as a cowboy for beer money I want to do this as a profitable "fun" extension of my love of music and mixing prices will be in line with other businesses in my area (Exeter)).

[Vectis]

Very useful guide... sorry if it's been posted before - quick search didn't turn it up.

http://www.hmrc.gov.uk/leaflets/se1.pdf