Hi, wife has set up as self employed dog groomer in January just looking for some tips on what she can claim for in her first year or any other advice would be appreciated. thanks

I had a dog called Tax once…I used to open the door and call him, and income Tax!

craigxxl is your man for these questions. Hopefully he’ll post for you.

Every single thing she spent on the business between Jan and April (5th I think) will be needed for her first tax return which will have to be submitted in January 2015. She can submit in September, for which HMRC will calculate her tax for her.

Was she in full time employment beforehand?

No she hasn’t worked for ten years (bringing up the kids) but was full time before that.

Tax Free Allowance will be close to 10k (that’s income minus expenditure) for next year’s calculations so I’m guessing she may not have any tax to pay anyway. HMRC actually does have decent advice on its website for what you can and cannot claim as allowable expenses. There are also some free/very cheap/pricier online cloud based accounting/book keeping systems she can use for keeping track of day to day income and expenditure which would allow her to input her expenses by smartphone or tablet. She may also need to set up a direct debit for NI contributions but I don’t know much about these tbh. Best of luck to her.

I use Wave for online accounts, it’s free and saves loads of time.

Something like Freeagent (online accounting) will do all the calculations – just *honestly* assign all transactions and it’ll work it all out for you. It’s £24 a month.

if she is using anything already paid for, transfer it in and take expenses for it out

not sure about wave, linking my bank account to that site…. 😐

N I is about £12 per month when paid by Direct Debit, I set mine up as soon as I went Self Employed.

You can also pay annually but I prefer monthly and it’s such a small amount, don’t really notice it going out.

She’ll be a sole trader for a few years at least. I run a gardening business myself and have no problem doing my own accounts. Been going 5 years. Claim anything you spend on the business, get that end of year net profit figure as low as possible! Phone bills inc landline, printer supplies, all vehicle costs, any dog-related products, work clothing/boots.

Has she a website? Is she fully booked yet? Best of luck to her. Target the posh end of the market (in terms of quality of work) and don’t neglect small houses when marketing 🙂

I am growing my business and want a couple of teams out and to do less physical work myself so I will be going vat reg perhaps later this year. When you have a physical business such as dog grooming you need to look after your body and eat more, get massage and rest properly.

Try not to break the VAT threshold and dont go VAT registered as the cost will just increase to your clients without any major benefit to you other than claiming VAT back on things.

Different story if you are dealing business to business but I guess you aren’t

Keep records, keep receipts, get an accountant. My account cost me £600 but I paid about £4k less in tax than I saved for or my “tax spreadsheet” came up with 😀

Does she use a room in the house? bills can be offset against that rooms use, laundry costs, uniform costs, stationary, mileage, heating bills (proportional), IT, phone, training, … the list can go on.

When you have a physical business such as dog grooming you need to look after your body and eat more, get massage and rest properly.

good plan.

Sig, most if the items have already been pointed out above. Your wife needs to register with HMRC as self employed and will need to pay Class 2 NIC. If she doesn’t expect her earnings/profit to be less than £5885 in the first year then apply for a small earnings exemption.
Business expenses are anything that relates to performing the job or promoting the business. If your unsure include the accounts and your accountant will let you know if it’s not. Proportional cost of household expenses inc mortgage interest can be claimed. Learn the difference between capital and revenue expenditure, as assets, if she decides to go limited later, can be sold to the company.

Hi Craig can you tell me if I started my self employment in January if I have to put in a tax return for those 3 months or do I do it in January and do I have to let my mortgage company know if I am running a business from home if so how will it affect my mortgage. This is all new to me and it’s all a bit confusing. Thanks sharon

if I have to put in a tax return for those 3 months

You will have to file a return for Jan-Mar by end of January 2015. You can file in Sept 2014 and the tax man will tell you how much he expects you to pay by 31st January 2015.

I have to let my mortgage company know if I am running a business from home if so how will it affect my mortgage

You’re probably supposed to, but I’d wait and see how it goes for a while before telling them. 😉

Might need to tell your home insurance company and add business use to your motor insurance. Shouldn’t change the premium by much if at all.

You would declare your profits for the tax year as self employed and not your financial accounting year. The financial year is 12 months after you started trading so in your case 31 Dec 2014. You declare the profits on a pro rata basis for the 3 months to the end of March 2014 for your 2013/14 tax return. Now comes the kicker as you are also taxed on the full 12 months for the financial year end 31 Dec 2014 in the 2014/15 tax return. This is known as overlap profits and this double taxation is carried forward until the business ceases or the year end is changed.
Easy answer is to do the financial year end to March and avoid overlap profits.

As DD said inform the mortgage provider about your intent to run a business from home, most don’t care so long as it’s not been used a rental property. Check your deeds too as some prevent you performing you from running certain businesses from home.

Total thread hijack:

But can anyone recommend a business bank account that isn’t completely s**t? Is anyone happy with what they have? I have to open one this week and all the online reviews are awful.

I use Santander Business as it’s free for all the transactions I need. Never had a problem with it.

That’s good to hear. You use it for UK transactions and GBP only? Or foreign transactions and other currencies also? I should have been more specific – I’m looking for an international business account that isn’t going to stick it to me where the sun don’t shine. If such an account exists.

Ah, no. mine is all UK only and GBP.

If such an account exists.

😆

Any reason why it needs to be a “business” account? You could open another current account and use that, as long as you’re using it in credit, you shouldn’t have a bother.

I bank with Barclays for business – I have no idea why I have a “business” account to be honest. It doesn’t seem any different to a current account. 😕

any more feedback on Wave??

I gave it a try but didn’t really get on with it that well MrNutt.

I use FreeAgent now (which isn’t free, but it’s rather good).

Casplan are your foreign transactions Euros or dollars coming in or going out? Going out tends to be a bit easier as there are a lot of forex companies chasing small company business, forward options are just coming available for them. Incoming currency we use HSBC but I’m not sure what the charges are like as the current employer has most of his financial stuff arranged years before I arrived. Some of the rates he has are quite keen.
Where possible we have all our sales in pounds through the clients cards, just the £ processing charges to pay. Settling our bills abroad we buy currency as and when playing the forex chaps off against each other.

Any reason why it needs to be a “business” account?

That’s a very good point.

are your foreign transactions Euros or dollars coming in or going out?

I get paid in USD but live in the UK, am a regular UK taxpayer etc. I just want to transfer from USD to GBP without getting killed. I pay tax based on the incoming USD – it doesn’t have to be offshore or anything.

Incoming currency we use HSBC but I’m not sure what the charges are like

I guess at this point I would ask you whether you felt like you were being abused by HSBC or not but it sounds like you might be part of a bigger business hence maybe the issue of HSBC fees are not that close to your heart? Let me know if otherwise.

Thanks for all the feedback as this is a minefield.

I would love to open a dog grooming business so I could call it ‘Smart my Bitch Up.’

That is all