Start-up Sunday: Week 5 - Self Assesment, PAYE & VAT

Good Morning and welcome to Week 5 of our Start Up Sunday series.

Today we are going to touch on the subject that you have all told us scares the living daylights out of you. We are limited for space and taxes is such a wide ranging subject that I will touch on the most common problems or fears. If I do not cover anything you need to know, just leave a comment and we will pick it up at the end of the series. We all like to know how we are doing, so please leave us a comment and tell us what you like or would like to see being featured.

Self Assessment:
When you actually start your business, if you are a sole trader you automatically become regarded as self employed. You therefore have to register your self employed status with HMRC. You can do this online, or via telephone or post. I personally recommend registering by phone. You can find more about the 3 methods or registering on the HMRC website here. 

You also become liable for Class 2 National Insurance contributions. If you expect your self employed earnings to be small, less than £5,075 for the tax year 2010-11, then you can apply for an earnings exception.  However, please consider your position carefully - Class 2 National Insurance contributions are counted when calculation your entitlement to a basic state pension, incapacity benefit or ESA, bereavement allowances and maternity allowance. If you are over state pension age, you are automatically exempt from Class 2 National Insurance contributions no matter what your projected income may be.

HMRC has several advice teams all over the UK and they run free courses on a wide variety of subjects. I strongly recommend that, whenever possible, you attend the newly self employed course they run. It covers everything from registering as self employed to Class 2 contributions to basic recordkeeping and where to go for further help. I also feel it helps you see HMRC as just another organisation that is human and not something to fear.

So now you are all registered as self employed, its time to keep records.

Record keeping is quite simple; however, it is easy to muddy the waters which is why I recommend you attend the HMRC start up course so you can ask questions and get answers right away. Your records should comprise of 3 or 4 different books, you can keep records electronically and there is a wide variety of software availible for you to do so. 

I personally find computers to be unreliable and, as records have to be kept for a minimum of 6 years, I prefer to use paper. You wil need a cash book, a sales ledger and a purchase ledger as wel; as a wages book if you have employees. You can make these out of regular A4 note pads with a ruler to seperate colums but you can buy pre made books from Staples, Amazon and all good stationers. Books can be bought in A6, A5 or A4 size - I personally prefer A4 size as I find the smaller books difficult if you need to write a lot.

So now you have your three or four (if you have employees) books. What do you record in each one?

The cashbook is the final record of what comes in and what goes out of your business, it is often referred to as the cash flow,  To help complete your cash book, you need to keep cheque book stubs, cancelled cheques, paying in books, bank statements, copies of your own invoices, receipts and delivery notes, your suppliers invoices, receipts for all your cash purchases, remmittence advice slips from customers, copies of payments made or received using online banking systems.

The sales ledger records sales your company has made, the amount of money received for goods or services and the amount of money owed at the end of each month. It is recommended that you number your invoices and record each number against the entry in your sales ledger, you can then file your invoices in numerical order for ease of finding in the future. It will also help you fill our your VAT return if applicable. More about VAT later.

A purchase ledger records all purchases made by the business, it helps you monitor your business outgoings and how much money you owe at any one time. This also helps you complete your VAT return. It is a good idea to number each bill as you receive it then record the number against the entry in your purchase ledger. You can then file the bills in neumerical order for ease of finding in the future.

A wages book is only required if you have employees - you can use P11's as the basis for your wages book. If you have employees, you should seek professional advise from either HMRC or an accountancy firm/payroll provider and either be taught how to keep wages records or turn that area of you record keeping over to the professionals.

So now we have registered you as self employed and you have kept full and complete records for a full accounting year. It is now time to complete your tax return.

Despite what I have said about my mistrust of computers when keeping records electronically, I always file my tax return online. Firstly, I feel its better for the enviroment - a tax return has quite a number of pages, many not applicable to you yet (on paper, it comes as a booklet and you just ignore the irrelevent bits). Secondly, when filing online, as you complete the sections of the form you can check double check and amend things before submitting which you cannot do with a paper form.

PAYE:
As we touched on briefly earlier, if you have employees you have to operate a PAYE scheme. If you decide to have employees, you will need to register with HMRC as an employer - you can do so here.

I cannot stress too much the importance of attending the HMRC new employer course that shows you how to keep PAYE records as well as covering statutory sick pay, maternity pay and student loan deductions. If you opt to be sent a new employer pack it will contain everything you need to set up electronic records for your employees. PAYE records should be kept electronically for submission to HMRC but this will all be explained both at the new employers course and in your new employers help pack.

VAT:
If you supply good or services within the UK and your turnover of taxable goods or services within the UK was more that 70k in the last 12 monthsm then you will need to register for VAT.

There are all sorts of other reasons you may need to register for VAT, even if you do not live in the UK but do supply goods or services to the UK. There is more about this on the HMRC website here. VAT is an incredibly diverse and sometimes complicated subject. If you feel anything less than 100% confident in dealing with it, I suggest you employ a prefessional to deal with your VAT returns on your behalf.

So there we have it, a brief overview of self assesment, PAYE and VAT. Unfortunately, with everyones circumstance being different, it's impossible to go into specifics using a particular person or business - however, if you feel there is something that we did not cover,  then please leave a comment or drop us an email.

If you do have a specific queary about anything specific related to taxes, PAYE or VAT and your liability for any of these, please do contact your local HMRC Office.

Don't forget to drop back next week when we'll be discussing our Week 6 topic - Legislation and Insurance.

Creation|Collaboration features CarmenJean!

We're really delighted to be bringing you our seventh Feature Friday - today we're featuring Carmen Maidment who runs CarmenJean.

Hi Carmen, introduce us to yourself and your company!

Greeting all C|C readers! My name is Carmen Maidment, and I run the CarmenJean Group. I know – it sounds terribly grand, but really it’s a collection of three trading names, all doing something a little different. CarmenJean, Soap By The Slice, and Teeny Tiny Soap Co.

The main focus of all of them is all bath & body products. CarmenJean’s focus is on wholesale orders, Soap By The Slice focuses on retail sales and Teeny Tiny Soap Co focuses on favours and small soaps & products. Each one has their own personality and image, and is treated as stand alone units.

The group is run mainly by myself, with support from my wonderful, understanding and ever patient husband. And I am kept mad by my two very energetic children. Well, the madness helps the creativity to flow!

I make glycerine soaps, body butters and a whole host of products to help wake you up in the morning, and relax you after a stressful day. I’ve started to make some of my own packaging too – a truly therapeutic activity!

Where did the idea of running this as a business come from?

As a work at home mum, I have always been driven to run a business from my home. When I started to make soaps, it was with the intent to sell them on. I never dreamed that I’d become this obsessed with it all!

What do you love most about your business?

The colours, the fragrances, the ingredients, the end product, and the joy my customers experience when they use my products.

I also love the creation aspect – making something that is appealing to the eye. I love the cute packaging, the handing over a parcel to a customer, knowing that they, or a loved one is going to enjoy using those products.

There are so many things I love about it, that it’s really difficult to pick just one. So, I suppose the answer to the question ‘What do you love most about your business?’ is …. My business, and everything about it.

What would you like to change?

Hmm. That’s a tough one. I’d like to have more time. But since that’s not going to happen, I suppose I’d like to be able to work smarter. By that, I mean that I would like to be more efficient, more resourceful, more organised and more efficient. (Yes, I did mention ‘efficient’ twice!) It’s not easy for me. My husband called me a ‘Space Invader’ nine years ago, and it still holds true today! I seem to occupy far more space than necessary.

What is your aim for the next year?

Expansion! I have so many ideas that need to be actioned. It really is just a case of getting them done. I am working on more wholesale orders, and more craft fairs, and those two are my main points of focus for this year.

Where do you ultimately see yourself?

Successful and happy. Success makes me happy, but, success is not easily defined. To me, success is a healthy turnover in my business, and a happy home life. The balance is not an easy one, but certainly not impossible. I don’t want my products in supermarkets – I would be far more happy for them to be in boutiques, gift shops and galleries.

What are your Top 5 tips for new Business Women ?

Tip 1: SKILLS!! I can’t stress enough, how important it is to have the skills you need as a strong foundation to build on. Whether those skills are in papercrafts, or bookkeeping – you need to have them as a strong, rock solid foundation. And if you don’t have those skills, get them! Internet, courses, college, and friends are all places where you can find those skills. If you’re physically unable to get a skill (anything to do with numbers confuzzles me!), get someone who does have that skill. My husband wouldn’t dream of letting me loose on the accounts, and I cringe at the thought of him designing a business card.

Tip 2: Source good ingredients. It doesn’t matter whether your ingredients include shea butter, sterling wire or ceramic clay, make sure that your ingredients match the standard of your end item. There is no way you can use inferior ingredients, and hope to sell the end item for a premium price. If it means you have to buy less quantity according to your budget, then do so – there is no substitute for good quality ingredients.

Tip 3: Branding. Whatever you sell, make sure that your name is on it in some shape or form. If it’s a service, make sure that everyone, and I mean everyone, knows who you are and has a good image of you.

Labels on products should reflect your style and should proudly display your company name. There should be no doubt where the product has come from.

It’s not easy, and many well known brands still don’t get it right. But wait! Before you throw your hands up in despair and give up, remember, it’s far easier for small business owners to change and adapt than it is for large companies. Think of a small speedboat making a turn, as opposed to a supertanker making a turn.

Tip 4: Roll with the times. Make sure that you are adaptable and flexible. If someone makes a negative comment about your product or service, do not take it personally. Turn it around, and see how you can use that information to tweak your business and make it better.

Tip 5: Be true to yourself. Don’t let someone else (even a loved one) tell you which way your business should go. Sure, get ideas from others, bounce new ideas off someone else, but go with what you feel is right for you.

Don’t allow your image style to be shabby chique, if you’re more of a grunge type of person. And if gothic is your thing, don’t let someone else tell you that you have to be more traditional. It may mean delaying the launch of your business, but it will be well worth it. If your business is to be sustainable, it must be something that reflects a part of you. And if you change, allow your company to change too. You will put a great deal of time and energy into this, and if it’s not something that you enjoy, it may not be long lasting.

A few last words - How do we contact you Carmen?

There are several different ways.

Facebook: CarmenJean Bath – Body - Beauty http://www.facebook.com/carmenjean.b.b.b

Twitter: http://twitter.com/CJ_Soap, http://twitter.com/soapbytheslice and http://twitter.com/TeenyTinySoapCo

Website: http://www.carmenjean.co.uk/

E-Mail: info@carmenjean.co.uk

I am working on my website, and will be listing the fairs that I will be attending in the year. Hopefully I’ll be able to get it finished fairly soon … hopefully.

Thank you so much for reading all about me, and my business.

Thank you so much Carmen for talking us today, your products sound utterly fabulous and we love the idea that you've split your company into different sections to match the different markets you sell to. 

Next week, we'll be featuring Brenda Panter from Splash - make sure to check back next Friday!!!

Feature Friday - Beads & More by Lois Profile at Creation|Collaboration

Welcome to the third of our Feature Fridays on Creation|Collaboration!

Each Friday, we're profiling a woman run business by interviewing the founder and finding more out about them, their business, their life and loves!

For our third Feature Friday, we've chatted to Lois Bartley, owner of Beads & More by Lois in Essex, a handcrafted jewellery and home ware business.

Hi Lois, introduce us to yourself and your company

My name is Lois Bartley and my company is Beads & More by Lois. I make handcrafted jewellery and home wares in the comfort of my own home. I have two small children so tend to relax in the evenings and get out my boxes of beads and tools and get creating! I love the fact that my jewellery is totally unique, you can be guaranteed that you'll never find anyone else wearing the same item you've bought from me because I only make once off creations.  

I also offer a bespoke service and really enjoy making something special for my customers - I love that they have helped create their special item by choosing their own colours and beads; I get such a kick out of sending them their special piece that they will treasure forever!

Where did the idea of running this as a business come from?

I started making jewellery about 4 years ago just as a hobby and started to build up quite a collection. Friends and family bought some pieces but I never thought about starting a business as I had just finished university and had my first job as a staff nurse! 

Over the next couple of years I had my first child, got married then fell pregnant with my second and decided to give up work for a while. Before my second baby was due, I had lots of time so got back into making jewellery. 

I met a lady in a bead shop who also offered jewellery making lessons so I signed up to them and learnt lots of new techniques and how to perfect them all to make saleable jewellery.

It was during that summer that I launched Beads &More by Lois and I haven’t looked back!

I started by setting up my own website and then selling some of my items in handmade online shops such as Misi and Folksy. I really enjoy being part of the handmade online community as a lot of us support our own.  For instance, at Christmas I bought the majority of my presents from Misi which were all handmade and fabulous.

A lot of my business has come from jewellery parties and fairs which I enjoy the most as I get to meet my customers face to face and they get the chance to try on my jewellery and see how great it looks on them!

What do you love most about your business?

I absolutely love seeing people wearing my jewellery and hearing how people have commented on how lovely their earrings or bracelet is. The fact that no one else is going to have the same item of jewellery as them is quite appealing to some customers and I enjoy making that happen!

Another aspect that really makes me smile is when I have a table at fairs and people wander over to browse, when they read my sign that all my items are handmade people always say ‘Oh you make all of this?’ and always seem so surprised, which makes me feel great and they spend more time looking.

There is lots to love about having your own business, especially as mine is more a hobby that I can make money from!

What would you like to change?
My work space! At the moment everything has to be packed away and hidden behind the sofa from my toddler and when I work, I either have to take everything to the kitchen table or work on the sofa so I can also spend time with my husband! I'd really like my own separate work-room where I can have everything organised and easily accessible and without having to pack everything away when I've finished which can take longer then making a pair of earrings!

What is your aim for the next year?


Next year, I'd like to make the majority of my jewellery with sterling silver rather than silver plated. I've mainly been using silver plated as it's much cheaper to buy therefore I can price my jewellery cheaper for the local fairs and jewellery parities. Once I have a good stock of sterling silver jewellery I'd like to approach some galleries and small boutiques who will hopefully exhibit my jewellery!

Where do you ultimately see yourself?


My ultimate dream would be to own a little boutique where I would feature handmade items only. I adore all kinds of handmade goods so would like to give others the chance to sell their items in my shop too. Local to where I live, there is a craft village with lots of small workshops where people make and sell their goods there, I'd like to start off with a workshop there and then eventually open my own boutique!

What's your top 5 tips for new business women?


1. Make the most of the Internet!  Twitter, Facebook and blogging are pretty essential to build up a customer profile and it's all free! To make the most of it you do need to spend 1-2 hours a day but the work does often pay off and can save you hundreds in advertising fee's.

2. Make the most of your family and friends. It was these people that got me off to a good start and the best way is to start with a party and invite them all! Set up a table and feature your products, as well as catering with nibbles and wine. Get them to see first hand what you working on, most of them will buy something but pretty much all of them will then spread the word of your new business! My Mum and sister have lots of my jewellery and pretty much wear something every day - quite often when they are out people will ask where they got the item of jewellery from and they always have one of my business cards in their purse to hand over - great advertising. You could call it "wearing the brand"!

3. If it's a product that you are selling, get out there and feature your work at local fairs. Preschools, infant/junior schools and church fundraisers are the best places to start as tables are cheap, mainly £10-£20. I personally wouldn't pay anything more then £20 for a local fair as they are usually quite small and it's not such a huge hit to your wallet if you don't sell anything. Local fairs are a great way to build your confidence and practice with different table layouts and stands until you move on to the big fairs. You also get to meet lots of local customers who will come back to you time and time again as they know you are 'real' and not just a website etc!

4. If you are going to sell a product online, learn how to take good photographs. I'm still learning with mine and quite often upload a picture to my website then take it down the following week and try again as it's still too dark or blurry. From personal experience, sometimes a photo of your product can make a huge difference to whether it sells or not and it's good to have several photos of each item from different angles so the customer can get a good idea of what it really looks like. I find taking photographs in natural daylight gives the best results.  Some people use light boxes when there isn't any natural daylight or certain light-bulbs. There are lots of different things to try and I feel it's one of the most important aspects of selling your product online.

5. Don't be too hard on yourself!  We've all been there when nothing seems to be happening, no sales or interest in what you are doing. Then just when you want to give up someone buys something or you get a good review! It's very hard work and there are going to be times when you won't sell anything for a while even when you are putting in enormous amounts of hard work and networking but sometimes you just need to give yourself a break, step away for a day or too then get back stuck in!

A last few words - How do we contact Beads & More by Lois?

I really hoped you enjoyed this weeks profile - if you'd like to contact me, please check out my website at http://www.beadsandmorebylois.co.uk/; you can also check out my Facebook page at http://www.facebook.com/Beadsandmorebylois or tweet me at http://twitter.com/beadsmorebylois and you can follow my blog at http://beadsandmorebylois.blogspot.com/.

We, at Creation|Collaboration, would like to take this opportunity thank Lois so much for taking the time to talk to us today - some fantastic tips and hints and such an interesting story that so many women who run their own businesses from home & have a young family to bring up, can identify with. 

Next week, we will be featuring Alison Thomson from Nujoolz - check back with us for our regular Feature Friday!