Tuesday, 11 June 2013

When does a hobby become a business?

So I have been thinking a lot lately and to be honest for years...

I've never known what I have wanted to do career wise, always knew I wanted to be a Mum, but never ever known what I'd like to do other than that.

I've always liked crafts, and dabble in quite a few of them but recently have been making a few personalised things like this and this which I've really enjoyed doing.

I've already been asked by an old school friend whether I could make one for her, and I'd really like to be able to make them to sell.

I always stumble on the business side however, and here's where you can hopefully help or point me in the right direction.

I'd like to start trying to advertise/sell products through a Facebook page

-Do I have to register the name I'll be using as a business?

-Do I have to have a separate bank account for any purchases and earnings for and from my makes?

-Do I have to keep records and receipts of anything I have bought and the price I have sold my makes?

-Do I have to register as self employed?

I'm sure I have other questions but they are the main ones that have stopped me from thinking I can do this and I can never seem to find the right or up to date answers. Please if you have any of the answers to these questions I will be forever grateful! Thanks in advance x

12 comments:

  1. If you are just going to sell one or two things in a year to family and friends, I wouldn't register as a business as it wouldn't be.

    But if you do intend to throw yourself into it and sell on facebook etc then yes you need to let HMRC know. There's a self employed number and you just call and let them know.

    You can then have a trading name so you'd be Joe Bloggs trading as Joe's craft - just have to check you won't be infringing any trademarks with same name etc.

    You don't have to have a separate bank account, but I think it makes it easier when it comes to accounting time if you sell more than a few things. The problem is that business accounts usually come with charges, I think mines 18 month free then about a tenner a month. If its through Facebook maybe you would get away with just a Paypal account and a cash tin?

    Yes you need to keep a record of everything you buy and sell for your tax return (keep receipts as proof for purchases).

    I sell the majority of my items through my eBay shop - so eBay and Etsy might also be worth looking into. There's also Amazon Marketplace.

    Hope that helps a bit - I'm no expert but you can always email if anything else, I started off self employed but mine is a Ltd company now so know a bit. L x

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    1. Thank you so much for all of this! xx

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  2. I used to sell on Ebay - the rules for tax were that if you were selling second hand you were fine but if you were buying in stock to sell, then you were acting as a business and had to register. Selling on Ebay is easier and things sell faster, but the fees for Ebay and Paypal are high. Selling on Amazon is slower (for small time sellers) but cheaper.
    i am self-employed now, although not as a seller. Tax is quite simple, as long as you keep track of what you buy and sell as you go along. If you work from home, keep copies of itemised phone bills etc so you can claim them back later. Using your car to go to the post office, a % of that can be claimed. Just note what you use for a few months so you can estimate it later.

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  3. I am useless at this sort of thing but Laura from @TiredMummyoftwo knows all this sort of stuff xx

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  4. I run a string quartet and I have a separate current account (not a business account) just so I can keep it all separate for when I do my taxes. I keep a record of all my expenses too. It isn't our main income (it is almost just a hobby but with the added bonus of being paid to play) so I probably haven't got all the right info but would keep it casual to start with until it really gets going. My friend does papercuts and she has all her business through NotOnTheHighStreet. She had so much work through them that in the end, she had to take on staff so might be something to look into in the future. There is another crafty site like NOTHS but I can't remember what it is called. I think you can register for free and sell things there. If I remember I will let you know. Good luck!

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    1. Thanks, I was hoping to do something like that, even if it's just to start off with (I know nothing of any business related parts), so that will be easier to just have a separate account. I'd like to start as more of a hobby that can make some income first anyway. Oh I always look at NOTHS with envy :) thanks x

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  5. Tbh I too no nothing about business either, but I know Etsy is a great place to sell handmade items x

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    1. I wish I had done a short business study class at school when I had the chance! x

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  6. Good advice from Mum Down South and Momma L. All I would add is try and see. Separate bank account (if you can open a designated account without running into business charges, all you need is a second account somewhere), keep records so you know what you are making and can work out your profit and pay correct tax. Personally, I wouldn't aim to be self-employed (which will trigger NI liabilities) until you are confident you want to make a real go of it. Why not see if you can make it a profitable hobby first and build it up? Good luck.

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    1. Thank you-I find all the tax side of it too confusing so great to get some advice x

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Thanks for taking the time to comment :)

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