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Starting an online business offering online services. How will it be taxed? Watch

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    What kind of things I should watch out for. I'm starting new with 0 experience. Is there anything I need to apply for?

    Will happily rep anyone who is willing to help
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    Would depend on whether you're a limited company or not, you'd have to pay corporation tax if you were. Or you can register with HMRC as a sole trader, and you'll pay income tax on your profits.

    Whats best for you will largely depend on your current finances and how successful the business is, though I would recommend you look into registering as a sole trader.
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    If you're serious.... look it up yourself. Browse and make mastery of the .gov.uk information available on their website. And. Get an accountant / speak to an adviser.

    You pay NI contributions if you make over 4.5k (or something like that). If you make less, you apply for NI exemption.

    Should profits (PROFITS not revenue) exceen personal tax free allowance (10.6k moving to 11.6k) then you everything above 10.6k is hit at an additional tax rate.

    e.g. you make 12k profit this year.

    you pay NI
    you pay tax on 1.4k (12k-10.6k)

    that is as a sole trader. as a limited company you will pay more but have the co. name reserved.
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    Just open a PayPal business account and you never have to worry about the rest. The tax you accordingly like ~5% of each transaction. I know this because I run an on-line business myself, been doing so for about a year now. I run a freelance programming service. Also you can look into using bitcoins too for your transactions.
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    (Original post by Async)
    Just open a PayPal business account and you never have to worry about the rest. The tax you accordingly like ~5% of each transaction. I know this because I run an on-line business myself, been doing so for about a year now. I run a freelance programming service. Also you can look into using bitcoins too for your transactions.
    PayPal do not tax you...
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    (Original post by Push_More_Button)
    PayPal do not tax you...
    By tax I also mean fee. Interchangeable words.
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    It's all about how you set up- as a sole trader, you will not be paying through your teeth. I had to set my business up as a PLC so I pay corporation tax on everything we make, which is 20% in our case. If you have any employees, then you legally have to register with companies house, whereas if you're on your own (obviously) you can simply register as a sole trader. If you are working with another person, and only that person, you can set up as a partnership.

    Because it's an online business, you'll also have to pay tax territorially. For example, I only pay tax on sales in certain countries but sales in other countries are exempt. Also, you can register for a TIN (tax identification number) to claim tax relief, the amount of which will vary depending on your circumstances.
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    (Original post by Async)
    By tax I also mean fee. Interchangeable words.
    They are in absolutely no way interchangeable. You're paying a fee to PayPal for their payment processing service. You pay taxes to HMRC, which if you're a sole trader is income tax and national insurance.

    If you don't pay PayPal they won't allow you to use their service, if you don't pay your taxes you're breaking the law...
    • TSR Support Team
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    TSR Support Team
    (Original post by Push_More_Button)
    They are in absolutely no way interchangeable. You're paying a fee to PayPal for their payment processing service. You pay taxes to HMRC, which if you're a sole trader is income tax and national insurance.

    If you don't pay PayPal they won't allow you to use their service, if you don't pay your taxes you're breaking the law...
    What will you do about it? Willful ignorance and all...
 
 
 
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