UK only - do I need to register as self-employed?

[aliflack]

I've got a question that may require a long answer and I hope someone here (from the UK!) can help...

I've registered with a stock agency (Alamy) in order to start making some money out of this hobby (I have a full-time day job) and I want to find out if I should set myself up as a company to comply with UK legislation (i.e. register with HM Revenue and Customs as self-employed).

Essentially my 'company' would be a vehicle through which to account for any profit from stock photography. In the future I may start doing additional paid photography work, but for now, it's just the stock work.

Anyone out there gone through this? Anyone care to share the ins/outs of the process?? I'm ploughing my way through the BusinessLink website but would appreciate any
help.

Thanks in advance!

[brivett]

Basic question... Is this a full time job ? I suspect not... If not, no need to register with anyone...

Worry about it when you have made the first few thousand....

Ask the Inlannd Revenue to send you their lovely hardback annual on setting up inbusiness... it's free !

[simatbirch]

Good question aliflack. I've been wondering the same thing.

[RobKirkwood]

Unless you want to claim tax relief on all the kit you're buying ;), I'd wait until actually earning some money from it ...and even then there's space on a tax return for detailing earnings (and expenses) outside your normal employment ...there used to be an annual limit (15K I think) below which simple 3 line accounts were sufficient for the Revenue (line 1 = income, line 2 = expenses, line 3 = profit), but I don't know if this still applies as I pay an accountant to worry about that stuff.

[brivett]

Remember that you can't claim equipment as an expense if it's also used for a hobby....

You have to be doing a useful amount of paid work before you claim for the toys... or absolutely no hobby work.

[aliflack]

[QUOTE=brivett]Basic question... Is this a full time job ? I suspect not... If not, no need to register with anyone...QUOTE]

You are correct - it would be over and above my day job.

Having started to read through the business link website (superb!) and the HMRC site it suggests that you really should register as self-employed if you're in my position (with the option of your company structure to be decided between sole trader, partnership or limited company)...it doesn't mention waiting till you've made cash!

Sounds like I'll be best off giving my local bank a call to have a chat with one of their business advisors and/or the business link people themselves... I'll post up any info I come across.

[dewmuw]

You can just put the detail on your annual tax return (assuming you get one - not everyone does as you have to earn over a certain amount first)

Best route though would be to register as a sole trader - you have to tell Inland Revenue and HMRC. This gives you the security of being able to keep one source of income separate from another - I gues you don't want your photo income to get involved in your day job income. Assume you make a lot of money with Alamy (good luck) you don't want your personal tax code to be impacted by that.

The only real benefit of registering as a limited company is to protect yourself from creditors should you go bankrupt - but I would imagine that is very unlikely in this situation as you are not doing the job full time and will not likely have any significant creditors (if any). A small benefit is that you could (like I have) set up your own limited company and keep all income within the business. You can then avoid* (or minimise) your tax exposure through a number of different routes - depedning on your income. This is all based on you making a good level of income from sale through Alamy.

I wouldn't recommend not worrying about it until you've made thousands. As a registered business Alamy have to inform the IR of anyone they pay. It is unlikely, but there is an audit trail, the tax man could turn up at your door and demand to know why you have been evading* paying tax. Working with Alamy (or any other creditable agency) does mean your are officially in the system. It is not like selling prints in your local cafe for cash.

*Tax avoidance is legal - tax evasion is illegal.

[aliflack]

thanks for the reassurance!

yup, not earning enough to have to do a self-assessment yet, and keeping the two incomes divorced is appealing.

no sales as yet through alamy (only been registered for a few weeks and still only got the 10 QC images availble) so don't anticipate making much, if any, money for a year or so.

sole trader seems the way to go right now. only question that really remains is whether or not to voluntarily opt for VAT registration... I've got a lot of digging to do before making that decision, but the key thing seems to be that if you're customers aren't registered for VAT and you are, you're effectively making them pay 17.5% more for nothing!

the advantage might be the ability to reclaim VAT paid on material purchases? i.e. camera bodies, lenses etc...

[Balliolman]

My understanding is you have to register as self-employed with the I.R. within the first three months you begin earning/trading.

[carl1645]

When we first started trading as a sole trader we contacted the IR asking when we needed to register. We were just looking at part time initially. We were told, from the horses mouth, that as soon as you take any proactive steps towards starting a business, ie advertising etc, even if you aren't yet trading, then you MUST register it with them as a business interest. If you don't trade that year then you submit a nil tax return. You can earn so much, not sure what the figures are now, before you need to pay NI contributions and tax.

It doesn't cost you anything to register a business and it keeps you out of trouble. Better to be safe than sorry.

Carl

[munchy]

Hey aliflack,

I am in exactly the same position as you. I have a full time day job but have also signed up with Alamy to sell images. Photography is just a hobby for me but am getting increasingly confused about VAT, tax, NIC's, Sole trading etc. Why do they make this so confusing?

I would be very interested to hear what info you find out - I'll have long read of the business link website and see if it makes any sense...

Cheers, Andy

[ffureel]

If I was you, and you do see yourself making some money I would register.

Its not very hard, just a small form and If you earn less than £4000 odd you dont pay any tax anyway. You will only really hear from them when you need to pay tax :-)

Registering just gets it out of the way and gives you peace of mind.

[aliflack]

Thanks for all the contributions - I guess my first port of call is to HMRC and register as a sole trader.

From there, I'll look into VAT registration and see what the pro's/cons of voluntary registration are for someone in my position. After that, accounting beckons!!!