There has been a lot of items in the media in recent months about the Government crackdown on Hobby Businesses and targeting sellers on Ebay, Etsy and other such selling channels. As I advise in my ‘Starting out Guide’ as soon as you decide to set up a business however small keep good records and keep your receipts. Most mobile devices have a scanning or camera option so if in doubt take a picture of all your receipts as well as filing the originals.Keep records of any expenditure on your business including business travel, heating, telephone calls and anything you have spent in connection with your business.
Anything you earn above your personal tax allowance is taxable. When you run a business your income is what you have to keep after all your costs have been taken out so its important as your business grows to keep proper accounts and its a worthwhile investment paying a professional to do your business accounts and help you with your tax return.
If your business reaches £82000 in turnover you also have to register for VAT. You can register voluntarily under this amount which means you can claim VAT back on VATable purchases. This is especially relevant if you mostly sell VAT zero baby items as you can then claim VAT back on all your VATable businesses purchases.
If in doubt about tax then there are lots of free advisory services such as The Citizen’s Advice Bureau and lots of online forums.