buisness issue

[dfinn 0]

Hi,

 

Ive just been pondering over the dreaded three letter word of tax. I am wondering what I need to do to stay on the right side of the law when it comes to tax.

 

I have done a quick forum search and found one post and crispy said something like you need to earn £4700 a year before you become eligable to pay tax. Is this true?

 

Is there anything extra I should do because I am earning waaay under this ammount per year.

 

Do all my earnings collectivly group up over the years until i reach the threshold then I need to start paying tax?

 

Sorry for all the questions but its a bit confusing.

 

Thanks,

 

Daniel

[spinner 0]

You will need to keep a record of all income and expenditure.

 

The cost of your equipment, vehicle, insurance, CDs, telephone, advertising and promotion etc can all be offset against your income.

 

£4700 is your personal allowance, or the amount you can earn in a year, before any tax is payable.

 

As an example, say you earned £6000 in a year from your disco and your running costs were £2000, then your net income before tax would be £4000. Since that is £700 less than your allowance of £4700 there would be no tax to pay.

 

Hope that helps.

 

[dfinn 0]

ah Thanks for that.

 

So as long as I keep track of everything and keep records thats the way to do it?

 

Thanks,

 

Daniel

[spinner 0]

Yes. But you need to complete a tax return each year. Do you earn money from any other source ( like a full time job? )

[YourBigEvent 0]

April

 

Date ADS Ref Payee Reference Amount Out Amount In

 

1st 290368951 ********** Flightcases 599.99

1st 290368952 ******* ******* Drawings 2,500.00

1st 290368953 ******* Leads 98.65

1st 290368954 **** ******* Rackcase accessories 350.00

2nd 290368955 ****** ***** Disco 600.00

2nd 290368956 *********** Disco 550.00

2nd 290368957 ********* Disco 500.00

2nd 290368958 ******* Disco 600.00

2nd 290369959 ******* ******** Service on Van 258.69

 

Total 3,807.33 2250.00

 

This is the sort of thing I do.

 

It states to my account that on the 2 days I have shown I spent £3807.33, But got paid only £2250, meaning a negative amount of £1557.33 for the two days.

 

Is this the sort of thing you were after ?

 

BTW I do it in Excel, but it doesn't come out too well after a cut 'n' paste !

Edited July 24, 2005 by ADS Entertainments

[Digital discos 0]

I do mine in excel..

 

Just put say

 

XLR LEADS (EBAY PURCHASE) -6.50

Disco For Joe Bloggs +500

 

Then at the end of the month I just auto sum and see how much profit I'm making. I takem into account everything I buy and sell, to do with the company.

 

And at the end of the year I can see how much I'm earning...

[High Fidelity 0]

QUOTE

I have done a quick forum search and found one post and crispy said something like you need to earn £4700 a year before you become eligable to pay tax. Is this true? Is there anything extra I should do because I am earning waaay under this ammount per year.

 

Don't forget that £4700 a year includes all your earnings from whatever source.

 

So if you're earning say 15,000 a year from a full time job, then you'll pay full wack tax on all your disco earinings.

 

However, earnings from your disco can end up very low after you've taken out all your expenses.

 

Get yourself a good accountant, preferably one who has been reccomended by somebody else that is self employed. They will know all the things that you can allow against you're earnings, like a percentage of you're heating, electricity at home etc.

[dfinn 0]

I have no other earnings except my discos.

 

im gonna sort all this out over the summer I think.

 

Thanks,

 

Daniel

[spinner 0]

Then you'll have no tax liability provided that your net income doesn't exceed your personal allowance.

[jeffwall 0]

Just get 2 folders....in and out

Thats all i do for the electrical business and dj work

All my invoices in the in box and all my reciepted outgoings in my out box and give the two boxes to your accountant!

Worth every penny as they will put capital allowances into your outgoings list for example your van depreciation and any loans you had to get etc etc average charge round ere is about 350 for a book keeper to do your accounts for ya

Its not hard really( filling the tax return form in every year is done by them as well just sign it!)

Inland revenue will charge you your owed tax plus half again for the year after....

so if your tax bill is say £1000 for 2004/2005 they will take £1500 off you so you have paid half of next years as well

Hope that helps....... BTW this system is only used if your tax bill is more than £500

[BigBen 0]

I've been meaning to start a tax thread for ages; well done DJF !!

 

I have an accountant buddy. Having been trained in accountancy during my early years, I was able to put everything together for him. He then quized me about loads of stuff and was able to reduce my tax bill to less than £10.

 

Some of the things you might miss are so obvious:

MILEAGE

Not just to the gig and back, what about the trial gig run? Visits to meet with organiser or host? My favourite one was trips to the DJ shop - worked out almost 40 mile round trip, multiplied by my petrol rate (40 pence) meant each trip I could claim back £16, and I made about 20 trips a year! £320 off my profit straight away!

 

EXPENSES

I take quite a few bits and bobs with me to each gig. Including drink, food, sweets, chewing gum, mints, batteries, toilet rolls (for the Mummy game), make-up (for the make-up game), kids prizes (including glow sticks), kids sweets, etc., etc. All of it is claimable with a receipt.

 

CAPITAL

Anything purchased to be used over a number of years can be classed as capital. Capital items should be depreciated over their lifespan - ordinarily, three to five years. Once again capital items include anything and everything that you use to run your show. Items include the gig laptop and its external hard drive, PCMCIA card and cable, the PC and printer at home used to check email, write letters, design the website, etc., answering machine, etc.

 

Anyone else got any more hints and tips on items we can claw back?

[ian 0]

This is a very timely thread - just thinking about my 2004-05 tax return.

 

Do CD's count as capital? I'd assume they would. If so, over what period would you depreciate them?

[Ian Stewart 0]

I think that the best bet would be for any of you to PM with any Tax questions, as i run a small accountancy business, and 90% of my clients are entertainers.

 

you need to inform the inland revenue within 3 months of starting your business that you are self employed failure to do so could result in a £100 fine.

 

you need to complete a tax return, no matter what your income (by the way the threshold is £4,745 before income tax and class 4 natinal insurance is payable.

 

your class 2 national insurance of £2.05 is payable if you earn above £4,215, if your net earnings are below this then you can opt out, but this is not advisable as you will be making no contributions, and benefits such as pensions, job seekers allowance will be affected.

 

I have offered to complete DJU members accounts and tax returns for the sum of £175, if interested please contact me

[Dave80s 0]

the depreciation factor wouldn't count for CD's, just claim the full amount in one go.

[Dave80s 0]

your accountants fee is tax deductable as well of course!

[Steve_Mitchell 0]

I won`t reply as the other lads have done so ... I`ll just get an extra post.