I worked freelance for a while a couple of years ago and used PayPal once or twice and never knew to do this (in fact, I don’t think I claimed a single expense when doing my taxes), good to know.

I’m currently working through my 4-week notice at my current job and will launch properly mid-to-late-June, but this has been invaluable! Thanks for the fast response too.

MC

Thanks for your comment!

There are several reasons I haven’t registered as a Limited Company, mostly to do with the ease of paying myself/moving money from business and personal accounts and borrowing money from the business. I’ve found that at this stage of my business, the upsides of being LTD aren’t worth the extra hassle in tax filling and restrictions in dividends etc etc. As of the 5th of May all LTD companies also have to file PAYE in real time (http://www.hmrc.gov.uk/payerti/getting-started/index.htm) which basically means that you need to inform HMRC each time you pay an employee/yourself, which is a massive headache if you’re your own (sole) employee and your income fluctuates each month. It really depends on your business and your cash flow though, so it’s something to investigate!

Re: Paypal, it just means that for example if I sell a print for £25, £1.18 of that is taken by Paypal as a fee, so I can claim that as a Cost of Sales expense and write it off my tax. It all adds up!

Yes, you should still be able to set those things against your taxes 100%, even if you paid for them via personal card. In FreeAgent you can enter them in as Out-of-Pocket Expenses > Capital Assets, my accountant tells me that anything over £100 should be a Capital Asset rather than a standard operating cost. (this post is quite helpful http://www.freeagent.com/central/capital-assets-and-capital-allowances)

Don’t forget, you need to register as a business with HMRC within a certain amount of time once you’re trading or you get a fine. When I did it it was 3 months, but that might have changed since.

Hope that helps!
Kris

I’m intending on starting as a LTD company for better tax and possible expansion later – have you ever considered this?

You mentioned PayPal charges can be classified as a business expense – can you explain what this means briefly?

I have no money for the business yet, but need to get a new laptop, monitor and a few other physical things and some memberships (freeagent might be one). I took out an interest-free (for 16 months) personal credit card and intend to put them on that but was hoping to still get tax back on them.. Is this wrong?

Thanks again

MC

Katie x

Katie x