Becoming a Business
Registering Your Business
As with any selling platform (e.g. Etsy, Facebook, Craft Fairs etc), if you’re selling goods or services with the intention of making a profit you should check if you qualify as a business. In the UK, a new tax allowance came into effect for income in the period 6 April 2017 to 5 April 2018 and you can turnover up to £1000 a year before needing to inform HMRC or fill in a Tax Return. If you turnover more, you will need to register as a business/sole trader. You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings.
If you decide to go self-employed, you should register with HMRC (if you’re in the UK). The general advice is that you should register with HMRC as soon as you start working for yourself, but you don’t have to rush to inform them. HMRC state that if you do start working as a sole trader you must register with them by 5 October of your business’ second tax year. So, if you started your business at any time during the 2016/17 tax year (from 6 April 2016 to 5 April 2017) you will need to register with HMRC by 5 October 2017.
Do I Need Insurance?
YES, if you are selling either at craft fairs or online (on any selling platform) you will need to protect yourself and customers by taking out insurance.
PUBLIC Liability Insurance: This is what is needed if you sell at craft fairs. It will cover you if a member of the public injures themselves whilst visiting your store (eg tripping on a cable).
PRODUCT Insurance: This is often included in public liability policies and is needed in case the products you sell cause injury or property damage. Please ensure if you sell overseas that your policy includes this.
If you’re based in the USA, it’s likely to be general liability insurance that you take out to protect your business, although exactly what it covers and how it compares to public liability insurance will depend on the insurer and policy you choose. Always check your documents carefully.
Will Selling Affect My Benefits?
Disability Living Allowance (DLA) / Personal Independance Allowance (PIP)
In the UK, Disability Living Allowance (DLA), Personal Independence Payment (PIP) and Attendance Allowance are payable whether or not you are working. They are not means tested, so earnings do not affect the amount of your benefit.
If you’re in the ESA Support Group you can earn up to £125.50 a week without it affecting your ESA benefit through permitted work, as long as you work for less than 16 hours a week. You will need to tell DWP about your permitted work and can do so by filling in the permitted work form.
There is no ‘permitted work’ under universal credit. Instead, you will be encouraged to do some work, even if only for a few hours a week, if you can manage it. There is no time limit to how many weeks you can work. Some of your earnings may be disregarded by applying a ‘work allowance’. This will apply if you or your partner have a limited capability for work. This is determined by a work capability assessment. The work allowance, whether you are a single claimant or claiming jointly with your partner, is:
£198 a month if a ‘housing costs amount’ is included in your universal credit award; and
£409 a month in all other cases
Disclaimer: The above is for advisory only, please always speak to your local Citizens Advice Bureau to check your personal circumstances.