As a market trader you may be operating as a sole trader or limited company. As a sole trader you are only required to submit an annual self-assessment return. If you are operating as a limited company then you will also be required to submit annual accounts in addition to your self-assessment return.
Sole Trader v Limited Company
Your suppliers are wholesalers and much depends on whether they allow you to buy stock on credit. If they do and the amount runs into many thousands then you may want to consider a limited company if you are operating as a sole trader. Whilst as a sole trader you have less formalities to deal with, you take personal liability for all liabilities.
If I am VAT registered and purchase a car that I use domestically as well as my business, can I claim back the VAT?
Provided the vehicle is a ‘qualifying car’ in VAT terms you will be able to claim back the VAT you paid. Most cars are qualifying, whereas such vehicles that are are not are:
- vehicles capable of accommodating only one person or suitable for carrying 12 or more people including the driver
- caravans, ambulances and prison vans
- vehicles of not less than 3 tonnes unladen weight
- special purpose vehicles, such as ice cream vans, mobile shops, hearses, bullion vans, and breakdown and recovery vehicles
- vehicles with a payload of one tonne or more
Do I have to pay income tax if I make a loss in any one year?
Income tax is based on what you receive from your business, not what the business makes or loses. Therefore, however much you have received from your business will depend on how much income tax you are due to pay. If the business has suffered losses but the amount you received from it has not altered, your income tax liability will not alter. If on the other hand you have consequently received less money from your business, this will have an effect on the amount of income tax you pay.
Do I qualify for any assistance if my income drops below a certain threshold?
You can qualify for working tax credit depending on how much you receive from your business. This will take into account any other benefits that you or your partner may already receive such as child benefit and family tax credit.