..when does it become recognised as a business not just a spare time hobby?
I was asked this great question in the open Q&A in the More Movement Hub and felt it would be a good question to share.
The way I understand it is that you need to register as self employed as soon as you start to earn money. Even if it is just a hobby income. If you do not actually make a profit, but are trying, then you still need to register but you would not pay tax (as you made no profit!)
To decide if you have crossed the line into being a business then you need to ask these two questions:
- Are you aiming to make a profit from your sales i.e. selling for more than cost of materials?
- Are you advertising your items for sale?
If you answer Yes to either then you have moved from a hobby to a business so will need to register with HMRC here .
If you need more clarification then there is a great guide here
Once you have started trading you are required to register as self-employed ASAP but definitely within 3 months of the end of your first month of trading. If you fail to do this you will be fined £100 :-/