I have started creating things for other people, I am unsure whether I want to go far with this and am trying to work out the tax implications of having my own wee business making baby slings and other baby/mummy related stuff.
I have made two baby slings this week, and the new owners love them, one is a ring sling the other a pouch sling, both were relatively easy to make and I enjoyed it, I also made a new ring one for Miss N and I to use, we love it.
I also made myself a dress that is breastfeeding friendly, I absolutely love it, its warm (merino) and stylish and I can easily and discreetly feed our wee girl wearing it.
So what do I do, continue with this and set up a wee business that's all legitimate, or do the under the table thing and hope that I don't get caught, I am leaning towards keeping all my receipts and running a receipt book and keeping 20% of my income aside for tax purposes just in case.
D
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2 comments:
Get some proper advice, but at this stage, I think the tax implications are minimal. I doubt you're going to come anywhere near the GST threshold, so that's not an issue. Other than that, basic income less expenditure should be fine. Why don't you work out how many items you think you might end up making, and how much profit you might make of each of them. That should give you a rough idea of your anticipated income. Unless you make thousands of dollars from it, you should just be able to declare it as income received in cash. The tax rate will be low, because you should be under the low income threshold... unless this turns into a huge operation.
To be liable to pay provisional tax (more-or-less a down payment on your income tax for the year), you have to end up with an end-of-year liability of more than $2,500 (NB: tax liability), and in order to have to pay that amount of tax, you would need to earn well more than $10,000 profit in the first place.
The short answer: you should be just fine if you set aside about 20% in order to pay any tax liabilities.
You and your partner may want to think about whether the amount you earn affects any Working 4 Families payments you receive. Again, unless you earn thousands and thousands of income (i.e net profit, which is receipts less payments), it shouldn't be too large an impact, and any overpayment should be covered by the amount you have set aside.
BUT... if you start to earn a significant amount from this, it may be worth talking to Inland Revenue who should be able to help you get going with recording your transactions for tax purposes. And talk to them earlier rather than later; it's easier to get things right in the first place than fix it up afterwards.
Oh dear.... comment longer than post - very poor form!
Thanks for the advice, I dont think I will make thousands from this, its just a way to get some pocket money and to branch out a bit with my sewing.
I might just ring Ird next week and see what they say.
D
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