Declare Tax or Setup Company?

[PassiveJ]

Hi I'm interested to hear people's opinions on the following.

I am a UK based Amazon associate, making money from Amazon.com. I have a day job but make about $200 to $300 monthly from Amazon. This money goes into a Payoneer account which I haven't really touched since starting.

I transfer the odd small amount from Payoneer to my UK bank account (less than $500) occasionally to cover any unplanned bills etc. but am becoming increasingly paranoid about getting caught out by the tax man when doing this.

I am wondering on the best way to go legit with this? It seems I have the following options:

A - Just declare any additional income and pay tax on it. However, should I start to earn in the region of $1.5k from my IM income, this will take my combined income over a threshold where I will then have to pay 40% tax.

B - Setup my own company. I have literally no idea how to do this, but I've heard mention about setting up offshore etc. Not sure if this is doable as my main job is based in UK.

Any advice or guides on this would be appreciated, thanks.

 

[Deleted member 657006]

your just suppose to pay tax on your earnings thu a accountant there use your current job tax code .

and yes if you go over a % you get heigher taxed .

that life in uk .

like you said 60% might be all be profit only .

but remeber the accountant can help as he can claim on stuff to save you cash .......

it best you sort this out only donation money allowed with no tax problams .

 

[Deleted member 1313244]

It costs about £100 to set up a company, it's called "company formation" and it takes about 2 hours.

 

[Deleted member 657006]

It costs about £100 to set up a company, it's called "company formation" and it takes about 2 hours.

is that worth it vs just get a accountent pay on tax code already exisists ????

$300 to $500 month money .?

 

[macdonjo3]

An offshore company costs thousands of dollars, not worth it for the little money you're making.

Do you know who you should talk to instead of a bunch of randoms on the internet? Your accountant! A good one will advise you when you're making enough money to make it worth doing so.

 

[Deleted member 1313244]

is that worth it vs just get a accountent pay on tax code already exisists ????

$300 to $500 month money .?

Taxes in the UK are very easy, you just need to declare self earned income. Financially it make sense to do it as soon as you earning the extra £100 and you need to change your account details from personal to business.

 

[PassiveJ]

Taxes in the UK are very easy, you just need to declare self earned income. Financially it make sense to do it as soon as you earning the extra £100 and you need to change your account details from personal to business.

Thanks for the replies, would you say it is beneficial to set up a UK based company then over just declaring the extra income? Setting up a company appeals as I would like to be claiming something back on the running costs of my marketing business.

 

[Deleted member 1313244]

Thanks for the replies, would you say it is beneficial to set up a UK based company then over just declaring the extra income? Setting up a company appeals as I would like to be claiming something back on the running costs of my marketing business.

If you just don't do anything then you need to self assess - all this means is that you say how much you earned in excess of PAYE and then HMRC works out how much you have earned for that year and how much tax you should be paying. It's not normally this easy in other countries - the UK tax system is designed to help people starting out being entrepreneurial.

Higher rate income tax is 45%, Corporation tax is around 20% so it almost always makes financial sense and you don't need an accountant unless you are in specific industries trying to get tax credits, business rates etc.

 

[lifehero]

here in us we just pay on earnings. if i were you i would just throw everything back into the site and claim it as cost that way you pay no taxes. i would not pay myself till site is huge. no since in paying the gov when you only making small time bucks

 

[James2774]

What is the benefit of setting up a company that youre thinking of?
UK corps all pay corporate tax except for a limited partnership i think its called.
Then youll pay any tax on money that the company pays you as income I think.
In the end if youre only talking about 200-300/month just declare it.

Does payoneer have a card you can use to pay for things? If so theres a method to cash out. You can also use your payoneer to purchase BTC, and then see what bills/purchases you can use that BTC for. Any way to avoid sending the money to your bank is all you need. Should be easy with small amounts like this. Could also get a BTC debit card, load the card with BTC then pay for things with it as well. Assuming Payoneer does ot send tax report to your government.

 

[PassiveJ]

What is the benefit of setting up a company that youre thinking of?
UK corps all pay corporate tax except for a limited partnership i think its called.
Then youll pay any tax on money that the company pays you as income I think.
In the end if youre only talking about 200-300/month just declare it.

Does payoneer have a card you can use to pay for things? If so theres a method to cash out. You can also use your payoneer to purchase BTC, and then see what bills/purchases you can use that BTC for. Any way to avoid sending the money to your bank is all you need. Should be easy with small amounts like this. Could also get a BTC debit card, load the card with BTC then pay for things with it as well. Assuming Payoneer does ot send tax report to your government.

I was thinking of setting up a company so I can deduct some of the running costs (hosting, writers etc.). So I was wondering if the effort of doing this was worth it against just declaring the extra income.

As I understand it you can order a Payoneer card and just use it to pay for things using the payoneer balance. I don't believe they report anything to tax authorities at the moment. However I am sure they will start doing this at some point, as Paypal had to. So that may work in the short term but I'm looking at a longer term option.

 

[James2774]

I was thinking of setting up a company so I can deduct some of the running costs (hosting, writers etc.). So I was wondering if the effort of doing this was worth it against just declaring the extra income.

As I understand it you can order a Payoneer card and just use it to pay for things using the payoneer balance. I don't believe they report anything to tax authorities at the moment. However I am sure they will start doing this at some point, as Paypal had to. So that may work in the short term but I'm looking at a longer term option.

You likely can do that as a sole proprietor or the UK equivalent I think is a “sole trader”

You can deduct expenses as an individual and you will just pay tax on the profit, not the expenses.
No need for a Corp to do that.
Just get an accountant at the end of the year and save/document all your expenses.

 

[PassiveJ]

^Just looked at sole trader and yes that sounds like it might fit my needs at the moment. Will do some further reading around it, thanks.

 

[BestSolutionX12]

Set up a company. It'll be useful in long term

 

[TheShrewMan]

1. You won't be paying 40% in taxes. Thats a marginal tax rate over a certain amount.

2. Just pay an accountant to do a self assessment for you. You can still claim expenses.

3. Form a company when you're doing big bucks and/or close to quiting your job

4. What ever you do, DON'T avoid taxes. Unless you like jail The taxman always knows

5. If you do like jails, then don't drop the soap

EDIT: also OP, the financial year ends on 5th april every year. Just mentioning it in case you didn't know

 

[BrandingCat]

Sole trader + reinvest = tax zero if you don't go above 12k in profit. You pay just 5% NHS I guess which is like chick&chips on your earnings.

UK it's a blessed country in terms of taxes.

 

[Sippo]

Hi I'm interested to hear people's opinions on the following.

I am a UK based Amazon associate, making money from Amazon.com. I have a day job but make about $200 to $300 monthly from Amazon. This money goes into a Payoneer account which I haven't really touched since starting. I transfer the odd small amount from Payoneer to my UK bank account (less than $500) occasionally to cover any unplanned bills etc. but am becoming increasingly paranoid about getting caught out by the tax man when doing this.

I am wondering on the best way to go legit with this? It seems I have the following options:

A - Just declare any additional income and pay tax on it. However, should I start to earn in the region of $1.5k from my IM income, this will take my combined income over a threshold where I will then have to pay 40% tax.

B - Setup my own company. I have literally no idea how to do this, but I've heard mention about setting up offshore etc. Not sure if this is doable as my main job is based in UK.

Any advice or guides on this would be appreciated, thanks.

how was the issue resolved?

 

[dabax]

It doesn't sound like you're earning enough to make this worthwhile but you can legally pay zero taxes by being termed as a "perpetual traveller".

This works if you never stay more than 180 day in any one country during a given year. A good few internet guys are doing precisely this and banking hard.

There are other ways around this - e.g. registering a company in a low/no tax terrority, assigning a bogus set of shareholders, and funneling the money back. But it takes some digging to figure how to do this.

 

[Unreliable Witness]

This works if you never stay more than 180 day in any one country during a given year. A good few internet guys are doing precisely this and banking hard.

Unfortunately this doesn't work if you have links to certain countries. In the UK, you can be tax resident without spending a single night in the country, simply if you have significant links to the country. And the UK taxes worldwide income, not just income made in the UK (like some countries).

You can set up a limited company for £12 through the gov.uk website. You can set up for free if you use some incorporation agents.

However, a company still pays tax on profits, and the owner still has to pay income tax when he pays himself (although there are some thresholds under which tax isn't due). You can reduce your profits to zero, for example, by reinvesting them, but then what's the point of doing the work if the reward is 0?

There is no easy way of getting around paying taxes.

 

[awesomewebsites]

You do not need to set up a company for such small earnings. Bu I am surprised that you are not paying taxes on the amount.