Is hula hooping becoming more than a hobby for you? Do you make hoops, sell hoops, teach a class, perform maybe? Then you are legitimate small business owner! Congratulations! But are you legitimate in the legal and professional sense? It is easy to fall into being a small business owner as a hula hooper. I did so myself, with no idea of what the legal side would entail. suddenly I found I was making a profit each month from hoops and hooping, and realised that my hobby had become a business. I had to get professional, legitimate, and quickly. So what are the first steps towards being a legitimate small business holder? Don't worry, it's not as scary as you think!
You WILL need to:
-keep record of what you spend in your business and what you make -use an excel invoice template to send out to people for payment, and print them all off. Print or keep all your reciepts. Add up all your incomings and outgoings, I recommend entering them all into a Excel spreadsheet (include date, description, amount, I like to categorise mine into marketing, p &p, IT, insurance etc) and enter them into the simple online form at the end of the year - you only need to pay tax on any profit you make. It's a good idea to put away 10-20% of your profit every month to cover any tax that may be due at the end of the year, but it may not be much when you are starting out, unless you are earning mega bucks, in which case lucky you!
You WON'T need to
- register for VAT (again, in the UK) unless you earn over £70,000 per year! Self registering voluntarily is possible but I wouldn't recommend it, it complicates invoicing and record keeping needlessly.
-get an accountant to do your tax return - give him your receipts, invoices, phone bills, petrol receipts, payslips,any other business related income ad expenditure and he will sort it out. It won't cost a lot, but could save you money in tax due. Worth it if you are earning a fair whack or don't have time for doing it yourself.
-take the free webinars offered by HMRC - very helpful and explain what you can claim as a business expense - a flat rate for mileage of 45p per mile, an amount per week for use of your home for business purposes, proportion of mobile phone and broadband for example. And don't forget to claim expenses such as training expenses such a hoop workshops, performance costumes, and of course hula hoops! These expenses all offset your tax bill at the end of the financial year.
2) Make sure you hold public liability insurance. This is not just to cover you, in the event that anyone is injured in the course of your workshop or performance, but if the unthinkable should happen and someone was seriously injured, and lost wages or quality of life due to injury, they would need that insurance money. Many contractors/venues insist on proof of PLI before booking now, so be ready. UK insurers that come recommended by hoopers are Rees Astley, Simply Business, and Equity (if eligible - you need to provide proof of earnings or fulfil other criteria)
3) Is your home and car insured for business use? If you keep/make your hoops at home, and if you use your car to travel to bookings and to transport business equipment - you may find that if you have a accident and you are not insured, you are not covered for damage to car or to business supplies/hoops.
4) If you are teaching hooping, and wanted to take things a step further (and possibly reduce your PLI insurance costs) you could consider taking a first aid qualification and/or Exercise to Music instructor course. These would be a benefit to your clients, be invaluable in case of accidents, arm you with a lot of useful information and experience, and the ETM course would help structure a class with an effective warm up and cool down, and give you vital information on physiology and adaptations for special populations such as children, teenagers, older adults, people with disabilities, pregnancy etc.
5) Music Licenses - in the UK, to legally play music in public commercially you must hold PRS and PPL licenses. Without these you are in breach of the law and could be fined. Some venues, such as gyms and schools may already hold these licences, but it is your responsibility to check this and make sure you are covered.
6) Profit and Loss. Ok, some people might think this is the boring bit. (Not me! I love a good spreadsheet!) And also, you might think that you are doing this for the love of hooping, not to turn a profit! Why track this? It's a passion, you don't want to commercialise it! Here are a three reasons why you should at least consider this:
1) To complete your tax return! If you record income and outgoings as you are going along, you won't have a huge job to do on your tax return at the end of the year.