How to turn your hula hooping hobby/fledgling business into a legit small business

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!

1) You must register with the tax office straight away.  It is not hugely complicated, you can do it all online (in the UK where I am based - US people, let me know of any US specific info, and I will share it here).  Let them know the date you started trading, get your unique taxpayer reference number and you're off.  The HMRC website is packed with useful information for setting yourself up as a self employed sole trader.  And you can always call them with questions - they are really friendly and helpful in my experience

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.

2) Even if hoop work is a labour of love, very few of us can afford to lose money doing it.  Keep a simple Excel spreadsheet to track how much you spend on hoop making supplies,  printing, advertising, insurances, room hire, speakers, performance supplies/costumes,  mileage.  Record your income on the same spreadsheet, and  check that you can afford to do  this, and you are not losing money.  You can also see where you spend the most, and this can help you reduce expenditure leaving you more money to spend on lovely hula hoops!
                       3) This can also be an invaluable tool to help you work out what to charge for your  services.  Make sure that  you take these expenses, plus your time and experience into account when working out what to charge.  I know a lot of us find that conversation difficult, but armed with  the facts about what any booking may be costing you can help you name your price and feel  confident in your worth.  Just because you enjoy doing something doesn't mean you shouldn't charge people who ask you to do it for them!
7) Make contracts and terms & conditions a routine part of taking bookings or selling hoops.  For booking, make sure you have a contract, take a deposit, and get paid.  A contract protects both parties, and ensures both you and the booker know what is expected and included.   For hoop sales, ensure you have a legal returns and cancellation policy, and if appropriate that it adheres to the distance selling regulations.
These are just a few things I thought of off the top of my head that I thought might be useful to someone starting out on their hoop business journey - if you have any more tips or advice do share them in the comments!

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