Sari

Hi I have a friend who has a spare-time business - an online dating website he started with another friend abut a year ago. The website allows free and premium (paying) members. They currently have only about 15 paying members - but in the last 6 months have earned approximately £500 from paying memberships. They haven't formed or registered any kind of company in the UK yet and are trying to work out how to take the business forward as they have some advertising campaigns coming up. My question is it it illegal for them to be earning money from the website or have the business running without it being registered as a company? I think it is but he thinks that as they have not earned much money it is not necessary to register or form a company until they do. What about the income - does that have to be taxed and who would it be taxed under if there are only 2 people in the business and even if it is only about £500 for the year?

DerrickG

you should register and also do the income tax procedures

wargsm

They are making a profit from the site, and it is going untaxed. So yes, it is illegal. TAX evasion to be precise....If the site takes off, and large sums of money start appearing in the bank accounts each month, then they will have some explaining to do.It's better for them to just get registered, and avoid allot of bother in the future.It's not expensive to get registered as a business if you do it correctly, and you can actually get government grants if you go through an agency. You can normally expect to get around £500-£2500, and not have to pay it back.The company that find you these grants, and will take you through the stages of setting up a company, registering etc is called "the small business gateway".You don't have to pay them anything, it's a free service. So give them a call, and organise a meeting sometime.http://www.bgateway.com/

OnestepdownfromGod8362

The partners should register with HMRC as self employed within 90 days of commencement or face a £100 fine.Annual accounts should be prepared and submitted to HMRC and I suggest you use an accountant for this. Unfortunately the early days of a business incur costs such as these.Any profits, after all expenses, are taxable, but this is unlikely in the first year with that sort of profit.It's not illegal, because so far no critical tax dates have passed.