By Law, anybody aged 16 years or over and running a business should be declaring the fact to the inland revenue, and be completing and submitting a self assessment tax form every year to prove their income, regardless of whether their Mobile Disco activities are part time or full time. If you are earning any income, legally you have to declare it, not doing so can lead to penalties and very large fines, based on what the Inland Revenue think that you have earned.

Tax Evasion, even on a small scale is classed as a criminal offence, and even minor offences can carry severe penalties and trigger an investigation into your earnings, often dating back many years. This alone can result in fines of many thousands of pounds in back taxes.

As soon as you start a business you need to register it for tax (within a 3 month window) -  that is the law and its not an option or related to how much you earn or Think that you'll earn!..

If you don't make any profit then you pay no tax, however you still need to keep accurate records of your expenditure and income and submit a self assessment form on a yearly basis to prove your earnings. Then you'll pay an amount of tax calculated on the Profit that you've made. Depending on your circumstance and any other income, you may even need to pay National Insurance too.

Keeping records for a business like a Mobile Disco is fairly straightforward. Simply keep a written account of your earnings, and your business related expenditure. Keep your booking forms for a record of your income, and your receipts for the expenses. It's also wise to number the receipts too, and make a note of the number against the entry in your books. This makes it easier to keep track off, and for your accountant (if you have one) to follow. A seperate bank account for your business activities can also be useful.

The amount of tax you will pay depends on your employment circumstances (ie any other employment or self employment you have), and how much profit you make in the accounting period. 

The figure your tax liability begins at (The point where you begin to pay tax) changes every year and is announced at each budget. Currently in 2006, it stands at £5000 per year. This means that everybody can earn £5000 before they become liable to pay any tax!. Please bear in mind that if you have any other income, like a part or full time job or other self employment, that this will be deducted from your liability allowance. So in other words if you already have other employment (or combination of employment), that pays you more than £5000 per annum, then you will pay tax on every penny profit that you earn from being a mobile dj!.

 If you do one disco every now and again then the chances are that you'll pay very little tax, however if you run a huge business empire then you'll probably pay some quite large amounts, so it is always wise to budget well before each tax payment becomes due.

If you are making profit from your mobile disco, then consider hiring the services of a good account. For most small business, professional tax services are often available for between £150 - £250 per year. A good accountant will save you at least his fee in your taxes, and will be able to give you legal advice on tax avoidance (not evasion!). They will also be able to advise you correctly on what you can and can't claim as expenses, and will ensure that you declare everything that you are entitled to!.

People often confuse paying income tax and VAT. VAT is in fact entirely seperate to your tax payments, and only currently applies to businesses turning over more than £60k per rolling 12 month period. So if you are taking more than £60k per year, then you'll need to register for VAT too and an accountant is a must. If you earn under £60k then VAT will not apply to you and there is little advantage to voluntarily registering!.

If you are not paying tax when you should be then its better to contact the Inland Revenue sooner rather than later, pay the £100 late notification fine and any back taxes you owe, rather than waiting for them to catch up with you, since the penalties for tax evasion are huge.

For more information or to register a small business for tax, please visit the Inland Revenue website using the link below

http://www.hmrc.gov.uk/startingup/