Ask a tax advisor on the topic of Business start-up

Small business alongside education

March 10, 2010 | 15,00 EUR | answered by Matthias Wander

Hello,

I am planning to register a small business alongside my training. It should really be kept on a small scale, focusing on IT and internet services, with a maximum annual revenue of around 3000 - 4000 euros. However, I don't want to commit to a specific amount, I just want to be able to issue invoices when needed. It may only amount to around 1000 euros annually at the moment, but it's difficult to say for sure. Now, onto the actual questions.

1. Due to my dual training, I receive not only a training allowance but also child benefit and BAB (financial support for trainees). If I register a business now, will these benefits be immediately stopped, leading to an automatic suspension of the benefits? Child benefit entitlement is only up to a certain income threshold, as far as I know, and the same may apply to BAB. So, if I register the business now and issue only 2 invoices totaling 500 euros this year, but my benefits are denied, I technically haven't "earned" anything. Or can I report at the end of the year that I earned xxx euros and this will be re-evaluated to determine the actual entitlement?

2. The threshold for small businesses is 17,500 euros, which includes all my income such as training allowance, etc. Salary is essentially calculated at the end of the year since it is already taxed. Does it make sense to have a separate account for my venture with these expected minimal earnings? I assume that all transactions from this "personal" account will need to be disclosed due to the salary. Furthermore, if I sell something on eBay privately for 50 euros through the personal account, would that count as income?

3. Is it possible for a small business to claim pre-incurred costs as expenses? These costs were paid from my personal account, hence the question of whether a separate account makes sense.

4. Are there any specific considerations I need to keep in mind when registering the business?

Thank you and regards.

Matthias Wander

Dear inquirer,

Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your involvement in an initial consultation.

1. The benefits (child benefit, housing allowance) will not be immediately terminated when registering a business. However, the income from your business must be taken into account when determining your eligibility for benefits. If it is found at the end of the year that your income is too high, you will have to repay the benefits. Since this can have significant financial consequences, you should always check beforehand how high the business income can be and keep track of it throughout the year.

2. The €17,500 small business threshold only refers to commercial income. The training allowance is not taken into account, as it is not considered commercial income.

Having a separate account would be a good way to separate business from personal finances. However, at this scale it is not necessary. If you sell items that are in your personal possession, they will not be taxed.

3. Pre-incurred expenses can also be taken into account for small business owners.

4. The business can be registered as a "side business".

I hope this gives you a first overview.

Best regards,

Wander
Tax consultant