Is it illegal to run a mini business without a permit?

[Sam]

i am 14, i think its time i start making my own pocket money, at the moment, i am working with polymer clay and make pendants out of them. so far i sold 4 to my friends, then it cme to me, what if i start up a mini business where i could sell pendants to a bigger audience, i only mean set up a facebook page and possibly a youtube acount. would it be ok if i did this, i mean is it illegal, do i need to pay VAT or something, i live in UK btw. i dont wanna be arrested or anything,so if you say no, then i most likely wont do it. if it is possible to do it without a permit, do i still need to pay VAT or something? polymer clay is my favourite medium so i work really well, is it possible to start a business at such a young age. oh and i usually discuss what my friend want in school and exchange the pendant and money out of school (it is forbidden in our school to handle money and sell) if i can start a mini business, is there a better way of excahngin rather than in school thanks

[TRish]

The legalities depend on your jurisdiction, not only the country, but also the city. I suggest you ask your parents or a teacher if they can help you research the requirements for a small business in your area. You may find that your type of business does not require any type of permit, but if it does, you can learn what you need to do to apply for one. If paperwork is needed, it is likely that your parents will have to sign something because you are a minor.

Because selling is not allowed in school (and I can see why; it can get to be a distraction from learning), I suggest you try a different business model that is somewhat popular in the U.S.: selling at parties. The way it works is that someone hosts a party at their house and invites their own friends. They let them know when they invite them that although there will be refreshments and games, there will also be an opportunity to buy pendants. (This lets them know to bring money, and also keeps them from being irritated when you get up to give your sales pitch.) The host of the party is responsible for inviting people and for having a nice party atmosphere with refreshments. You are responsible for selling your goods.

To encourage people to host parties, print up a coupon for anyone who hosts a party that gives them a discount of 2% per guest who shows up at their party. (For example, if 5 guests, not counting you and the host, show up, you will write in the coupon "10%" for the discount.) They can use this coupon the night of their party to buy themselves your merchandise at that discount. After someone has hosted a party, give them a referral coupon: If they get someone else to host a party, then at that party, they can use the coupon to buy merchandise at the same discount as that host. This gives people an incentive to provide you with opportunities to sell your goods. The actual selling is then up to you.

As you go along, you may develop more products to sell, including some that you may buy in bulk from another supplier instead of making yourself, to sell at a markup. The more interested people are in the goods you offer, the more likely they are to come to a party where they know you will be selling.

Whatever method you choose for marketing your goods, I wish you all the best in your business.

[ibu guru]

At this point, you only have a few odd sales of your homemade crafts. Such occasional sales are not a problem permit-wise at this point - as long as you don't sell them on school property, of course.

There will only be complications once you are selling anything regularly & in quantity. VAT applies to in-country sales, but foreign sales should be exempt from VAT.

If you hire any employees or helpers, or have customers coming to your home, you have problems big-time.

IF it starts looking like you're getting a following and you want to pursue this on a larger scale, then you need proper legal advice. There are country laws, and local ordinances & regulations affecting businesses, plus the tax matters, so you need a good local attorney familiar with all this "business & tax stuff."

It would be wise to have a preliminary discussion with an attorney (solicitor) to talk about your future plans and what you might need to do at what stage of your business development. When do you become subject to VAT? When & how do you register your business as a fictitious name, or LLC, or what? What about protecting your original designs & logo for your company? Who do you hire to do what when?

Perhaps your parents have a friend who's a solicitor and will have a little chat with you & let you know at what point you will need to hire legal professionals to perform particular legal matters for you in the future. If not, an appointment won't cost much at this point for some preliminary discussion since there's no costly legal work required quite yet. But you would get to know a good resource for your future & know when to hire them to do what.

[shawn]

Check your local laws.