Yes, you must include all transactions since the start of the business in the information you provide to HMRC. This may include any pre-start up costs of assets you bring into the business such as a motor car or van, IT equipment, programmes, etc at cost or valuation (at the commencement of the business). You can also claim for a proportion of the costs of the location you are trading from as an expense. If you are based at home the costs of the room where the IT equipment is would be the basis of a claim. You must keep records to justify any costs you charge against your sales, in case HM Revenue & Customs enquire about them.

If you start as a Sole Trader (an unincorporated business) you are taxed (Income Tax) on the profits you earn. You must notify HM Revenue & Customs within three months of starting the business. Information on registering for self employment is available on the HM Revenue & Customs website.

You will then have to complete a “Self Employment” section of your annual Tax Return after the end of the tax year (5th April). Example: If you started in August / September then your first return will be for the period up to the next 5 April. However many self employed businesses chose to end their accounts at the end of a month and 31 March is a popular choice. You will need to prepare a set of accounts to complete the Self Employment Tax Return. It is likely that any Income Tax and National Insurance payable on your first year will be payable in one amount. For the second and subsequent years you will be required to pay the liability in two instalments (based on the previous year’s figures) on 31 January and 31 July with any further amounts owing payable the following 31 January.

Related: The essential guide to setting up a business on eBay