Turn hobby into business?

wish_i_was_a_rich_girl

I'm currently waiting a callback from Business Link but it takes 24hrs and as I've been unable to find anything online I'm hoping I can get some help here.

Firstly I have a hobby that I think may have potential to be a business. I am wanting to start selling my handmade items online, however I am currently in reciept of benefits after being made redundant, 6 months ago.

I am wanting to know how I go about starting up while in my present situation, my concerns are - let's say I am lucky enough to make around £30 a week, obviously this wouldn't be enough to live on or pay my rent. I may not even sell a thing, I haven't a clue how it will go.

I understand if I was to start this business idea up I must declare it to the Inland Revenue but wouldn't they just stop my benefits, hence not having anything to live on. I highly doubt my idea will make me rich but I pray and hope it will become something I can do for a living.

How do I go about making this dream a reality without making myself and family homeless?

paulwf

I'm not sure about unemployment benefits but I'm sure someone else better qualified will advise. I do know though that if it all goes well you can still claim tax credits whilst self employed.

Can you also sell at farmers markets, car boots and get a concession in local craft shops as selling just online is hard?

Good luck with it, it's great to see someone turn something they love into a business...there can't be any better sort of job to have!

Trespasser

Hi, best of luck.

You can claim tax credits, I do this myself. I went SE in April but I wasn't being paid anything since September '08 by DSS as my partner earns too much so I had nothing to lose. I don't know many rules or regs but I would say that you could be entitled to something while you are starting up. I earn myself £400 a month and my partner £650 and we still get £250 p/m tax credits with no kids.

May I wish you the best of luck with business link, they were as useful as the proverbial chocolate 'T' pot when I saw them before christmas. It got to the point where I just woke up one day and decided 'todays the day' and made the jump to SE ....... haven't looked back yet.

If you do start up you have to inform HMRC that you have done so, probably best if you do it straight away then you wont forget and get fined later, you also have to inform DSS who will (eventually) send your p45 to you. If you start as a sole trader (joe bloggs T/A Any company) theres no reason to register your business with companies house, and dont bother registering for VAT at the moment.... you probably wont make that much yet, thats always an option at a later date.

Wishing you all the best in your new venture.

Gothdolly

I'm in the same boat as you, but I have done the SE thing before whilst a lone parent on benefits.

As Trespasser says, you need to register with HMRC but you don't need to register with companies house or for VAT and it's up to you whether you decide to open a business account or just open a 'normal' bank account.

Basically advise your job centre that you are going SE, your IS will stop when you officially go SE but I believe if you have been on benefits for at least 6 months you will get a back to work grant of £250 and a 4 week run on of housing benefit, you may also qualify for new deal at a rate of I think £40 per week for the first 12 months but you need to meet certain criteria which your job centre will advise you on.

Dependent upon how many hours you work will affect your tax credits, check the online calculator for an idea of how much you will get, so far it's been pretty accurate for me. You should get Child Tax Credits & Working Tax Credits.

Housing/Council Tax Benefit for me was a nightmare, they wanted accounts but being newly self employed I didn't have any other than a couple of receipts and a few payments, I had to supply information every 3 months but it really was down to who looked at my application as to what I qualified for. That was the worst part so when I go back to SE I'm going to make sure I will earn enough so that I don't have to apply for housing/council tax benefit as it caused me so much stress it made me ill!

Please don't let that put you off, if it's something you love doing and can make a living from it there's nothing better in my opinion. I know that I could never work in the mainstream ever again, it's suffocates my soul, but I'm lucky that I will be able to go back to SE in the very near future, once I've got everything in place which I'm currently doing in preparation.

I wish you luck and hope all goes well for you.

Horace

New Deal for self employment is changing and I know that they are not taking anyone else on until October (I was told this by my chamber of commerce mentor as it was he who helped me on my New Deal programme).

I chucked the jobcentre in at the end of April:j and am now getting Working Tax Credits. I too am struggling a bit with regard to my Housing/Council Tax Benefits because the form they sent me related more to company directors:rolleyes: I have had to write to them explaining the situation - I am now in receipt of some documentation stating that I am on working tax credits and I now waiting for my Class 2 NI exemption form so that I can show these at my neighbourhood office - there is no way that I shall be sending any originals in the post because they have a habit of losing things:mad:

Set up a separate business account too - lots of banks offer free business banking, this is to keep your business money away from your personal money and thus they dont get confused.

BTW the return to work grant from the jobcentre is £100 - I have no idea where the £250 quoted above comes from.

Also try your local chamber of commerce for help - I found mine invaluable plus they do free courses on how to set up your business e.g. legal stuff, business plans etc.

Good luck - SE is just fab.

wish_i_was_a_rich_girl

Thanks everyone for your answers, a lot of info to look into here!

An update with my progress so far, after speaking with business link they said this was a grey area (unfortunately not much light was put on this). However they are sending me out some business start-up leaflets and they informed me to call Job Centre Plus.

I called the JCP, I was informed that anything I am doing that consists of researching my business, basically anything I am doing that is associated with me setting up a business is classed as work, huh? They are in effect paying me to do this so I would not be entitled to income support.
At first I was in shock as I thought how is anyone supposed to live when they are trying to better themselves if there is no help available to pursue it?
However she told me to call the Tax Credits peoples and after spending hours looking for an answer to this question it is becoming very obvious that the HMRC are the people to call for help with this.

This has been so confusing for me but it seems it is possible to go self-employed even with a estimated zero profit in the first year as the tax credits go by the previous year. (also found some suggestions saying it's better to over estimate as you will get back paid at end of Tax Year rather than under estimating and owing it back). - just something to think about if this is a true fact.

Although as mentioned by some of you, I think the biggest issue will be the dreaded Housing benefit and Council Tax as they want proof of business income which as you know is impossible to produce if your just starting out - especially if looking into business is classed as work, it's gonna be some time before business is up and running.

I am still looking into this and will be calling the HMRC tomorrow.


Hope to update soon!

wish_i_was_a_rich_girl

Gothdolly and Horace, your both right on the return to work grants....


Job Grant

Job Grant is a single tax-free payment to encourage someone who has been unemployed to consider and accept work that they might otherwise have been unable to consider because of the costs of going back to work. Job grant is £100 for single people and couples without children and £250 for lone parents and couples with children.
A Job Grant is intended to cover the oneoff costs of returning to work. It may be spent in any way you decide but will normally go towards, for example, new clothes or transport.
To be eligible, you must have been in receipt of benefit for the previous 26 weeks. The job must also meet certain conditions.
To get a Job Grant, you must have been getting one of the following benefits or a combination of any of them, for 26 weeks without a break:

• Income Support
• Jobseeker’s Allowance (JSA)
• Incapacity Benefit
• Employment and Support Allowance (ESA)
• Severe Disablement Allowance.

Some other people getting allowances from Jobcentre Plus, for example, people on the New Deal, may also be able to get a Job Grant. Check with your local Jobcentre Plus office to make sure.
To be eligible for a Job Grant, the job you are taking must:

• be for 16 hours a weeks or more
• be likely to last for at least five weeks
• be a new job, an increase in hours of an existing job (to bring it over 16 hours), or a combination of jobs.

You will also be eligible for a Job Grant if you are becoming self-employed and the work you are taking on meets the above conditions.
You may be able to get a Job Grant if your partner starts work for 24 hours a week or more, and this ends your Income Support or income-based Jobseeker's Allowance.
A Job Grant is paid automatically. However, you should let your local Jobcentre Plus office know when you start a new job or if your hours of work increase.
Return-to-work credit

If you're claiming Incapacity Benefit, Income Support because of incapacity or Employment and Support Allowance and you take a job where you're working for at least 16 hours a week, you may be able to get a return-to-work credit worth £40 a week. You only get this if your earnings are less than £15,000 a year and your job is expected to last at least five weeks. Ask at your local Jobcentre Plus office for more details.




Sorry had to copy and paste as I'm unable to post links due to not having many posts.

Trespasser

wish_i_was_a_rich_girl wrote: »

Thanks everyone for your answers, a lot of info to look into here!

An update with my progress so far, after speaking with business link they said this was a grey area (unfortunately not much light was put on this). However they are sending me out some business start-up leaflets and they informed me to call Job Centre Plus.

I called the JCP, I was informed that anything I am doing that consists of researching my business, basically anything I am doing that is associated with me setting up a business is classed as work, huh? They are in effect paying me to do this so I would not be entitled to income support.
At first I was in shock as I thought how is anyone supposed to live when they are trying to better themselves if there is no help available to pursue it?
However she told me to call the Tax Credits peoples and after spending hours looking for an answer to this question it is becoming very obvious that the HMRC are the people to call for help with this.

This has been so confusing for me but it seems it is possible to go self-employed even with a estimated zero profit in the first year as the tax credits go by the previous year. (also found some suggestions saying it's better to over estimate as you will get back paid at end of Tax Year rather than under estimating and owing it back). - just something to think about if this is a true fact.

Although as mentioned by some of you, I think the biggest issue will be the dreaded Housing benefit and Council Tax as they want proof of business income which as you know is impossible to produce if your just starting out - especially if looking into business is classed as work, it's gonna be some time before business is up and running.

I am still looking into this and will be calling the HMRC tomorrow.


Hope to update soon!

Yes, exactly.

Anything you do to do with researching products or looking for premises, making calls to arrange stuff for your SE venture IS classed as work. BUT ..... but the upside of this is with working tax credits ..... in our case I had to work 30 hours a week. Online research is classed as work, reading literature on new suppliers is classed as work, washing the car can be classed as work (it has to look good for potential clients), going to Staples for folders or filing cabinets is classed as work...... see how its all mounting up ??? I get my hands dirty for about 20 hours a week and spend the rest of the time making phone calls to suppliers for prices and availability of products, online research, cleaning the car, visiting customers to drink coffee. But the best bit !!! I claim 40p a mile for doing it, and claim for my meals out, and pay a percentage of the phone bill and electric as I work from home. My company doesn't make that much yet but it's certainly not paying tax for the next 2 years.

toasterman

wish_i_was_a_rich_girl wrote: »

I called the JCP, I was informed that anything I am doing that consists of researching my business, basically anything I am doing that is associated with me setting up a business is classed as work, huh? They are in effect paying me to do this so I would not be entitled to income support.
At first I was in shock as I thought how is anyone supposed to live when they are trying to better themselves if there is no help available to pursue it?
However she told me to call the Tax Credits peoples and after spending hours looking for an answer to this question it is becoming very obvious that the HMRC are the people to call for help with this.
<snip>
I am still looking into this and will be calling the HMRC tomorrow.

Hope to update soon!

It's a very rigid system I think. I was on ESA for a bit, during which time I came up with a business idea.
I had an assessment and went onto JSA, and then asked excitedly about starting my own business - only to be told that Job Seeker's Allowance is exactly that - allowance to get while seeking a job. Self employment is not included.
Because of that, I'm now working on my business idea, and hiding it. I'm still looking for jobs with other people, but if I could find a job I'd do, I'd be doing it...and not struggling on claiming JSA.

Will be interested to hear what HMRC tell you re the rest.

wish_i_was_a_rich_girl

toasterman wrote: »

It's a very rigid system I think. I was on ESA for a bit, during which time I came up with a business idea.
I had an assessment and went onto JSA, and then asked excitedly about starting my own business - only to be told that Job Seeker's Allowance is exactly that - allowance to get while seeking a job. Self employment is not included.
Because of that, I'm now working on my business idea, and hiding it. I'm still looking for jobs with other people, but if I could find a job I'd do, I'd be doing it...and not struggling on claiming JSA.

Will be interested to hear what HMRC tell you re the rest.

Okay here's the Update and I think most will agree that it's good news.

Right starting with the HMRC, they say you are not self-employed until you are doing one of two things.

First - The day you actually open for business ie; in some cases you need to open a shop to start a business.

Secondly - the day you actually start seeking work for your business ie; anything you do to get business or bring it in etc.

Next I spoke to the Housing + council benefits people, who say there shouldn't be any change in my benefits as the income would be around the same initially, maybe even for a couple of years. They did say obviously if I make a substantial profit or income I would need to notify them right away. Also they would probably request a 6 month projection of costs, incoming and outgoing.

So to clarify, looking into to starting up is not classed as working according to the HMRC and thats all us looking to go self-employed need to worry about but I wouldn't go telling the benefits people you are looking into it as they seem to have a completely different view on this and would completely stop your benefits on this information.

Thank you everyone for taking part, I learned a lot!:T


Best of luck to you all on your self-employment ventures, looks like there could be an upside to this recession

qw3rt7

Alot of the people that work for the job center do seem to be very rude and uninformed. I guess they have to deal with alot of idiots, but treating everyone as a lazy scammer is just not on!
Agree about not telling JCP UNTIL you have started to trade. Regarding the 'we pay JSE to seek a job, research is work' comment, this is clearly rubbish, though quite possably official policy! I mean, sure JSA is for those looking for work, which im sure you are. They dont expect you to do so 24hrs a day though do they! And the research bit is rediculusly unspecific. I mean, if you ask the landlord of your local pub 'hows business' whilst ordering a pint, would you be considered researching the licensed trade?

This is just a rant, i find it so annoying the great lengths the job center will go to to make it bloody difficult for genuine people to claim benefits, that make it imposable to leave once on them. I have never had the misfortune myself, but my partner ended going 9 months unemployed with no benefits what so ever because the system is so complicated and contradictory. She has now started working again, and has been receiving threatening letters stating her benefit will be stopped because she failed to attend a health assessment. She never received a penny in the first place!!
Rant over.