going self employed help

mmgmum

hi all
just after some advice my partner is thinking of going self employed he is a mechanic and has been offered some garage space right as neither of us have a clue on going self employed i need some help with it all as looking online is confusing me
the hlp i need is as follows
does he need a seperate bank account?
can we do the book keeping?
how do we do the book keeping?
can he minus any new tools he buys from his earning?

i know he has to register with hmrc and has to pay income tax and nat insurance is this paid weekley, monthly or yearly??

what about his rent does this count as an expense? i presume so

and will public liabillity be an expense??

do we need an accountant??

i pretty good with maths so could do it myself

thanks in advance to anyone who can help

cabbage

Hi

have a look at businesslink to start off. There's loads of info and they usually have help available locally. Some local authorities have business start up people available or could put you in touch with someone.

Depending on his age, the Princes Trust might be able to help with a mentor.

Savvy_Sue

mmgmum wrote: »

does he need a seperate bank account?

YES! if you look at the t&c for your personal account you'll almost certainly see that it's against those to use it for a biz. It will be much easier to have it separate, in the business name - which might be just your partner's name.

mmgmum wrote: »

can we do the book keeping?

Yes, if you're prepared to be organised and methodical - and even if you pay someone else to do it, they'll have a much easier job if you're organised and methodical, so you might as well just be organised and methodical! Receipts for everything you buy for the biz, details of any mileage, records of all payments made to the biz etc.

mmgmum wrote: »

how do we do the book keeping?

see above, and below ... you can just use an Excel spreadsheet, but it might be worth seeing what your accountant (if you use one) recommends.

If using Excel, at the most basic level you'll need columns for in and out. But you'll probably also want columns for parts purchased, supplies purchased, other costs: I don't really know what else.

mmgmum wrote: »

can he minus any new tools he buys from his earning?

Yes, but if they're expensive, they might need to be depreciated, this is the kind of thing where advice from an accountant pays off.

mmgmum wrote: »

i know he has to register with hmrc and has to pay income tax and nat insurance is this paid weekley, monthly or yearly??

NI is usually quarterly DD for the Class 2, but if there's Class 4 to pay (based on profit) then I'm not sure but I think that gets paid with the tax.

mmgmum wrote: »

what about his rent does this count as an expense? i presume so

and will public liabillity be an expense??

Yes, and yes, and all the other expenses of running a business - waste disposal, utilities, cleaning, business rates, getting a solicitor to check the t&c for the garage space he's been offered etc.

mmgmum wrote: »

do we need an accountant??

i pretty good with maths so could do it myself

with respect, the maths is the easy part. If you don't understand what you've been reading online, then you need someone to explain things to you until you DO understand.

Mistral001

Income tax is paid 6 months in arrears for the previous financial year, so he needs to save up enough to pay for it.

When self-employed get used to getting demands for large sums of money all at one time.

NatFeerick

Hi everyone!
I am just about to go straight from being employed by one company to starting my own business as a sole trader (what must I be thinking!?).

I don't expect to make a profit for the first 9 months, but from what I can see on the internet there seems to be no help for newly self-employed people unless you were previously claiming JSA or some other benefit, and WTC seems to be based on the last 12 months income so I would be over the earnings threshold for the last year because I have been fully employed until now, when I am being made redundant.

Hopefully someone will tell me I'm missing something! :eek:

w211

Savvy_Sue wrote: »

YES! if you look at the t&c for your personal account you'll almost certainly see that it's against those to use it for a biz. It will be much easier to have it separate, in the business name - which might be just your partner's name.

I did not know that, since I can't imagine half a million self-employed taxi and minicab, and couriers having business bank accounts!

They get paid gross by the firm/s they do jobs for, and expenses such as fuel, tyres, etc., come out their (current) account, and they also use that account as normal for personal use.

Obviously, I'd expect a business account is needed if you become VAT registered.

NiceGuyEddie_2

w211 wrote: »

I did not know that, since I can't imagine half a million self-employed taxi and minicab, and couriers having business bank accounts!

They get paid gross by the firm/s they do jobs for, and expenses such as fuel, tyres, etc., come out their (current) account, and they also use that account as normal for personal use.

Obviously, I'd expect a business account is needed if you become VAT registered.

Plenty of tax drivers do have business bank accounts. The vast majority of self employed people I've come across have them. I don't understand the big deal with getting one - you're operating a business, set up the correct bank account and make it easier for your own record keeping and also that rather important point of not breaching the T&Cs on the personal account.

This seems to crop up with concerning frequency, and I don't understand why. There is nothing to be feared by having a business bank account, it's really not that difficult to set up and is a help not a hinderence. Why not have one?

I'm not really sure what VAT registration has to do with business accounts, if you're in business full stop then why not have a business account?

Mistral001

As a sole trader having a business account when you perhaps have a business with maybe only a few dozen business payments coming into it evey year seems to be a total waste of effort to me. It might keep business transactions separate. But business bank account statements are not the firms "books" or "accounts"

HMRC do not require it. Your accountant does not require it. Your banks T&C wiill perhaps have a clause in there about it but will only close down your account if you have a lot of business transactions as they know you will just go to some other bank as far as I can tell. Often the self-employed person will be getting fewer tranactions connected with their work than say somone getting paid weekly on a salary.

w211

Ok thanks for replies.

But the only difference I can tell from having a business current account, and a personal current account is in the name, and you have to pay for transactions coming in and out. I don't see how having a business current account will help with record keeping?!

Fair enough I may have more transactions than a normal salaried person (who is often paid monthly), coming in, since I get paid weekly by two companies I sub-contract for, and monthly for the rest. Outgoings will not be any more than any other normal person, since all my expenses (fuel/tyres/servicing, etc) are on a (personal) credit/charge card, which I pay in full by direct debit.

Should I also get a business credit card?
Should my next car be on a business lease, or if were to borrow money from the bank should I get a business loan (but they'll only give it to you if you've got a business current account?!)
Should my mobile phone contract be a business one?
When I collect a passenger at Heathrow Airport, and wait inside the terminal for them to arrive, should I park in one of their "business" car parks? http://www.heathrowairport.com/transport-and-directions/heathrow-parking-options#BusinessParking

I think that where companies offer something to a "business" and have the word "business" in their product, it just gives them an excuse to charge more, than to a personal customer, which isn't exactly moneysaving!

Savvy_Sue

w211 wrote: »

But the only difference I can tell from having a business current account, and a personal current account is in the name, and you have to pay for transactions coming in and out. I don't see how having a business current account will help with record keeping?!

Many banks do offer free business banking initially, and there are some longer terms deals available. And actually the name of the account might just be your name.

But IMO it helps with record keeping because when you're peering at your bank statements and there's a payment for £50 gone in, you'll know it was your birthday cheque from Aunty Vi rather than anything else. OK, in your business it may be obvious anyway, but when I was self-employed I had one account used for biz and one for personal stuff. I'll be honest, it was still a personal account but a) this was a long time ago and b) it was a very small business with not a lot going on. And yes, I knew I ran the risk of the account being closed. If I'd been making a living from it I'd have set up a biz a/c.

w211 wrote: »

Should I also get a business credit card?
Should my next car be on a business lease, or if were to borrow money from the bank should I get a business loan (but they'll only give it to you if you've got a business current account?!)
Should my mobile phone contract be a business one?

If not a business credit card, then personally I'd keep a separate one for biz expenses - it's what I did for work before they gave me a biz credit card. Still drives me nuts when I find things on our personal credit card which I can't identify and it's something DH has bought for work: he has another card I've suggested he keeps for work stuff!

As for the other things, they're the kind of question to put to your accountant. There may be savings to be had. Or huge disadvantages. Depends on your situation.

w211 wrote: »

I think that where companies offer something to a "business" and have the word "business" in their product, it just gives them an excuse to charge more, than to a personal customer, which isn't exactly moneysaving!

Fair point. However, it won't be exactly moneysaving if your bank does twig that you're running a business through your personal account and back charges you. Your decision.

leveller2911

Savvy_Sue wrote: »

YES! if you look at the t&c for your personal account you'll almost certainly see that it's against those to use it for a biz. It will be much easier to have it separate, in the business name - which might be just your partner's name.





I agree with all of your post Sue except the above. I've been self employed for over 25yrs and never had a business account.I've always run it from a personal account.I also have another personal account for my tax/vat money.

The only reason Banks want people to have a business account is so that after the initial "free" banking period they can start adding charging for writing cheques etc.

Both my Banks asked me to open a business account and said they could get into trouble with the FSA if I didn't.I told them I wanted to still use a personal current account and if the insisted on a business account I would move banks. That was 3yrs ago.

I know at least 30 self employed people in my area and only 2 have business accounts. My advice is to open a seperate Current account for the business and transfer the money they put aside for tax/vat into a seperate account.

Re:Class 4 NI as you suggested this is based on the yearly profit ,I think its around 8%.Its always paid with the income tax.