New business

skintsaver_2

Hi everyone I have a few questions to ask if you don't mind

I am going to set up my own business in a few weeks, hopefully by the end of the month, and currently receive help with rent and council tax and also child credit.

When I register as self employed would I need a business bank account?

Do I need to keep my tax credits,child benefit etc, separate from my business income?

What would I need to show the local council and tax credits to continue the help until I earn enough to pay fully myself?

Thanks very much for your help

Happy new year

Savvy_Sue

You might not need a business bank account, but the t&c for your personal a/c probably say it's not to be used for business, so at the very least I'd open a separate a/c for your self employment to keep it all separate. I think it makes life much simpler to have your business money separate.

As for your benefits, I'm sorry to say but it may become a bit of a nightmare with the rent and CT, because that is based on actual income rather than the previous tax year, and the system creaks a bit catching up with itself. Child Benefit won't be affected by your income, don't know how tax credits work I'm afraid. But I'd build up a 'rent fund' if you possibly can to avoid going into arrears when the inevitable overpayments are clawed back.

You will need to speak to your local council about what evidence they'll want to see, or if you look at any paperwork you have about rent and CT benefit I'm sure there will be information about "what you need to tell us" and "what we need to see." Failing that it will be on the local authority website.

skintsaver_2

Thanks for reply,
I've worked out the housing benefit and i think I would only be entitled to 20 a week so it may not be worth claiming it if it would involve a lot of hassle

phill99

When the recession started an my business income went through the floor I tried to claim HB and it was such a difficult process it was simply not worth it. After all the information I had given them, they continued asking for more and more details and more and more information, some of which I didn't have access to so in the end I gave up. I'm sure this a deliberate policy on their part to help minimise the number of claimants.

I also claimed working tax credits for a couple of years. Much simpler. They ask for an estimate for your income for the year and pay you based on that. At the end of the year when you have audited accounts that you can give to them, they just adjust their figures accordingly. If you have earns less than you thought you get some more money but if you have earned more than you estimated you will have to pay some back.

CKhalvashi

skintsaver wrote: »

Thanks for reply,
I've worked out the housing benefit and i think I would only be entitled to 20 a week so it may not be worth claiming it if it would involve a lot of hassle

£20 a week is £1000 a year; look at it like this, and it certainly is worth claiming!

As Sue said, you'd be best ensuring that there are sufficient funds to one side to cover any overpayments (preferably the full £20 a week), and also 30 to 35% of your income for tax and a small 'bonus'.

With regards to tax credits, you will go on last years income, then the first £10,000 above is ignored. Remember to keep HMRC updated with an estimate of what you're earning as necessary; usually every £20 a week extra in regular income, and the difference will be sorted when you get your tax return.

Good luck with the new venture!

CK

skintsaver_2

Another quick question I have is about tax

Would I have a tax bill automatically sent to me or would that happen once I have completed my self assessment

I know ingot to start paying national insurance when I register as self employed as well

Savvy_Sue

skintsaver wrote: »

Another quick question I have is about tax

Would I have a tax bill automatically sent to me or would that happen once I have completed my self assessment

I know ingot to start paying national insurance when I register as self employed as well

You'd work out your own tax when you do your self-assessment.

What do you expect your profit from self employment to be initially? if less than c. £6000 per year (possibly more), then you could ask for a certificate of exemption from paying NI. If you're getting Child Benefit, then there's no real value in paying it at this stage.

skintsaver_2

My first year profit will be under 6000 because of my initial set up costs.

Does child benefit exempt me from paying ni? Sorry if I'm sounding a bit thick

Savvy_Sue

skintsaver wrote: »

My first year profit will be under 6000 because of my initial set up costs.

Does child benefit exempt me from paying ni? Sorry if I'm sounding a bit thick

No, your CB doesn't exempt you from paying it, if your profits were going to be over the limit then you'd have to pay it anyway.

BUT CB gives you Home Responsibilities Protection, ie you get your NI paid towards your pension for any full tax year you're receiving CB. As that's just about all the benefit you get from paying NI when you don't have to, in your case there's no point. Unless you're planning on having another baby?

skintsaver_2

Im sure that the council told me that i need a business account to claim my rent, also i need to take deposits from people to secure bookings so maybe a business account would suit me needs best

Argh i wish i could jsut decide lol

feygan

Are you currently employed at all? If you are in recipt of JSA you can qualify for the steps to work self employment scheme. Otherwise I was informed that even a self employed person can declare zero expected earnings for the year ahead to qualify for both tax credits and housing benefit.

Perhaps a legal loophole but I can't see any moral issues as you could very well earn nothing, just be sure to keep track of how much your getting and be very careful as when you tax return is due you could find they made a large overpayment to recoup.