New Business, new CSA bill!

Gungho

My partner came off of disability benefits, retrained and has managed to started a new business in October. He is self employed.

He borrowed a fair amount of money to start it but its not doing so well - yet - however, we have high hopes though that it will provide a living in the future.

We've just had a new bill from the CSA calculating money owed (and backdated) based on a 'standard' income (in comparison to other established businesses in the area) that they think he will be earning. Sadly its a massive over estimation. They want him to pay £80 per week. He didn't even make that in total for the last weeks work. No problem paying towards his children but it needs to be realistic. We're panicking a bit that we apparently now owe thousands based on this assumption.

So they've sent forms and want him to fill out all sorts, what's coming in and what's going out. No problem, except the amount going out is a lot higher than the amount coming in and we're using my money to pay the shortfall.

If he fills in the forms he's worried it's going to look like he's had money to spare when it's been borrowed from me. We've got what's come in but we're a bit hesitant about showing what's going out.

Do they need that bit? I thought they calculated it on income anyway? And its the type of job that you can earn not bad money one week and nothing the next. How do we forecast that based on 3 months (the worst 3 months of the year for this business, it will pick up in summer).

Anyone got any suggestions?

PreludeForTimeFeelers

Gungho wrote: »

My partner came off of disability benefits, retrained and has managed to started a new business in October. He is self employed.

He borrowed a fair amount of money to start it but its not doing so well - yet - however, we have high hopes though that it will provide a living in the future.

We've just had a new bill from the CSA calculating money owed (and backdated) based on a 'standard' income (in comparison to other established businesses in the area) that they think he will be earning. Sadly its a massive over estimation. They want him to pay £80 per week. He didn't even make that in total for the last weeks work. No problem paying towards his children but it needs to be realistic. We're panicking a bit that we apparently now owe thousands based on this assumption.

So they've sent forms and want him to fill out all sorts, what's coming in and what's going out. No problem, except the amount going out is a lot higher than the amount coming in and we're using my money to pay the shortfall.

If he fills in the forms he's worried it's going to look like he's had money to spare when it's been borrowed from me. We've got what's come in but we're a bit hesitant about showing what's going out.

Do they need that bit? I thought they calculated it on income anyway? And its the type of job that you can earn not bad money one week and nothing the next. How do we forecast that based on 3 months (the worst 3 months of the year for this business, it will pick up in summer).

Anyone got any suggestions?

It's always harder to work out an assessment on self-employed income. Once a business is up and running they'll look to tax declarations, but in the early days they'll base an assessment on the current financials. Send them a spreadsheet chart or something similar showing operating costs and income. They'll not ask where start-up cash has came from, as that's irrelevant.
If you're propping up the company's income with your own money then it sounds as though it is currently operating at a loss. As long as your figures back this up then it's possible that the case will be nil-assessed.

Gungho

Thank you for replying. They want the first 3 months bills - but this is going to make the figures even higher as the first month was buying all the items for the business outright and paying upfront for contracts - these will need to be replaced but not in such a hefty lump as already spent. So do I put down that stuff as well?

PreludeForTimeFeelers

Gungho wrote: »

Thank you for replying. They want the first 3 months bills - but this is going to make the figures even higher as the first month was buying all the items for the business outright and paying upfront for contracts - these will need to be replaced but not in such a hefty lump as already spent. So do I put down that stuff as well?

Yes - they're basically asking for profit/loss figures for the business to date: even if those initial start-up costs are high they'll still be considered for your actual profit/loss this year. I'd guess the business has been operating at a loss, topped up financially with income from you. For CSA purposes the money you're putting in shouldn't be classed as income, so it should strictly be income brought in by the business vs costs associated with the business.

To be honest when you look at it all in black and white it might be quite scary!

Gungho

I have already!! And it is!! It doesn't even look viable at the moment. We should really have started it a bit later but a decent, reasonable priced property went up for rent so we went for that, something which in the long term will help. We knew it was risky but sometimes you have to take a chance and he's main reason for doing it is to build on something and have something for his children in the future. Plus, understandbly, he wants them to proud of him. He doesn't want to be on benefits. So scary as it is, we can manage for the moment.

If after a year it's still not going well then thats something we'll look at but although he's operating at a loss at the moment the business is slowly starting to trickle in with repeat business and word of mouth. One day we may be able to afford £80 per week but at the moment thats just not possible.

PreludeForTimeFeelers

Gungho wrote: »

I have already!! And it is!! It doesn't even look viable at the moment. We should really have started it a bit later but a decent, reasonable priced property went up for rent so we went for that, something which in the long term will help. We knew it was risky but sometimes you have to take a chance and he's main reason for doing it is to build on something and have something for his children in the future. Plus, understandbly, he wants them to proud of him. He doesn't want to be on benefits. So scary as it is, we can manage for the moment.

If after a year it's still not going well then thats something we'll look at but although he's operating at a loss at the moment the business is slowly starting to trickle in with repeat business and word of mouth. One day we may be able to afford £80 per week but at the moment thats just not possible.

I think that's fair enough, sometimes you've got to take the chance.

Let me know how you get on, but if you provide them with the profit/loss figures and the date that the time period covers then they should assess you based on that (at least, they did when I worked with a self-employed team).

Gungho

Hi, thanks - I've got one more question (and then I'll stop)

They only need to know whats coming in and out dont they - i don't put things down we've paid for such as furniture, computers etc do I? They are not ongoing costs, they were our startup costs. Is that something else, Capital or something? Do I leave them out?