Becoming Self Employed But Not Making Money to Live Off.

mrsbutton

Hiya,


I'm looking for a bit of advise about starting up a business.
I'm looking to become self employed as a sole trader, the problem I have is after looking at my business plan I can't see me making enough of a profit to give me self a wage for around the first 6 months. Any profit made would go into paying back the loan I would need to take out for stock and to pay for new stock. I sadly would need to build bigger stock levels over time to then make enough to give myself a wage.
My partner is currently on JSA and has been for 6 weeks. He was sadly involved in an accident at work and is no longer able to work within his previous career. He is looking into training which he would then become the main person who produces our stock bringing prices down. This is something that will take time to learn but would be a very good business for our family. I have contacted a few people regarding what help with money we could get and they all seem to say different things and now I have no idea if I'm coming or going!


What I would like to know is are there any benefits for people who are starting a business if the business is not making enough?
Would we still receive Housing Benefit?
Looking at the Government website they say we would still receive JSA if I work 16hrs or less. Or if I work over 30hrs I would get Working Tax Credits but would this still include Housing Benefit?


I would be really sad if there was no help, I can make it work but it will take time to build and I just need a little help along the way.


Any advise would be very helpful!


Thanks


Naomi

paulineb_2

Yes, you can get housing benefit if you are a small business or sole trader and dont have much income.

Im self employed and I get some housing benefit depending on my income.

mrsbutton

paulineb wrote: »

Yes, you can get housing benefit if you are a small business or sole trader and dont have much income.

Im self employed and I get some housing benefit depending on my income.

Thank you very much for that! I imagine they would just need to see your figures quite regularly to insure your getting the right amount of benefit?

tinkledom

paulineb wrote: »

Yes, you can get housing benefit if you are a small business or sole trader and dont have much income.

Im self employed and I get some housing benefit depending on my income.

Isn't there a danger of a self employed activity being seen as a 'front' in order to claim the benefit?


On top of that what proof would the council require if say 60% of the takings were cash? It's not difficult to mis-record cash receipts. In fact a local hairdresser friend has a policy of not accepting anything but cash and penalises anyone that wants to use a card for payment by adding another 10% on top.
Strange really that her lifestyle and spending habits far outweigh what she actually records as a profit in the books. Surprise, surprise her hubby works 10 hours a week to get out of the house and claims maximum WTC & CTC based on the fact that for all intents and purposes they are living on the breadline with their 2 kids.


There are ways and means of appearing to be extremely poor to claim HB & CTB when self employed.

fishybusiness

Strange really that her lifestyle and spending habits far outweigh what she actually records as a profit in the books. Surprise, surprise her hubby works 10 hours a week to get out of the house and claims maximum WTC & CTC based on the fact that for all intents and purposes they are living on the breadline with their 2 kids.


There are ways and means of appearing to be extremely poor to claim HB & CTB when self employed.

Maybe seems like that from the outside.

Doesn´t matter where you set the WTC threshold, someone will always be on it, or near it. If people have the brains to work to that, good for them. They won´t have a great lifestyle, or an affluent future, they will just get by.

Don´t see anything wrong with that at all.

cbrown372

tinkledom wrote: »

Isn't there a danger of a self employed activity being seen as a 'front' in order to claim the benefit?


There are ways and means of appearing to be extremely poor to claim HB & CTB when self employed.

And you, Andy, know all the ways and means :beer:

OP ignore the troll

tinkledom

fishybusiness wrote: »

Maybe seems like that from the outside.

Doesn´t matter where you set the WTC threshold, someone will always be on it, or near it. If people have the brains to work to that, good for them. They won´t have a great lifestyle, or an affluent future, they will just get by.

Don´t see anything wrong with that at all.

Thanks. Yes they do seem to have a knack of maximising everything that they claim for. Lifestyle? well considering that they have two holidays in the States every year, one to include the three weeks covering Christmas and the New Year, as well a 4/5 others in Mexico, Spain, Turkey etc as well as running a 09 plate Range Rover and a 62 plate BMW X5 and having clothing that is clearly expensive, they must be on the breadline. Oh I forgot, he owns a flat that he rents out that no one knows about, she owns the property that she trades from and a flat above that is rented out, not forgetting the detached 4 bed property that they both own that is also let out.
Oh yes, the 6 bed detached property that they currently live in. And they earn between them just enough that gives them max WTC's!!

lovetowinacar

tinkledom wrote: »

Thanks. Yes they do seem to have a knack of maximising everything that they claim for. Lifestyle? well considering that they have two holidays in the States every year, one to include the three weeks covering Christmas and the New Year, as well a 4/5 others in Mexico, Spain, Turkey etc as well as running a 09 plate Range Rover and a 62 plate BMW X5 and having clothing that is clearly expensive, they must be on the breadline. Oh I forgot, he owns a flat that he rents out that no one knows about, she owns the property that she trades from and a flat above that is rented out, not forgetting the detached 4 bed property that they both own that is also let out.
Oh yes, the 6 bed detached property that they currently live in. And they earn between them just enough that gives them max WTC's!!

Report them then or ignore it. Your choice.

supermum38

There is something called the 'new enterprise allowance' that my friends are getting. Simply put, you provide a business plan and you get about £60 a week while you get your business up and running. I believe it lasts for 6 months. I understand you can also get funding towards costs like licencing, training and equipment. I think you need to have been on JSA for a minimum amount of time. Worth looking into?

BigAunty

mrsbutton wrote: »

What I would like to know is are there any benefits for people who are starting a business if the business is not making enough?
Would we still receive Housing Benefit?
Looking at the Government website they say we would still receive JSA if I work 16hrs or less. Or if I work over 30hrs I would get Working Tax Credits but would this still include Housing Benefit?

Housing benefit is paid according to income and it doesn't matter if it is regular or self employment.

You can model some of the scenarios that you are considering in the Turn2us online calculator.

If you go down the WTC route, make sure you read up on the HMRC website about what is classed as business activity to meet the hours threshold.

Do keep very good records on how you are spending your time, customers, invoices, etc, as the HMRC do target WTC claimants for audits and have forced them to repay back their benefit.

Do also research what tax deductible expenses are allowed for calculating HB as this can be different from what is permitted by HMRC on your tax return

Do also look into how the self employed will be treated under the Universal Credit system which may be rolled out in a few years (or not at all, according to some sceptics). Because of the long-term benefit dependency of the self employed under WTC, the government are setting the expectation under UC that the SE can make at least the national minimum wage from their businesses. At the moment, a claimant just has to show that they have been 'busy' for x hours per week but it switches over to an emphasis on profit under UC.

If you are under 30, look into the Princes Trust who mentor the self employed. Also, look into producing a proper business plan - there is no requirement for this to get WTC but it will help you understand about marketing, cash flow, risks and issues, etc.

Finally, you might want to stick our resident troll on Ignore as they make every thread on this forum about themselves, regardless of the issue.

dktreesea

tinkledom wrote: »

Thanks. Yes they do seem to have a knack of maximising everything that they claim for. Lifestyle? well considering that they have two holidays in the States every year, one to include the three weeks covering Christmas and the New Year, as well a 4/5 others in Mexico, Spain, Turkey etc as well as running a 09 plate Range Rover and a 62 plate BMW X5 and having clothing that is clearly expensive, they must be on the breadline. Oh I forgot, he owns a flat that he rents out that no one knows about, she owns the property that she trades from and a flat above that is rented out, not forgetting the detached 4 bed property that they both own that is also let out.
Oh yes, the 6 bed detached property that they currently live in. And they earn between them just enough that gives them max WTC's!!

Have faith. UC is coming. When it does, everything will be means tested and subject to the capital limits, including the replacements for tax credits. Since they are self employed, they won't be able to rely on transitional protection to protect their current level of entitlements. The minimum income floor will apply, and if their youngest child is over 13 hey presto, that will work out a 2 * 35 hours per week at the NMW. Do people without children to support get any benefits even now if they both earn close to the FT NMW?