self employed - tools, stock etc

lilybankrupt

I'd love some advice and the benefit of anyone's experience on my situation. I have spoken to Business Debtline and also an Insolvency Practitioner via CAB. Overall it seems to be the case that 'it depends' - which I'm finding quite hard. Apart from being a control freak :eek: my business is very seasonal, and in the next month or two I need to get sorted ready for Christmas - but with BR in the next few months (99% certain) it's hard to plan ahead.

I am self employed, selling engraved gifts. The business is 2 years old, and in year 2 made a profit (but not enough for an IPA). I'm now in Year 3 and best case scenario is about £10k profit, so still not enough for an IPA.

I've been applying for part time work, but so far no joy - not even minimum wage jobs. My background is banking but obviously my credit score / BR precludes going back into that.

I have an engraving machine which I bought over a year ago for £500 on eBay. Also a computer, probably worth about £500. Other than that no assets, personal or business, to speak of.

Stock wise this varies hugely, in the run up to Christmas it's a few thousand pounds worth, in Jan it's a few hundred if that.

I do appreciate that there is no black and white answer, but any thoughts as to whether the OR will shut down the business (by selling stock / the engraving machine) would be much appreciated.

I'm terrified of this - I would then be unemployed and housing benefit doesn't cover the rent (I work from home and the business 'covers' part of the rent as one room is dedicated to the business), which means I would be homeless. I have already spoken to the council and because I'm not priority (no children, no health issues) I would have to wait at least a year for something, even if I were homeless.

I totally understand that the OR needs to recoup as much money as possible, equally I'm really keen to get back on my feet and pay my own way in the future, which the business will enable me to do in a year or two.

Thanks in advance for any advice :-)

egrescrimp

Quick question, the profit you mention is this considered your wage or is this after you've paid yourself a salary?

HappyMJ

They leave you with the computer in almost all cases. The engraving equipment....what would it achieve at auction. If you paid £500 then it's probably only going to get £50 after fees. The OR probably won't worry about it. So the answer really is "it depends"...

lilybankrupt

it's my wage / salary, there isn't any profit left in the business

egrescrimp wrote: »

Quick question, the profit you mention is this considered your wage or is this after you've paid yourself a salary?

neslein

Hi,

Sorry to hear of your situation. I am self employed too, in april 2014 I declared myself bankrupt. My business isn't seasonal, but I do have a workshop full of machinery. What I took the time to do was have the machines valued by a reseller of machinery in my field, and use these figures in my documents. The value of the machinery was higher than yours, but as they are old and I knew the guy valuing them he was very sympathetic on the values. Having this in my back pocket made me much more comfortable about the situation as because like you I was also very worried about the OR taking machinery tools etc and me being unable to make a living.
When it came to the meeting with the OR he took one look at the figures, asked what they did and how old they were and that was that. He was very professional and I felt through my interview that whist he had due diligence with the bankruptcy, he also didn't want to leave me in a position where I could no longer earn a living and potentially land in the same position.
I hope this helps

neslein

Also, another thing I made sure was that when the time of my bankruptcy happened, I had no outstanding invoices with money owing to me. This was also true of materials as I was able to time it so that I was receiving a deposit for a customers materials the following day. This was mainly to make things simpler during the process

lilybankrupt

This is really helpful, thank you :T

I will keep an eye out on eBay for similar engraving machines to see what they go for, as this might give an idea of current value. I do know that the machine is so old the manufacturers won't accept it for their servicing insurance cover, so honestly I can't imagine it would fetch very much after collection / storage / auction fees have been paid. But reading this forum does seem to throw up the odd situation when OR's have claimed scrap cars only worth £100 :eek:

Your point about invoices etc is a good one. My main sales avenue sends the actual cash 2 or 3 weeks after the sale has been made, and so the only way round this is for me to put my items 'out of stock' for the few weeks leading up to BR, so there is no outstanding money due. Obviously it's then going to be another few weeks before sales funds arrive again - I'll be looking at at least a month with no income. Not insurmountable but I will need to plan carefully, and choose my quietest sales month (August / Sept).

Stock is going to be harder to manage as I have to buy stock upfront in October / November for Christmas, but don't actually get money back until December / January. I can't see the OR letting me keep hold of a few thousand for stock purchase

I'm actually trying to come up with new products that involve very little in the way of materials but more in the way of my time to get round this.

I fear the next few months are going to be a challenge

debtinfo

Hi lily. Just for your info. The reason that low value vehicles seem to get taken is that they are a special case. Different to tools. As well as an asset a vehicle can incur liabilities such as vehicle tax fines etc. The OR therefore has to do something with it and if it does not meet the criteria for exemption and is not worth selling then that can mean scrapping it.

lilybankrupt

Thanks for this info, that makes sense. It's a good example of where something that seems to be a very harsh and / or strange action on the part of the OR has a reason!

debtinfo wrote: »

Hi lily. Just for your info. The reason that low value vehicles seem to get taken is that they are a special case. Different to tools. As well as an asset a vehicle can incur liabilities such as vehicle tax fines etc. The OR therefore has to do something with it and if it does not meet the criteria for exemption and is not worth selling then that can mean scrapping it.

poggles

lilybankrupt wrote: »

I'd love some advice and the benefit of anyone's experience on my situation. I have spoken to Business Debtline and also an Insolvency Practitioner via CAB. Overall it seems to be the case that 'it depends' - which I'm finding quite hard. Apart from being a control freak :eek: my business is very seasonal, and in the next month or two I need to get sorted ready for Christmas - but with BR in the next few months (99% certain) it's hard to plan ahead.

I am self employed, selling engraved gifts. The business is 2 years old, and in year 2 made a profit (but not enough for an IPA). I'm now in Year 3 and best case scenario is about £10k profit, so still not enough for an IPA.

I've been applying for part time work, but so far no joy - not even minimum wage jobs. My background is banking but obviously my credit score / BR precludes going back into that.

I have an engraving machine which I bought over a year ago for £500 on eBay. Also a computer, probably worth about £500. Other than that no assets, personal or business, to speak of.

Stock wise this varies hugely, in the run up to Christmas it's a few thousand pounds worth, in Jan it's a few hundred if that.

I do appreciate that there is no black and white answer, but any thoughts as to whether the OR will shut down the business (by selling stock / the engraving machine) would be much appreciated.

I'm terrified of this - I would then be unemployed and housing benefit doesn't cover the rent (I work from home and the business 'covers' part of the rent as one room is dedicated to the business), which means I would be homeless. I have already spoken to the council and because I'm not priority (no children, no health issues) I would have to wait at least a year for something, even if I were homeless.

I totally understand that the OR needs to recoup as much money as possible, equally I'm really keen to get back on my feet and pay my own way in the future, which the business will enable me to do in a year or two.

Thanks in advance for any advice :-)

3 years trading and you are still earning less than you would on NMW.

As someone else says, it depends ...

But, if the worst comes to the worst, there are plenty of jobs out there ... and they all pay at least NMW.

lilybankrupt

The common wisdom though is that most businesses don't make a profit for the first few years. I have it in my mind that if it's not making enough after 3 years (just started year 3) then it's time to accept it's only a sideline, if that.

I honestly wish you were right that there are lots of jobs out there. Maybe there are, but with more and more companies credit checking now, even for minimum wage jobs, I'm finding it harder and harder to find things to apply for :-/

It also doesn't help that I haven't worked for someone else for a good few years now, and that when I was employed it was at a senior level with a large bank - for more junior roles I'm both under and overqualified now :-/

poggles wrote: »

3 years trading and you are still earning less than you would on NMW.

As someone else says, it depends ...

But, if the worst comes to the worst, there are plenty of jobs out there ... and they all pay at least NMW.