Working tax credits self employed

LONDONBOY123

As stated previously, he could drop his price and sell the products in 5 minutes, but would hardly make any profit- and then be just stuck with cash whilst waiting for another product to buy.The business has no cash flow as its a niche market and not like selling bread rolls etc..

The frustrating fact is that the business was said to qualify for WTC by the Job Centre , when now its looking unlikely.I guess its just a ploy to get him off JSA and to promote all these so called "Britain is booming with all these new self employed entrepeneurs" to fudge the unemployment numbers count.When in fact I would guess 90% are not even turning a profit above the annual tax allowance.Hence the countries unemployment rates have gone down but income tax receipts are not going up.A combination of new start up firms , those stuck on zero hour contracts and the 500,000 claimants that have been sanctioned this tax year.

Back to my clients situation- is it safe to say its a waste of time him going ahead with his WTC claim?

Thanks in advance.

LONDONBOY123

Thanks for your reply.The business model is perfectly viable, as has been proven from previous results. The business model ( crudely speaking ) is similar to an Estate Agents ( lots of sitting around waiting to sell a house etc.. ) rather than that of your corner shop selling milk and bread all day, where there is continous cashflow with lots of daily low value transactions.

I will inform my client that it looks unlikely that he will be awarded WTC rather frustratingly , so no doubt he will be thrown back on the dole.Such a damm shame.

Mattygroves2

LONDONBOY123 wrote: »

Thanks for your reply.The business model is perfectly viable, as has been proven from previous results. The business model ( crudely speaking ) is similar to an Estate Agents ( lots of sitting around waiting to sell a house etc.. ) rather than that of your corner shop selling milk and bread all day, where there is continous cashflow with lots of daily low value transactions.

I will inform my client that it looks unlikely that he will be awarded WTC rather frustratingly , so no doubt he will be thrown back on the dole.Such a damm shame.

You have got nothing to lose by him submitting a claim - they can say no but they might say yes as well.

Estate agents work on volume to drive their business - they have lots of houses on their books and price them sensibly to balance profit against the amount of time they are sat on their books.

Your friend needs to do the same and start by generating some income even if it is only a small profit. If he can sell three in a month at a £200 profit each that is better than not selling any and holding out for a £750 profit which may come after three months. There is a cost to stock sitting there not being sold. It is also normal for startups to make loses as they establish their business - once it's established you can afford to wait for a better price on some goods but until then you need to be generating cash and investing it back into the business to expand operations.

What was the projection for sales in the first quarter from the business plan ?

NYM

Your client should have researched the market with regard to pricing his stock.

Has he invested very much in stock, incurred any business expenses or is his only expense to date just being registered as a business user with eBay?

LONDONBOY123

Thanks for the reply. He has invested around £700 IN stock.Its not a case of being able to buy and sell easily as its noteasy to get hold of the stock at the business plans is run on, hence why it takes so much time in sourcing the stock. Its no good him selling a jet ski for a small profit then be unable to get any more stock in.He does well if he manages to source 2 jet skis per month.

His only business expense is phone bills and ebay fees. How does he get his WTC that the Job centre said the business will qualify for?

Thanks

nannytone_2

is it just me or does this not sound like a business?
there is little stock available, and he doesn't sell the stock he hholds in case he can't source any more?
so ge spends 40 hours a week trying to find stock ( over a 2 month period) and yet has only found £750 worth ( £375 a month) and hasn't sold any of it on.
i wouldn't want to invest in him

LONDONBOY123

Yes he has only managed to source £750 of stock as he is very particular what he wants to buy and obviously at the right price. Hence this is the reason why so much time has to be put in.

tomtontom

LONDONBOY123 wrote: »

Yes he has only managed to source £750 of stock as he is very particular what he wants to buy and obviously at the right price. Hence this is the reason why so much time has to be put in.

When you become an accountant, what would you advise a client that came to you with your "friend's" business plan?

nannytone_2

LONDONBOY123 wrote: »

Yes he has only managed to source £750 of stock as he is very particular what he wants to buy and obviously at the right price. Hence this is the reason why so much time has to be put in.

so given that stock i scarce....
how does he EVER plan to make a profit of more than a few pounds a month?
even if he doubled the price ( unacheivable if he is already using eBay as a source of stock) he would still have only £750 a month income ... and thats if he managed to sell everything he buys, in the same month as he bought it!
do you really consider it to be a potentially viable business?

FBaby

Would he be holding on to this business if instead of tax credits, he got a loan from the bank....that he had to repay with interest?