Need extra money, but self employed on HB, WTC and dont take a wage. Please help!

purdyoaten

merlin68 wrote: »

I dont understand why your not paying yourself out of business it is allowed, anyway you will come unstuck soon because from april you have to earn £153 a week or they'll stop your tax credits. So pay yourself £153 and youll be fine. Which probably wouldnt make any difference to your claim for benefits.

I really do not understand this. The op is self-employed and drawing £153 out of the business would be irrelevant. Surely the relevant figure is the profit that is made , not what one chooses to draw out of the business?

BigAunty

L.Underhill wrote: »

I was wondering, if, hypothetically, I get paid cash in hand for a painting or other art work, would I be able to put the money earned from that, into my PERSONAL bank account, and be able to use the money from that as a top up for bills, and/OR a top up towards rent on a place renting for £550 ( if it was a one bed with a study I could work from, badly need the space!!) .. or would this be classed as me taking a wage.

At the end of the day, it is business income that you are discussing and whose spending must be accounted for. The method that you use to store it and the things that you spend it on are irrelevant, AFAIK. Not placing in a business bank account and spending it on urgent personal expenses doesn't mean you can skip formally accounting for it to the HMRC or local council.

Self employed people are advised to put their income into a business bank account and have clear separation between their personal and business income and spending, hence separate accounts. There is, AFAIK, no actual legislation that compels business people to have business bank accounts, just that it's best for ease of accounting and transparency.

So your proposal won't work as the type of bank account and the things that you elect to spend the business income on won't influence the way you must do your accounts for the HMRC or benefit claims.

Have you considered hiring an art studio or workshop, storage facility or similar for your proposed expansion as that would be a legitimate business expense? In my city, there are a lot of artist cooperatives and it's even possible to have a part share in an art space on a cheap monthly basis.

You say you haven't earned enough to justify drawing a wage - how much business savings or yearly net income would this be to trigger a release from your business nest egg? At what point, will you feel comfortable spending your own income on yourself? How much do you owe in overdue personal bills and how much is in your business bank account?

Have you actually performed a cost/benefit analysis for the business funds you are saving to specify exactly what you need for its expansion. You do have a general idea about the cost of future expenses (liability insurance, etc) but I wonder if you've done any formal analysis to identify what can be used to invest in your growth and what you can release as a wage or a single one off payment rather than a regular wage - AFAIK, you don't have to draw a weekly or monthly sum but can take out the sum you wish when you want?

If you are only allowing yourself £45 per person per week (or is it £90 pppw) while sitting on a nest egg that hasn't been reinvested back into the business, it's not a surprise if your shoes are getting tatty.

Your business sounds like it's on an upward trajectory but that are too scared to draw a personal income from it because of the impact on your benefits. We see this kind of anxiety a lot on this forum - while benefits can be a subsistence sum, it offers a lot of security. Currently, your disposable income from benefits is tiny but for some years, your full accommodation costs - rent and CT, has been paid for. You are worried about crossing the boundary into paying towards your own living expenses because there is usually a steep withdrawal in benefit income and potential exposure to taxation.

lovinituk

L.Underhill wrote: »

It is a legitimate business account from Lloyds TSB, we keep every reciept for our books, and we get checked on a regular basis by HB and twice a year by HMRC in regards to tax and income. So yes. It is legit. Thanks for judging already.

And by successful, I mean that we are putting enough into the business account to be able to buy better equipment for our stall, liability insurance every year, and have more options to put more money into the account. Anything spent from the business account MUST be accounted for in receipts and proof which we provide without fail.

Unless you are a limited company then the business money is your money. You can take as much of it as you like, you just need to account for it as drawings in your bookkeeping if you do. How much do you have saved in the business account? Could that be higher than any of the benefit savings limits?

Are you completing annual self assessments and paying any income tax owed?

lovinituk

purdyoaten wrote: »

I really do not understand this. The op is self-employed and drawing £153 out of the business would be irrelevant. Surely the relevant figure is the profit that is made , not what one chooses to draw out of the business?

This is also my understanding. The gross profit from the business should be being declared as income on a self assessment. I'm not familiar with partnerships (if that's what they are) but I'm guessing that both personal allowances can be used if they are.

merlin68

What i mean by £153 a week is that wtc will decide not to pay if your business isnt viable. They normally give you 12 months, before they stop your wtc. The minimum income they will accept is £153 a week.
My friend had hers stopped because she was only declaring £2000 a year. Annual reviews are coming up soon.

Mojisola

L.Underhill wrote: »

Throughout the summer we work away at festivals, running our own Henna tattoo business, which the money earned from these festivals, goes straight into our business account (Lloyds) and obviously the money in there cannot be touched for personal spending (i.e., food, clothes etc) and can only be used for other business expenses to help us expand. Its been growing very slowly over the last few years but we are beginning to see a nice rise in the money we put into the account each year now.

Paying wages is a business expense!

densol_2

Mojisola wrote: »

Paying wages is a business expense!

Paying someone else a wage as an employee of the business is a legitimate expense. Paying yourself a wage from a self employed or partnership is not an expense. It's a drawing on anticipated net profits.

PlutoinCapricorn

"the money earned from these festivals, goes straight into our business account (Lloyds) and obviously the money in there cannot be touched for personal spending (i.e., food, clothes etc) and can only be used for other business expenses to help us expand."

I am confused by this: you do not operate a limited company (and if you did you could pay yourself a wage) so what does this mean? Self-employed people live off their profits. Do you mean that you prefer to use this money for expansion?

tomtontom

PlutoinCapricorn wrote: »

Self-employed people live off their profits.

Apparently not when they can claim benefits instead

Mojisola

L.Underhill wrote: »

the money earned from these festivals, goes straight into our business account (Lloyds) and obviously the money in there cannot be touched for personal spending (i.e., food, clothes etc) and can only be used for other business expenses to help us expand.

Its been growing very slowly over the last few years but we are beginning to see a nice rise in the money we put into the account each year now.

densol wrote: »

Paying someone else a wage as an employee of the business is a legitimate expense. Paying yourself a wage from a self employed or partnership is not an expense. It's a drawing on anticipated net profits.

And that's how most self-employed pay for their personal living expenses.

We don't live off benefits while leaving all our money to build up in the business account.