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

shegirl

I honestly don't understand why you aren't paying yourselves! What is the point in running a business if you get nothing out of it (and no,wtc don't count as you don't work just to receive then).

Why have you been putting and keeping everything in the business account and letting it pile up?

Have you ever worked out your fees and prices properly or do you just put a price on something without considering it properly? As someone else has said,what you are doing doesn't create a viable business and you are not helping yourself.

There are various ways of working your pricing and they ALL take into account how much you pay yourself. You pay yourself through transferring your 'pay' from your business account into your personal account on,say, a monthly basis.

I'm a self employed jewellery designer and silver/goldsmith and pay myself,because that is the whole point.

Work out your overheads and work out your hourly rates etc so you can pay yourself- the whole reason you are in business in the first place.

Make sure your prices include your pay,a portion of overheads,materials costs AND profit per piece of work.

There are various ways to do it and which one you choose depends on what you do,how you run and how successful you want to be.

Some people in my field operate on adding a portion of overheads per piece related directly to that piece,plus a bit for utilities,insurance etc + an hourly rate they would like + materials + 20% profit x 2 = total price (some multiply by 2.5 or 3) and end up with a different proportion of costs to each piece.

Others calculate projected annual overheads + annual pay they would like / profitable making hours = hourly rate. Then hourly rate+ materials + 20% profit x 2 to work out the price for each piece.

Those are retail coatings btw,wholesale is different.

Each way, the materials are accounted for, a percentage of the money received covers a portion of the overheads (the majority of which have already been played out for so can be recouped or added to profits), we all get out hourly pay out of it and the profit added into the costs stays sat in the business account ready to either cover losses,be reinvested back into new equipment or sits happily as profit.

Nobody leaves all the money in the business account,that would be pointless.

shegirl

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?

The thing is Tax Credits are starting to look at the viability of the business and also take the point that someone who is self employed should not be soley living off the tax credits paid to them,they must be earning money and supporting themselves in part. Working Tax Credits are a top-up, not a replacement so you can leave all your money pointlessly in a business account!

poppasmurf_bewdley

Isn't all this discussion futile as the Government will be abolishing claimants rights to do what the OP is doing when Universal Credit is rolled out and it will be assumed anybody self employed is paying themselves 30 x the hourly national minimum wage.

shegirl

poppasmurf_bewdley wrote: »

Isn't all this discussion futile as the Government will be abolishing claimants rights to do what the OP is doing when Universal Credit is rolled out and it will be assumed anybody self employed is paying themselves 30 x the hourly national minimum wage.

Not necessarily futile but you are correct in what you are saying about the future with Universal Credit.

If the OP can think about the business,plan it and run it properly then they may have a chance of it being viable and receiving a bit of help if required. So any replies that help the OP understand the whole thing can be helpful.

Also,them being informed about the future of financial top ups for the self employed may (should!) help them plan better,be prepared for a huge difference or wind up the 'business' and find employment.

So not necessarily futile IF the OP takes note and considers things.

OP you really DO need to account for your hours working and you DO need to pay yourself for the work you do.

When you are moved to Universal Credit you are going to be in a pickle with the way you are running things. You're already in a pickle with not paying yourself but this will be totally different.

You WILL be assumed to be making minimum wage x 30 per week. If you make less you will NOT have extra money on top. If you have more expenses one month you will NOT receive extra money to cover it etc etc.

You will need to plan and run your business as effectively as possible. Although,I'm not sure what,if anything on the working side,you will receive?

Actually,one way this whole thing could be futile is your working hours. Are you and your partner working 30 hours each or 30 hours combined?

What is your business set up? How many aspects are there to your business? You mention painting,your OH doing graphic work, henna tattoos in the summer...do you have any structure to your work or is it an ad hock mishmash? Is there reasonable expectation for payment for every piece of work you do?

Do you have a business plan? If not,you need to do one asap. You also need to start accounting for your hours and keeping note of them because self employed people are now randomly being checked by Tax Credits and being expected to prove their hours of work either through appointment books,invoices/recipts which include the work and hours undertaken or through diaries and logs of your working times with it broken down into what you are doing during those hours.

Here is a link to a bit of info about Universal Credit and Self Employment https://www.moneyadviceservice.org.uk/en/articles/universal-credit-for-the-self-employed

You need to start thinking properly.

shegirl

blondebubbles wrote: »

Tax credits look at the profit declared on the self assessment.

That doesn't mean you can continue for years 'working', claiming tax credits for doing so and never using a penny of the money you've earned. Isn't that effectively like running a 'hobby business' - 'working' for nothing, not giving yourself any money and using all money made to repurchase things and cover current and future costs only,while the government pays you? The exact thing they are trying to crack down on.

It's not how you run a business,it's not viable and it's taking the pee out of the system.

densol_2

shegirl wrote: »

That doesn't mean you can continue for years 'working', claiming tax credits for doing so and never using a penny of the money you've earned. Isn't that effectively like running a 'hobby business' - 'working' for nothing, not giving yourself any money and using all money made to repurchase things and cover current and future costs only,while the government pays you? The exact thing they are trying to crack down on.

It's not how you run a business,it's not viable and it's taking the pee out of the system.

Ok so its ok if the OP spends spends spends their money on fags, drink, bingo, betting etc ? But not ok if they live like paupers and try and save as much as they can to build their business up instead ! Its their money - if its properly claimed they can do what they like with it !

shegirl

densol wrote: »

Ok so its ok if the OP spends spends spends their money on fags, drink, bingo, betting etc ? But not ok if they live like paupers and try and save as much as they can to build their business up instead ! Its their money - if its properly claimed they can do what they like with it !

What does fags,booze and bingo have to do with the price of fish? If a business is not viable it's not viable. If it doesn't pay you it's pointless. That's the whole problem is and it's a problem that is smacking the OP in the face right now and potentially even harder in the future!

Both couples in the 'business' (not sure if separately registered as sole traders or working as a partnership) are working and not getting a penny out of it. Yes,there is 'profit' built up but,not only is it not benefiting them and hasn't for the years they've been working,other than the tax credits they receive,when they are finally called to question and ensure viability of the business it's not going to look viable and sustainable if every single penny,year after year,is continually put straight back in,they don't understand the workings of business (e.g. they thought they couldn't touch any of the money!),they don't consider the hours they put in and don't earn enough to cover hours worked. It's not a start up,the OP has mentioned 'over the years'. When the changes come in,if the OP and their partner haven't made changes,planned and made something potentially viable they're going to be expected to find gainful employment and either forget the business or have it as a side line to full employment.

They'll be taken as earning a full time wage and,as such, will have any top ups reduced accordingly.


How many years do you go on reinvesting every penny or keeping it by for future reinvestment?

Universal Credit takes savings into account. Will saving all profits in the business account will be classed as savings,if they continue to pile it up?

The OP needs to change things before this happens. There are a lot of self employed people panicking about Universal Credit and the potential impact on relatively new businesses, the fluctuating income not being accounted for and the viability thing. Among those who should be worried are those who don't make anything and those who don't and won't make enough for the minimum wage requirements.

Isn't it the time for people to be questioning and checking their own businesses so they don't get sudden shocks?

shegirl

blondebubbles wrote: »

I'm not saying it does but my point was, tax credits won't look at the business bank account but the self assessment.

If the self assessement shows a profit of £10,000 then that's the figure they will use. It doesn't then matter if the money is left in the business bank account or not.

Fair point,but I think what the general gist that was/should originally meant to have made by someone else,is the actual profits covering the working hours,perhaps,and it was misworded and led to a slight tangent of it?!

Or possibly it was more related to the changes with UC and the constant repouring of every single penny back into the business,year after year, calling into question the viability?

Murphybear

Hi OP

Have a look at FSB (Federation of Small Businesses). We joined them when we first became self employed. They have lots of helpful advice and we went to seminars that covered things like tax, VAT etc. also, as has already been suggested, get yourself an accountant.

Best of luck