can you volunteer in your own business?

littlerock

If you have set up a small business, say a shop, with one employee, and are putting all your profits from the business back into the business, so there is no net profit after paying the employee's salary and running expenses, just breaking even or even showing small loss, can you say you are volunteering?

Meanwhile your husband, who is retired, and has no pension or savings, is claiming pension credit and housing benefit for both of you. You are not signing on after all, and have no income, just breaking even after expenses. You are supplying your labour in the business for free ie just volunteering in your own business. This is what someone I know is doing. Is it legal?

da_rule

Is this a limited company or a sole trader?

If it's a sole trader then no, you cannot volunteer as there is no separate legal entity, you are the business. What they are doing is working X number of hours and taking money out of the business (as drawings etc). This may mean that they are working for below the minimum wage when they work out the hours they've worked vs the money they take but this is completely fine when self employed.

If the business is a limited company then it is a separate legal entity. Therefore, if the person concerned is an employee or an office holder they could work unpaid overtime. If the person is a director of the company (an office holder) they are exempt from the minimum wage. If they are an employee they should be paid the minimum wage by the company, but as it's their company they're not likely to complain.

For something to be voluntary for the purposes of a lot of benefits etc it has to be a charity, voluntary body or some statutory bodies.

Leo2020

I'm not 100% sure what your asking but I will try my best.

You don't have to make money, you can even lose money running a business. You don't have to make a profit but of course that is the usual idea. But that person is still running a business it might be unpaid/low paid but they are still running a business.

Volunteering is what I currently do. I help out in a school for one day a week unpaid thats is totally different from running a business, I should know I have been self-employed in the past.

xapprenticex

In short, the answer is no.

You cant run your own business and class it as volunteering (so you cant claim benefits) and you cant be classed as a volunteer doing a job someone would normally be paid to do.

littlerock

it is a limited company offering a service. The person concerned set it up and id a director with 1 other person as director. They employ 3 staff to deliver the service in 3 locations on a part time basis . They pay for salaries supp!iers equipment and premises hire. Also running expenses. One director does the accounts for payment. The other founder director runs it and does not take any money out. Instead they donate their time as a volunteer. So they have no personal income. It has not been set up that long about 3 years and is currently showing a small loss. So founder has no income. Her husband is retired with no income or savings, claiming pension. credit (full,) for both and max housing benefit. He also pays for her car and she does not contribute to the rent.

Bogalot

If you are in receipt of benefits you cannot donate your time in the way you describe. Any work done, however you dress it up, will be allocated a national income and benefits calculated accordingly.

Failure to declare this work would amount to fraud.

annandale

Just because the woman running it isn't taking a salary doesn't make her a volunteer. Some people will choose to pay staff rather than take a salary themselves.

This is your BILs wife, the last thread you posted you were considering reporting them for benefit fraud

Now you want to report her for fraud..You seem determined to report them for something

da_rule

To be honest, it doesn't sound that bad. They're putting paying the staff and their bills ahead of paying themselves. At the moment, the business cannot support paying them all a salary, so as directors, not all of them are taking one. Assuming she is also a shareholder, the value of her shares and any dividends she receives (probably none if there's no profit) should be declared.

Whilst she cannot volunteer, as a director she does not have to take a salary. Or she could be loaning the salary back into the business as a directors loan (this would obviously be classed as income I'd imagine for benefits).

The main question appears to be, if you are a director of a company and do not take a salary because it would appear the business cannot support this then are you allowed to claim certain benefits? And is there a distinction between an unpaid worker/office holder and a volunteer.

In terms of company law etc as long as they are attempting to make a profit and are keeping up with their debts then there doesn't seem to be anything wrong with what they're doing.

da_rule

Also, if they were a sole trader/partnership then the money they are reinvesting would be their income, so would be declareable. However, as it's a limited company, the money they are reinvesting belongs to the company (as a separate legal entity) and does not belong to the directors or shareholders until such point that the company pays it to them.