The Great 'Working for Yourself' Hunt

beckah

fc123 wrote: »

Find a local accountant...he will deal with everything. Can be done by yourself but if you have to ask how? best to get prof advice.

I was thinking about that but don't know if it will be worth it because its only gonna be a job i do along side my full time job so i am only doing it for some extra cash.

Just in the middle of creating my own website, thats as far as i've got so far!

the-mad-one

trilbythecat wrote: »

If you are thinking of going into business, especially if you have kids, seriously think about the environment you want them to grow up in. We work all the time. We argue about the business all the time. And there is no money for anything ... days out, new clothes, new toys, sessions on bouncy castles, anything like that. Pretty soon they'll be old enough to sense the shame I feel about our poverty as well. What a great life we chose for ourselves.

.....................................................................................................
My husband and his friend started their own business end 2006, and as a specialised type business cant just get work from anyone as can plumber/tiler/electrician etc.
The first 6 months were hell with hardly any income whatsoever, and I started to panic, but what kept me going was that i knew they were GREAT at what they did and they just needed a lucky break.
They chose a name for the company that now comes up first in web searches due to spelling, and also in yell.com etc, which is how had clients find them.
After 6 months they DID get a job and altho was the only big job in the year, both myself and other guys partner stood by them. They have just finished another big job and have now got 3 more on horizon, due to having fantastic website and photos of jobs/ videos etc. Believe me it does take patience but for parnters, do stand by them!!

As for money saving in these times, i kept note all grocery shopping, cut down all non essential items. Our kids take packed lunches which helps too. I also spoke to the two older children who were very understanding that if we couldnt afford christmas presents they were happy with couple cheap things and to get more when we DID have money! I also joined the national trust last summer, costing just £4 per mth i could take the kids to many different places of interest in our area for free (and they loved excitemnet of going somewhere different). i also shop in tesco so used the vouchers i had for deals instead shopping instore, and we had a week of great fun going to theme parks and other places.
Luckily for holidays we usually go visit family so that wasnt too expensive but we searched the web before and found places that didnt cost money for entry, take picnic instead buying out and just generally watch what you spend on! I used give kids a limit when on holiday and when its spent its spent - they have to learn the value of money after all!

I also started giving the kids pocket money, but for this they have to help with chores etc, which takes some pressure off parents (not always done perfectly but helps anyway!) Also means your not constantly paying out for treats/ magazines etc, my kids know if they want a NON ESSENTIAL item they have to pay it themselves.
We have gotten thro the past year and half and now looks (i hope) as tho business is starting to pick up, but we both know that we still have to cut back until we get some savings together.
Believe me even simple things like being there to talk, both to your partner and kids and understanding that the long hours WILL be worth it in the end, makes all the difference!!

Hope havent babbled too much havent done many posts! still getting used to finding way around the site!

Pennywise

beckah wrote: »

I was thinking about that but don't know if it will be worth it because its only gonna be a job i do along side my full time job so i am only doing it for some extra cash.

In that case, don't go for a limited company. You either need to research it properly, learn about how to complete corporation tax returns and payroll returns, learn about the difference between paying yourself in wages or dividends, and the procedures for doing so, learn how to prepare accounts in the correct format to comply with company law, etc. Alternatively, you pay an accountant to do it for you.

If you are a sole trader, things are a lot simpler and it is possible to do it without spending hours researching and without engaging an accountant, especially for a small part time business.

If your profits are likely to be low, any tax saving from being a limited company will be minimal and probably not worth the time you spend researching how a limited company works or the cost of an accountant.

HappySad

muckypots wrote: »

It’s mostly been covered but here’s my 2 pennorth….

1. As already mentioned, if your clients are VAT registered then get on the VAT flat rate scheme. I charge 17.5% on my invoices and pay 12.5% to the Customs & Excise. It’s as simple as that and you don’t have to muck about tallying up receipts. It’s the easiest money I’ve ever made. Of course if you are mainly working for Joe Public then avoid VAT as it will make you uncompetitive.
2. Put aside your tax and NI money as soon as you earn it. This requires some discipline but don’t think you will magically get it together at the end of the year – you won’t. Make the money work for you by putting it into high interest with a stated withdrawal date or, if it’s a lot of money, maybe put it against your mortgage in an offset scheme.
3. Double cab pick-up trucks can be fully set against tax as commercial vehicles – even if you don’t put so much as a bag of sand in the back. This means that your business will pay for a vehicle that you can use as your family car.
4. Get receipts for everything and put them against the business if you can. If you buy a pair of jeans – they’re work jeans, if you buy a carpet – it’s for your office, you get the idea. Be wary of bogus petrol receipts, though. Although it’s easy to collect loads of them a tax inspector will soon catch you out if you get investigated.
5. There is no reason to ‘take the plunge’ and go solely self-employed. There is nothing to stop you doing both PAYE and self-employed work. Don’t burn your boats!
6. The law of averages determines that the tax inspector investigates everyone eventually and it might be worth getting accountancy insurance to cover the extra accountancy involved. Depending on the complexity of your business and how close to the wind you’re sailing the £150 or so per year might save you thousands. Of course it won’t save you from prosecution if you are found to be pulling a fast one!
7. Be realistic about what you charge and don’t go in too low to start as you will be making a rod for your own back. Remember this is the only money you’ll have coming in and it’s got to cover everything:
Living
Tax & NI
Holidays
Lean periods
Periods of illness (or insurance to cover)
Public liability insurance
Employer’s liability insurance
Replacing tools and capital items
Premises
Upkeep on premises………….etc, etc

Remember……you’re worth it!

thanks muckypots for you straight talking advice. It all makes sense.

nicolarichard

With the end of our first tax year approaching i was wondering if anyone could help with a couple of questions i have.

1. I have recently bought a new laptop for £370. I understand that this cannot be put as a business expense in full but should be treated as an asset. I also use it for personal use - say 50% personal - 50% business. So how would i put this on my accounts?

2. I do the books for the courier business and when i first went to see a tax advisor she told me i could get paid £87 and i wouldn't have to register with anyone for tax or N.I. My partner then spoke to the employers helpline who told him to pay me UNDER £87 (now paid £86.90) - and to fill a form in - a P46 i think - but i am not sure i need to?

Any help would be greatly appreciated - thanks in advance.

Savvy_Sue

It wasn't a P46: that's the form you have to complete when you start a new job if you haven't got a P45. Might be the P35 that you complete at the end of the tax year listing all your employees, but it's a few years since I did PAYE so don't quote me on that.

I would phone the HMRC employer's helpline, presumably you're a new business and there's a special one for new employees, I always found them really helpful.

Actually, before doing that, make sure you have read the end of year pack: if you start at the beginning and work your way through to the end, skipping the bits which clearly don't apply, it usually makes sense!

janeyd2

To anyone thinking about going self-employed I would say think very long and hard about it.
It's not the easy ride a lot of people think, no-one pays for your time off and illness is a thing of the past.
We have less holiday time than anyone else I know .
And you are never "off-duty" if there is a problem you may find yourself discussing it at 3 in the morning.
But on the up-side what you earn is yours (Oh and the governments)
On that point if you are VAT registered never regard the VAT you charge as your money. If you are in credit its a bonus but if you have to pay out then you never had the money in the first place. Don't think of it as part of your income.

Frugaldom

It's almost the end of the 2007/2008 financial year, which means it's almost time to start over and attemp to do better. I don't normally dwell too long on how much is needed to live when thinking of self-employment because income usually needs to be supplemented by part-time employment!

However, I have stopped long enough to wonder about it now. This is more for the benefit of those who are self-employed and working from home to earn their own living, as opposed to building up new companies with a view to providing local employment.

Everything about self employment is much more complicated than anyone ever told me! Regardless of what you do or how you do it, if you are going to rely on that income entirely then you need to know right from the start how much you NEED to turn over just to survive. I've just arrived at a figure of £16,372. If I cut that to the bone and live without savings, pension, holidays, social life or luxuries of any description whatsoever, I could take it down to about £12,500. That is CLEAR PROFIT needed and allows for the increase in National Insurance and income tax for the 2008/9 year. If I was selling products and working on a 33.3% mark up, I would need to sell about £37,500 worth of goods per year just to live! And I haven't even considered the cost of borrowing and working capital.

Before anyone points out such things as working tax credits, I am aware of these. Remember, you are NOT ENTITLED to claim if you are under 25 years of age unless you have a family.

Good luck to everyone who is about to embark on the 2008/9 trading year. I wish you all success.

babyfaceclothing

Hi everyone, I have recently started working for a home call centre company, they have advised me that I am self employed as I will be paying my own NI and tax i only work 21 hours a week so i am earning before deductions £130. I am not really sure how much I should set aside to pay my tax bill? can anyone offer any suggestions:T

Frugaldom

Re tax & self-employment.
Best to get started by opening your business bank account, registering as self-employed and setting up a direct debit or standing order for your regular NI contributions. Check out www.hmrc.gov.uk for all the details, as there are still more changes to be made to the income tax. You are only taxed on your profits, so I'm assuming you will need to deduct allowable expenses from your £130. Also, as self-employed, I am assuming you are permitted to carry out other contracts of a similar nature, so your hours and income could easily increase. As a very basic and general rule of thumb, I would save 20% of everything over £100 per week. I'm no expert, but I THINK this should work safely enough to cover any tax due next year.

EDITED IN: I have just read Martin's weekly email newsletter and there's an article in it that states, "Self-employed/freelance warnings! A third of what you earn isn’t yours... " so I am now totally flummoxed. One third??? Can anyone please explain this, as I must be missing something and certainly do not want to be caught short on tax next year. If I manage to earn £15000 of profits, the above suggests I should set aside £5000 for the tax man. I can't understand this, as I'd have thought that you would deduct your personal (tax free) allowance, which is currently £5,435 (but will apparently change this year again) and then 20% of the remaining £9565 would be the tax. £1,913 is nowhere near £5000. Can someone please explain where I have gone so badly wrong, thank you. I do know that National Insurance is payable on the above but even including that... I'm lost