The Great 'Working for Yourself' Hunt

AVH

Hi,

It's my first post and a long one, so please be gentle :rolleyes: - but here's what to be aware of when starting a new business - don't fall for the same scam we did.

We recently opened a business and have been inundated with rogue/scam callers (Experian and Thomson have new business databases from which companies can access your details to cold-call you to death) and unfortunately nearly fell foul of one scam.

We kept being harrassed by companies ringing and saying that we our electricity meter wasn't registered (Meter Registration Services - sounds official eh?) and that they could find the best supplier and get us sorted. We soon realised that something wasn't right and the last time we told them not to ring again, we were hung up on.

Another company, Commercial Power, didn't talk about the meter but stated they looked at different energy suppliers and could find the best rate for us. They gave us rates for British Gas and a company called Bizz Energy and the latter came out very favourable, if we tied into a four year contract.

On a subsequent call, they ran through basic terms and conditions (be aware that as a business there's no legal right to a cooling off period) and setup a direct debit from verbal instructions (yes, they can do that too!) to setup the contract.

We then found out (from a call from British Gas) that we'd been given false information regarding the rates quoted for BG, and it would cost hundreds of pounds to cancel and that we would pay hundreds of pounds over the odds for our electricity supply, but as the rates weren't quoted at the time the contract was made, legally there's nothing we could do, even though we weren't given all the information we needed to form a contract. Subsequent actions were very stressful, took a lot of time and energy etc... but in a nutshell, this is how we overcame the ******** (insert bad word at random) at CP.

We contacted Energy Watch who were very sympathetic and gave us a case number, but as they only regulate energy suppliers, not third party companies, there wasn't much they could do. They did suggest speaking to our current supplier and getting them to block the transfer of the account, which was a really useful move.

Contact with Commercial Power was difficult - they'll setup contracts over the phone but anything else you have to write to them about - to complain, to get a copy of the audio recording etc...Every call drew a blank and they fobbed us off - mainly to play for time whilst the contract was being transferred so they could get their commission.

We then blocked the direct debit from the bank - technically not so good a move but we were angry. Some digging on the Internet gave us a forum with someone who had similar experiences and provided details for the Compliance Officer at Bizz Energy and also advised not to contact the Bizzenergy customer services but to speak to the Compliance Officer directly. We rang, and got slightly through explaining our situation, when she stopped us short and stated that Bizzenergy wouldn't take over the contract due to the circumstances.

A few days later, and we were sorted with British Gas, who will lock the account from being transferred without our permission, gave us rates that they quoted when the whole sorry saga kicked off, despite a price hike in the meantime, and have given us a direct line to our account rep who has been absolutely fantastic .

Moral of the story - always check the rates at different energy companies yourself rather than relying on smooth talking third party companies, even if takes a little extra time (that 25th hour in your day when you're setting up in business!) as it will save stress and money in the longer run.

If this forum post helps even just one person, then I'll be pleased - it wasn't a nice experience and hopefully one that no-one else should go through.

If you do need further information, Bizz Energy Compliance Officer details for example, please PM me and I'll give you any info I have.

Emma
x

p.s. Obviously this is our experience of Commercial Power, and whilst I know we're not alone, they may not be like this in all circumstances, so please do your own research not just rely on what we've experienced with them.

Savvy_Sue

nicky_nacky_noo wrote: »

I need advice, my hubby has been Ltd Co for 2 years (Electricial company with 2 employees), it is ticking over ok, he has some good customers, but we have 3 small children and we are up to our eyes in debt, resulting in us living well below the bread line, we are drawing money from personal credit cards to pay into the company to meet the 6 grand a month over heads. Is it work carrying on I think wwe are at breaking point, but he thinks this is normal, which one of us is wrong, will it get better? Help

nicky, not sure if anyone has already suggested this but if you go to the Debt Free Wannabe board and post your personal income and outgoings there, they will make suggestions about ways of reducing your outgoings. However, you have had good advice here about taking a long hard look at the company, perhaps with the help of your accountant. And if you don't have one, you really do seem to need one: this doesn't sound like a good situation!

mgb

I'm with the earlier poster who said join the FSB.

The Federation of Small Businesses now have over 210,000 members, organised into Regions, which are then split into branches. According to their website, "small businesses employ 58% of the private sector workforce, contribute over 50% of the UK GDP and make up 99% of all businesses."

I saved my annual subscription of £100 on the Streamline package alone. I found the legal helpline excellent, and over the years consulted them on staff problems, customer problems, and an issue with a vehicle I bought. This advice is delivered by Abbey Legal, and is FREE! They also have a tieup with the Co-op bank to give free banking, which is quite unusual in business banking, and lots of other benefits.

They also have local events which are an excellent chance to network, and these events are held on topics which are useful for the small business.

Here is their benefits web page.

http://www.fsb.org.uk/data/default.asp?id=0&referrer=%2Ffsbbenefits%2FDefault%2Easp

Good luck to all those thinking of starting their own business - it's hard work but very rewarding for those willing to put in those hours!

Regards
mgb

ps - I don't work for them, but I am a member!

CoatesFranklin

big_ste wrote: »

Top tip indeed pay your partner a wage but it may pay to actually pay them a ammount to incur the barest minimum Ni especially if of child bearing age, as the minimum contribution 20p aweek (i think) you can claim full maternity pay for 9 monthes and keeps pension going on as well!
Also give a contract for 16.5 hrs per week and this will entitle to working tax credits if needed helpfull when setting up

If you pay your spouse/child etc a wage make sure it is at least at the National Minimum Wage rates otherwise the Taxman can catch you out. One way to get round this (if using a limited company) is if your spouse/child is a director rather than an employee in which case you do not need an employment contract and the NMW does not apply.

glamourpug

In short: when you receive payment, automatically put 25% into a savings account designated for your tax bill.

I was self-employed for around 7 yrs, and learnt a painful lesson in the first year: when it was time to pay my tax I didn't have the money, so I had to scrabble around for any money I could, emptying ancient accounts I opened in childhood and even paying some of the amount I owed with my credit cards [I know, I know, but I was desperate]. BUT after that, I always put 25% of my income into a special account [called 'tax'] I set up with my online banking. As soon as the money hit my account, I shoved 25% into the 'tax' account, whiose name reminded me that it wasn't my money but just waiting there - and earning me interest . And now I'm no longer self-employed, and paid my last self-assessment bill last summer, there's a healthy-sized wedge in what used to be my 'tax' account.

Frugaldom

I know this is a little off topic, but I think it may be relevant - being self employed, I was told that all business monies and transactions must be worked through a business account and that it was illegal not to do so. In light of what has been said here, I am wondering if there has been some change in the law or if it's only a Scottish law or, worse, if I have had the wrong information all along and could actually have been earning extra interest off my business turnover? I will research this now that I've been made aware of it, but any help or advice would be extremely helpful. As an example - could I transfer money from my business account into my ISA for safekeeping??

muckypots

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!

savercol

Work for yourself, do me a favour!!! 15 hours a day, 7 days a week, no sick pay, no holiday pay. But I don't regret doing it myself. Mike was right about the HRMC, they are very helpfull. Also, as most ministers know, employ your wife (son, daughter or parent) at £5000 per year if she (or he) is unemployed.
Keep receipts for everything and claim for everything. Petrol, car costs, computers, paper etc. Let your accountant sort it out.

mdavis1982

Savvy_Sue wrote: »

Hi, Martin’s asked me to post this in these circumstances: Sorry, this site is free of advertising and we ask people not to advertise their own services/websites/ebay sales (please see this rule). I have asked Board Guides to move any they see. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].

Matt, you can put your website address in your profile so that people can find you that way.

Sorry about that... I didn't know whether I was allowed to post the web site address or not! :eek: I'll update my profile so that if anyone wants to know the web site address they can view it there!

Thanks for pointing that out... I'll try not to make the same mistake again!

Cheers...

Matt

CoatesFranklin

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!

Quite a few of these posts mention the importance of getting a good accountant - yet more posts illustrate why it is so important. You cannot legitimately claim for the costs of jeans or any other clothes unless they are either a uniform or protective clothing (specific rules exist to define these terms). Similarly there is no automatic right to claim for a double cab pick up 'fully against tax'. I have seen businesses make such claims based on 'pub talk' and when they get investigated (which could be up to 6 years later) they get hit for the tax plus interest plus penalties. Beware!