Are there any self-employed DFW's here?

Mum_of_3_3

Hi!

The problem I've kind of hit upon when trying to do any sort of budget is that I really have no idea what money is coming in when as both my partner & I are self-employed. He's a builder and has been s/e for approx 14 years and I've just gone s/e.

Sometimes we can have a couple of thousand in the bank and sometimes we can be minus a couple of thousand in the bank :eek:

I have figured out that the reason we have got into problems in the past is because I tend to throw a lot at debts when we have money and then of course because we have no money in the bank from paying off the cards we have to put all our shopping etc back onto the cards or have had to eat into the money that we should be putting back to pay off the materials on a job that have been put onto CC :mad:

I have now sat down and decided that everytime he gets a bill in the money we get for materials will go straight to the Credit Cards (hopefully we should pay off some outstanding debt that way as he obviously makes money on materials). The labour part of the invoice is ours to spend. I know we should save some for tax, but that again has never happened in the past and the unexpected £4,500 bill we are in the process of paying HMCR is what finally made me have my lightbulb moment.

How do you all you self-employed DFW's cope with budgeting when like us you have no idea when you'll be paid again??

Sorry if this post is completely rambling, but I've just typed it as it's come into my head iykwim.

Thanks M_o_3

natters_2

Do you have seperate accounts for the business - or do you just try and work it all out at year end?

You say money from the labour is yours to spend - but maybe you need to put some of it aside for unexpected bills or things you need.

If either of you are VAT registered what I used to do was put all of the VAT element of a bill in a seperate account - then every quarter I had enough to pay the VAT, the electric, phone and sometimes part of the business rates.

also if the business on paper does not make much you can get a NI exemption aswell.

Can't really help on the rest of it I used to do the same as you - when we had money it was thrown at the bills when we didn't it went on cards.

Are you eligible for working and child tax credits?

suzialwaysbroke

No solutions, just a sigh of recognition..... :wave: most of our cc debt has been accrued in the past, propping up the business when times are tough. We are in exactly the same situation as yourselves (I think!) as both me & OH run our own business (together!!!) better times are always just around the corner.
It is definately harder not knowing how much you will have in wages from month to month, overtime is non-existent, & it is much harder to claim things such as sick pay, WTC etc, if I am wrong please let me know!
I think in the end you have to be ultra disciplined & put most of the money into the different accounts - invoices, tax & NI, VAT etc, otherwise it is just an unholy mess (sigh):rolleyes: :rolleyes: :rolleyes:

Love Suzi

Mum_of_3_3

Neither of us are VAT registered as my partner only has a turnover of £50k and I'm expecting a turnover of around £10k. We have always turned down major work to keep him under the threshold as our finances are in a mess without owing the VAT man money every quarter as well!

We have a seprate joint account for the vast majority of the bills, but OH has a personal account he uses for his business which the mortgage comes out of as well.

I always try to save for the tax bill, but other stuff crops up in between time ie I had £1,500 saved for the Jan tax bill, but we then didn't get any money for 8 weeks which meant that I had to use that to pay Jan's mortgage etc.

His bottom line is usually about £22k each year and as mine involves nothing much apart from my labour costs I'm expecting a profit of around £9k max.

I phoned the tax credits people & was told that they couldn't give me a figure for this coming year as they don't have the software in place yet :eek: , but using the most recent year he could he put in our figures £22k+£9k and said we should be entitled to £20 per week, but as childcare is going to cost me £35 per week so that I can have a day to go to client's offices etc that actually doesn't help much :rolleyes:

We've never really budgeted and if the car or van needs servicing then we just forgo paying as much of the CCs that month.

My Mum has always nagged me that I should draw up a budget and stick to it and try to save x amount per month, but I find it's like drawing in the sand. I mean we can find ourselves paying £1.5k off of CC's one month and only enough to pay £300 the next. I wish he was employed as at least then I could say ok we have x coming in this month and y going out so we have z left to clear debts etc. He just can't find a building job around our way that will pay him as much for being employed

I have cut down on things like food shopping and I've managed to get it down to £45 a week (I get moaned at all the time though for not having snacks & alcohol in the house :rolleyes: ). I also used the comparison websites and managed to get both my car insurance and his van insurance for the price I was paying for just the car :j . I have checked USwitch and our utility bills are the cheapest around (even after all the price hikes). OH is on the cheapest mobile contract he can be and I'm just about to take mine down from £30/month to £19 (It would cost me a lot more to be PAYG).

OH has stopped going to the pub every Saturady night (even though he only ever spent £2/week tops), but of course this means he's now working 60 hours a week on average and has nothing to look forward to (apart from being DF in a few years of course!).

We never have spent any money on takeaways, holidays, sky tv or any other luxuries like that as we've never been able to afford it.

We have paid £3k off of the tax bill and I aim to pay the other £1,453 by the end of this month, but it's going to leave us really, really short and not able to clear the materials bill off the CC this month which means that our CC bill will rise by about £600 this month.

I have transferred some money from the CC to a 0% one, but it's only £2,500 (about a quarter of what we owe).

Most of the time since my lightbulb moment I have felt quite positive about budgeting-by-the-seat-of-my-pants, but I guess sometimes I feel it's a bit of a losing battle!

OK will stop whinging now :rotfl: .

M_o_3

natters_2

I really feel for you - being s/e isn't as fab as other people seem to think

Being s/e is what got us into so much debt (that and hubby thinking if there were cheques in the cheque book we had money), so I don't envy you one bit -it is so much hard work

Mum_of_3_3

suzialwaysbroke wrote: »

No solutions, just a sigh of recognition..... :wave: most of our cc debt has been accrued in the past, propping up the business when times are tough. We are in exactly the same situation as yourselves (I think!) as both me & OH run our own business (together!!!) better times are always just around the corner.
It is definately harder not knowing how much you will have in wages from month to month, overtime is non-existent, & it is much harder to claim things such as sick pay, WTC etc, if I am wrong please let me know!
I think in the end you have to be ultra disciplined & put most of the money into the different accounts - invoices, tax & NI, VAT etc, otherwise it is just an unholy mess (sigh):rolleyes: :rolleyes: :rolleyes:

Love Suzi

Hi Suzi!

Yeah you do sound like us

The other reason why we're not VAT regisitered is because OH works for individual homeowners 99.9% of the time and his quotes/rates always seem much more favourable than the bigger companies who have to add the 17.5% on top.

I have no idea how people seem to claim so much on WTC we always seem to fall over one threshold or another and therefore only able to claim a pittance if anything! The gasp they give though when I say my partner works at least 60 hours a week always makes me smile :rotfl: .

The thing is we aren't sure on how to up his money though as there really does seem to be a cap on how much people are willing to pay for a builder, especially as there are a lot of Eastern European workers around this way who will work for £6/hour :eek:

Yet again will stop moaning :rotfl: . Thanks for the support :beer:

M_o_3

Mum_of_3_3

Thanks Natters

The most annoying thing he finds about the whole s/e builder thing is when people plead poverty and asking him to cut corners (which he won;t do if it means it's dangerous btw) then they go out and spend £'000s on decorating the rooms he's just built for them!

M_o_3

ShelleyC_2

It is tricky when amount in can vary so much & to keep track of what money is already paid out as it were :rolleyes:

I tend to try and keep a bit of a float in my account to cover lean times. Usually no more than the next months essential outgoings. I also have money in different accounts for tax etc.

Gemmzie

Another self-employed person here, well my dad (he's the one in debt).

I think knowing what your main outgoings are so that you know the minimum you need is really helpful.

If he's been s/e for a few years then you must have some tax returns to look back on and work out rough budgets for things.

Definitely invest in Microsoft Money, it's a godsend for variable income. I'm able to say (for example) we need to save £140 a month for income tax and schedule it in. If we don't have the money for it, then I can not enter it and it'll remind me it's overdue. I couldn't budget without it's forward thinking.

huxley

Hi, its not easy is it! My dh is SE i am on disability benefits so we do know that there is a definite £200 a month coming in, this I use to do all food shopping etc on, there a 4 of us dh me dd (22) ds2(17) and visits from ds1(23) to keep fed. All normal household bills mortgage,etc and insurances are on a spread sheet to show amount needed for year divided by 52 and then I know how much I need to take for a wage each week to cover these, debts are on a seperate sheet dd's housekeeping and if the business can afford to gvie a little extra help to pay these (minimums only at present!) business money is in a completely seperate business account that way it doesnt get swallowed up by everyday living we have also got a small overdraft on business account so that especially at this time of year when work is scarse (gardener!!!!) we stay afloat just! Not easy at all is it, but life is never dull;)

gibbyni

The £4.5k tax bill was that for 1 year? Have you considered your husband going ltd, we have a wedding stationery and baby card business and had it set up as a partnership for 3 years and went ltd last year, accountant was able to get our tax bill for about £30k profit down to about £800 for both of us and should be less next year. Have a word with your accountant about this.