Author Topic: Self employed (Read 3674 times)

BIG MAC · « **on:** 15 October 2011, 05:17:18 pm »

Rather than do the usual act in haste repent at leisure.....I am going self employed and need to do the following
Business plan
Speak to the Bank
Registration (will not need VAT year 1 at least I dont think so at this point)
Get an accountant
Let tax office know and apply for CIS status
Insurances
Website
Printing
Premises - from home initially but I have an eye on a unit which I can probably get v cheap (owned by family friend)
So I am looking for those on here with their own small businesses
I am setting up on a shoestring and can't afford costly mistakes.
I know quite a bit however never too old to learn so any advice, tips or tricks would be appreciated..

BBROWN1664 · « **Reply #1 on:** 15 October 2011, 06:26:11 pm »

Company registration is straight forward enough as is the website/printing, the thing to keep an eye on is the accounts. Others with much more experience than me will be along shortly though.

Gingernutz · « **Reply #2 on:** 15 October 2011, 06:46:51 pm »

Getting a basic website up and running is a piece of pee these days - so don't pay anyone - have a look here http://buildyourwordpresswebsite.com/
there is normally advice free locally
Accountants are important - don't forget your wife will be working for you too...........

alan09 · « **Reply #3 on:** 15 October 2011, 08:07:47 pm »

good luck trev

Tori · « **Reply #4 on:** 15 October 2011, 08:40:46 pm »

Good luck. All I can say is, if you can avoid being VAT registered for as long as possible, that'd be good! Get a good accountant, they'r worth their weight

Oldgit · « **Reply #5 on:** 16 October 2011, 10:51:16 am »

Hi Trev,
Been running my own Limited Co for about 6 years now and
A) better to be VAT registered and go for a fixed rate option.
B) keep your own accounts but get an accountant to submit your tax returns, you can do your own VAT returns every three months.
C) make sure your Public Liability Insurance is with a reputable company.
D) make your wife a co director and talk to an accountant to discuss whether it is better to have a monthly wage or a yearly dividend from your company for you and your wife.
E) remember that your corp tax and tax liabilities are not paid till the 2nd year--so don't go spending mad.
F) you will find that working for yourself is the only way to make money--so go for it, and enjoy the ride.

All the Best

John.

helen · « **Reply #6 on:** 16 October 2011, 02:59:14 pm »

Are you setting up as sole proprietor, or starting a ltd company? Either is easy to do, but there are tax and liability implications for either option.

I was self-employed bookkeeper for a couple of years, so if you want any help with CIS drop me a pm, as that's probably more complicated than VAT and tax returns put together!!!

oldmotherfoccer · « **Reply #7 on:** 16 October 2011, 07:07:18 pm »

i booked on one of these advice days, they had everyone there and it was a packed day http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1081749667&r.i=1081726461&r.t=CAMPAIGN&type=PIP

locksmith · « **Reply #8 on:** 16 October 2011, 07:58:00 pm »

As Helen said, are you going self employed or ltd company, world of difference.
Whichever, your choice of accountant is the key.

BIG MAC · « **Reply #9 on:** 16 October 2011, 08:02:33 pm »

Aha...pearls of wisdom! Thanks to Mr Git, Ms Helen and Mrs OMF....
Limited year 2 if year 1 works out ok John, Helen...wanna little part time occupation ;-) , OMF I may well give it a spin.
For Info we will be Bathroom Kitchen fitting and Insurance related repairs....Gas Safe and NIC EIC through a couple of subbies (Who are mates) until we can get our own full time.
I know it's tough out there but if we keep our costs tight and reinvest to try to grow the company we wil see how we get on....right now I am 49 and wondering what the F I am getting into!

BBROWN1664 · « **Reply #10 on:** 16 October 2011, 10:05:17 pm »

I may have some work for you soon then Mr Mac. Just got to finish getting (or is that start getting) the new bathroom bit together before booking somone to do teh fitting.

BIG MAC · « **Reply #11 on:** 16 October 2011, 10:55:27 pm »

Come all ye faithful lol ...mates rates

pitternator · « **Reply #12 on:** 17 October 2011, 08:05:49 am »

Mac
CIS is easy ..its keeping to deadlines which is difficult. Just be very aware that CIS has massive financial penalties for not sending returns on time. £100 per item...and the revenue has now made it clear they do mean business.
I have been using CIS since 1996 and its straightforward unless u have lots of itinerant subbies. The issue with CIS is that you the contractor are responsible for everything ! You will stand the cost of any errors, so get a foolproof system in place at the start. If you have employees who u want to try to push to CIS , be very careful as the rules apply not to the person but to the job they R doing for you. A true subbie is just that.
generally my advice would be to avoid too much outlay at the start , the market is very up and down, so keep overheads to a minimum. Nice shiny industrial units dont pay for themselves, they can be a major revenue drain etc. Similarly dont go mad on leasing vans etc...make yer decisions on what you can afford, not what you think you can afford.
You dont need an accountant if you are a sole trader...and tbh I dont think they will save you the cost of their fees . If you go limited then you do need one.

also be aware that most folk employ tradesmen based on personal reccomendations, so massive advertising may not create as much work as you might think. You also need to do what you say on the tin !

Orangegrump · « **Reply #13 on:** 17 October 2011, 02:59:06 pm »

Hi Trevor
A few more points to consider
VAT
Registration limit is a Turnover of £73,000. No need to register if less than this.
Identify your customers. If customers are not VAT registered then VAT will be additional cost for them.
Will you be spending a lot on capital expenditure on tools, equipment? This is where the VAT reclaim may be beneficial.
You will be able to reclaim the VAT on materials expenditure but you will have to charge VAT to the end customer - so it is fiscally neutral to you
Income tax
Individuals/Sole traders/Partners in business all pay income tax on taxable profits for a tax year.
First £7,475 is tax free, the next £35,000 taxed at 20%, then 40% on profits in excess of £42,745.
Class 2 National insurance payable at a rate of £2.50 per week and Class 4 NIC at 9% on profits in excess of £7,225.
Corporation tax
Small Limited companies (profits less than £300,000) pay Corporation tax at 20%.
Income extracted as dividends comes with a tax credit which means that for income less than £42,475 then is no further income tax to pay.
Salary taxed at 20% up to £42,475 with NIC payable at 11% by you and 13.8 % by the company.
Suggestion - Partnership with Mrs BigMac
Partnership with Mrs Bigmac – all income taxed at personal tax rate of 20% with NIC payable at 9% and class 2 at £2.50 a week.
Partnership uses both personal allowance of £7,475 so potential to earn nearly £15,000 tax free. Remainder of income taxed at 29% (IT at 20% NIC at 9%)up to £70,000.
Example
Company profits £70,000 - CT at 20% equals £14,000. Retained income £56,000
2 person Partnership profit £70,000, IT at 20% equals £11,010, NIC equals £5,260. Retained income £53,730.
The Partnership route results in more tax to pay. However the tax saving could soon be absorbed by additional costs of having to trade through a company – company accounts, annual returns, possibly more scrutiny, service company legislation, etc
CIS
As a contractor you will need to;
- Register with HMRC – online or by telephone
- verify the sub contractor - HMRC will then instruct you in what to deduct – 0%, 20% or 30%.
- Pay tax to HMRC by 19th of the month
- Provide a statement to the sub contractor of gross payment and tax deducted.

Good luck with whatever you choose.
Moore

goldfazer · « **Reply #14 on:** 17 October 2011, 06:19:29 pm »

Been Ltd for a few yrs now - as an IT bod.

'A) better to be VAT registered and go for a fixed rate option.'

Depends. as already mentioned, if most of your clients are VAT registered, be registered (VAT back off PC's, phone bills, tools etc etc). If not, the client has to pay the extra 20%. Fixed rate depends on the in/out VAT ratio. Do yer sums.

I'm sure I can knock you up a website if you have a vague idea of what you want on it! Get yer hosting/email sorted as well. No charge (except costs!)

seangee · « **Reply #15 on:** 18 October 2011, 07:35:15 pm »

Have to agree with the VAT and fixed rate option. It adds up to quite a lot of extra dosh in your pocket. IIRC I was charging 17.5% in the day and only paying 12 or 13 (there's a 1 percent discount in your first year)/ It also makes you lok more professional and like a bigger concern.

As others have said keeping your own books is easy. Personally I opted to use an accountant cos I was paranoid about missing deadlines.

pitternator · « **Reply #16 on:** 20 October 2011, 05:54:08 pm »

CIS DEADLINE

the £100 penalty is for not filing a monthly return in time...its nowt to do with paying the tax! ... they will charge interest on late tax payments...
You must must file the return on time....

BIG MAC · « **Reply #17 on:** 22 October 2011, 01:07:56 pm »

Love you guys some good stuff there and GF you are likely to hear from me...(Sorry!)
I am not going to put too much in here detail wise because by not doing so I am already getting some guidance that I may not have got by being smart arsed (or appearing so)
I have been out of commission for a couple of days so just getting back to look at stuff now...
THANK YOU

Ben Diesel · « **Reply #18 on:** 23 October 2011, 06:47:36 pm »

My view on VAT for what it's worth. The turnover of my company was less than the VAT registration limit in year one of trading but I registered it for VAT nonetheless, on the advice of my accountant.

In the early months I claimed back VAT paid on my capital purchases (computer, printers etc etc); then once they were out of the way I switched to the flat rate scheme for VAT. In basic terms, I bill customers for fees plus VAT at 20% and pay HMRC 14%. The remaining 6% is mine to keep. There's a 1% discount in year one so I only paid them 13% and kept 7%.

The amount of VAT you pay on the flat rate scheme depends on the type of business you're undertaking. Mine is under 'business consultancy'. I have virtually nil capital purchases - no stock or goods, just my time and service - so it works for me.

My accountant did all the setting up of the company for £85 plus the agency fee. His bill for year one was £635 including running my payroll and a full set of accounts and submissions to Companies House. I reckon he saved me about twelve times that amount in the reduction of my tax bill.

Orangegrump · « **Reply #19 on:** 24 October 2011, 09:15:07 am »

VAT Flat rate scheme.

A common VAT error is that businesses apply the flat rate scheme to net turnover when it should be applied to gross turnover. For example if turnover is £100 plus VAT the flat rate percentage should be applied to £120. In Ben's example if net turnover before VAT is £100 " the percentage to keep" is £20 less 14% of £120. This equates to £20 less £16.80 which is 3.2%.

It is still worth having but it is not a margin of 6%.

If a business does not need to register for VAT; it needs to decide if the potential to recoup VAT (either standard rated or flat rate scheme) outweighs the possible lost turnover by virtue of being 20% more expensive to the majority of customers who are unable to reclaim VAT.