New SMALL business start up - erm - help!

[YourFriendlyHelp]

Hi
I have been pointed to UKBF as a friendly bunch and knowledgable people – so firstly hello and thanks in advance – as whilst I know what I want to do (at least I think I do!) I know I need some friendly pointers to ensure I don’t cock up too badly.
Brief background: I am in the middle of a career break and will keep this break ongoing as long as possible, so have no intention of working full time, earning as much as possible, or indeed trying to grow a huge business.
My initial business will be based on me providing a technical skilled service. So the only thing I will be selling is “me” and “my time”. My only costs will be “expenses” (such as train fare) and things like books. I do not anticipate capital expenditure as I have enough of what I would need already.
I do not wish to have any assistance in selling, sales, marketing etc (thanks anyway)
I have just been awarded a consulting contract (max 2 weeks work), so now it means I need to finalise the facts of what I need to do in order to stay legal and legitimate.
I’ll outline my simple plans below for comment. Please do remember though, the idea is to keep it small and simple. I do not want to over complicate it for an extra 1% profit, or set it up to grow in the future – these aren’t on the agenda :)
1 – Get business software: I need to manage contacts; write invoices; manage expenses. So basic CRM and basic accounting. Happy with 80/20 rule on simplicity/functionality and I have narrowed it down to Microsoft Office Accounting Express 2008 and Sage Invoicing. Both free of course. Comments on both most welcome
2 – VAT: I do not plan to be VAT registered. I believe you only NEED to be if you turn over a certain amount? Is it £30k+? I do not intend to turn over that much as I am in the middle of a career break, and I do not expect to make any purchases which would benefit me from reclaiming VAT. Silly or wise for simplicity?
3 – Registered Business: I wasn’t intending to, just run it as a sole trader and not bother with any form of registration. All I see is extra complications by registering?
4 – Bank Account: I was intending to simply use my normal current account and credit cards. I am very good with money management; there will be no overdraught or debt, and I can happily keep track of things. With, maybe, 1-2 payments into the account per month (cheque or direct), and the expenses and cost paid via DD to credit card anyway, it doesn’t seem much point setting up a business account?
5 – Tax: Hmmm. Remembering I’m not too worried if I’m not in the MOST tax efficient position, I was just planning on keeping accurate accounts, income – expenses – 40ppm mileage (or whatever it is) and complete it on my PAYE tax return (which I complete every year). I will have no other earnings.
6 – NI: Assume the PAYE tax return will deal with it?
7 – Staff: There won’t be any – but the wife may help out with report writing – can I simply pay her (as my wife) and get her to fill it in her tax return – just thinking about doubling tax-free allowance.
8 – Insurance: Do I need any? I would have contract with all I work for saying “liability maximum is no more than the sum already paid for contract” or some such I need to work on.
9 – Help: Apart from here – is there a formal body I can get help from? Is there a grant scheme which gives me government cash if I do something a certain way :) lol! Got to ask....
Anything else I need to consider?

MANY THANKS ALL!

[Esk247]

1 – Get business software: I need to manage contacts; write invoices; manage expenses. So basic CRM and basic accounting. Happy with 80/20 rule on simplicity/functionality and I have narrowed it down to Microsoft Office Accounting Express 2008 and Sage Invoicing.
MS Office Accounting is what I use..its simple enough and works ok actually. It's free so why not. KashFlow is another alternative to Sage (UKBF Member on here remember)

2 – VAT: I do not plan to be VAT registered. I believe you only NEED to be if you turn over a certain amount? Is it £30k+? I do not intend to turn over that much as I am in the middle of a career break, and I do not expect to make any purchases which would benefit me from reclaiming VAT. Silly or wise for simplicity?
Make sure you tell inland revenue what you're doing and ask them for relevant advice on the requirements of becoming VAT registered etc.

3 – Registered Business: I wasn’t intending to, just run it as a sole trader and not bother with any form of registration. All I see is extra complications by registering?
It is sometimes worth registering. If you can afford to then why not? It's no real problem.

4 – Bank Account: I was intending to simply use my normal current account and credit cards. I am very good with money management; there will be no overdraught or debt, and I can happily keep track of things. With, maybe, 1-2 payments into the account per month (cheque or direct), and the expenses and cost paid via DD to credit card anyway, it doesn’t seem much point setting up a business account?
ARGH! ALWAYS have a seperate business account!!! you will need a seperate business credit card (for emergency use) and you MUST MUST MUST seperate your finances at the very start to prevent a total mess up later. E.g. refunds or complaints or even fraud! you don't want this filtering through to your personal account do you? Get a seperate business banking account perhaps with online banking facilities.

5 – Tax: Hmmm. Remembering I’m not too worried if I’m not in the MOST tax efficient position, I was just planning on keeping accurate accounts, income – expenses – 40ppm mileage (or whatever it is) and complete it on my PAYE tax return (which I complete every year). I will have no other earnings.
Ask Inland Revenue

6 – NI: Assume the PAYE tax return will deal with it?
Ask Inland Revenue

7 – Staff: There won’t be any – but the wife may help out with report writing – can I simply pay her (as my wife) and get her to fill it in her tax return – just thinking about doubling tax-free allowance.
Tricky one! How can you be keeping your accounts in order though if you're paying someone on the side??? that doesn't appear to be what you were saying at the top of your post.

8 – Insurance: Do I need any? I would have contract with all I work for saying “liability maximum is no more than the sum already paid for contract” or some such I need to work on.
If you are having people round at your place or whatever then Public Liability Insurance.

9 – Help: Apart from here – is there a formal body I can get help from? Is there a grant scheme which gives me government cash if I do something a certain way
Business Link/Prince's Trust/Local Business Start-Up Groups?

[CassioAcc]

[quote=YourFriendlyHelp;836702]
1 – Get business software: I need to manage contacts; write invoices; manage expenses. So basic CRM and basic accounting. Happy with 80/20 rule on simplicity/functionality and I have narrowed it down to Microsoft Office Accounting Express 2008 and Sage Invoicing. Both free of course. Comments on both most welcome[quote=YourFriendlyHelp;836702]
I prefer Office Accounting

[quote=YourFriendlyHelp;836702]
2 – VAT: I do not plan to be VAT registered. I believe you only NEED to be if you turn over a certain amount? Is it £30k+? I do not intend to turn over that much as I am in the middle of a career break, and I do not expect to make any purchases which would benefit me from reclaiming VAT. Silly or wise for simplicity?[quote=YourFriendlyHelp;836702]

VAT registration limit is £67K.

[quote=YourFriendlyHelp;836702]
3 – Registered Business: I wasn’t intending to, just run it as a sole trader and not bother with any form of registration. All I see is extra complications by registering? [quote=YourFriendlyHelp;836702]

You do not need to complicate things with a LTD, but you must register as a sole trader with HMRC and register for Class 2 NIC

[quote=YourFriendlyHelp;836702]
4 – Bank Account: I was intending to simply use my normal current account and credit cards. I am very good with money management; there will be no overdraught or debt, and I can happily keep track of things. With, maybe, 1-2 payments into the account per month (cheque or direct), and the expenses and cost paid via DD to credit card anyway, it doesn’t seem much point setting up a business account? [quote=YourFriendlyHelp;836702]

You should keep a business bank account. This will give you clear records on the business transactions and avoid any confusion if HMRC investigate.

[quote=YourFriendlyHelp;836702]
5 – Tax: Hmmm. Remembering I’m not too worried if I’m not in the MOST tax efficient position, I was just planning on keeping accurate accounts, income – expenses – 40ppm mileage (or whatever it is) and complete it on my PAYE tax return (which I complete every year). I will have no other earnings.[quote=YourFriendlyHelp;836702]
You will complete on your self assessment not PAYE.

[quote=YourFriendlyHelp;836702]
6 – NI: Assume the PAYE tax return will deal with it?
[quote=YourFriendlyHelp;836702]

Self Assessment Tax Return - not PAYE

[YourFriendlyHelp]

Thank you for comments so far.

Looks like I need to speak to HMRC and IR (the same?) and get some clarification.

I do not want to make half of the VAT limit - if I get close to half then its time to take the rest of the year off :)

Re bank accounts - note I am very good with managing personal accounts and know I could manage "all in one" "virtually" if you get my drift, I accept the complexities of audit and/or fraud suggest a separate bank account would be better. But do business ones cost money? Or could I just open a normal current one? There will be NO risk of debt, and I can put all purchases on my credit card and "claim back" so to speak.

As for registering a company (with HMRC) is that when you get a company "reg no"?

Re wife, I wasn't trying to pull a fast one - came across wrong! Just if I "made" 20k it would be more tax efficient to split it with her (assuming no other earnings) - and as she would be helping it'd be all fair and above board. Not worth thinking about this yet though.

I will see if local business groups available, but I foresee me being "unquie" as it will be zero products; zero debt; zero advertising; I don't need help with finance, business plan, strategy etc - so not the same as most small companies.....

MY MISTAKE - I meant self assesment not PAYE. Sorry. I do these every year and they pay me :)


Anyway - thanks for this.

One last one - is there an idiots guide book for someone in my position rather than a typical business man who needs to write all his strategies, advertise, get stock etc which seems to be all the books I've looked at so far :(

[Zeno]

If I get your drift correctly, whereby all you are really asking for help with is basic legal & tax compliance then simply outsource the lot to an accountant.

There are some excellent ones on here that will work remotely or however you need.

[YourFriendlyHelp]

Hi Zeno
Valid answer!
But I actually like understanding things and doing things myself (sad as it sounds) - I enjoy the learning and challenge! :) I may live to regret those words but hopefully not.

[Zeno]

Hi Zeno
Valid answer!
But I actually like understanding things and doing things myself (sad as it sounds) - I enjoy the learning and challenge! :) I may live to regret those words but hopefully not.

Any decent accountant will help you to understand everything you need to know.

I would recommend it as a better use of your time & money.

[Matt1959]

Re bank accounts - note I am very good with managing personal accounts and know I could manage "all in one" "virtually" if you get my drift, I accept the complexities of audit and/or fraud suggest a separate bank account would be better. But do business ones cost money? Or could I just open a normal current one? There will be NO risk of debt, and I can put all purchases on my credit card and "claim back" so to speak.







I ran my business for 20 years without a seperate business account and never had a problem. The minute I set one up, my bank charges went through the roof. If you are crediting the account with 2 or 3 businesses transactions a month, setting up a seperate account is overkill imho

[JGOffshore]

If you are going to go down the Limited Company route you register with Companies House (http://www.companieshouse.gov.uk/), not HMRC (who are the combined Inland Revenue and Customs & Excise).

As a limited company you will need a separate bank account so have no other option. As a sole trader it would be much better to use a separate bank account but the final choice is yours.

[CassioAcc]

There are many free business bank accounts on the market.

[YourFriendlyHelp]

Thanks all again.
I'm suffering from being away from decent internet (on 3G whilst sitting next to Lake Garda) - and my first job came out of the blue and was arranged when I have been away - so thrown in it!

Yep - managed to get info on free business banking - I will look at these when at home. As it is free, as long as they let me I'll get one openned. (Abbey / A&L seem to be providers. Shame not nationwide as I have everything else with them)

I do not want to go "limited" - I don't think I need the agro, and without any risk of debts not sure what benefits I would get? (will research this)

Zeno - time I have plenty of ;) - money - well I don't like spending especailly as I may do one job then clear back off travelling so it may not be money well spent. That said, I have no idea on the costs involved beit £10, £100, £500 for someone else to do the work.

PS - I *really* appreciate the answers from all - thank you.

[hlsps]

Hi

I would also suggest Outlook and Office Accounting for your contact/invoicing needs.

At the moment I am a sole trader, offering Virtual Assistant Services, I am different in that I will need to advertise etc to grow, however, already have a handful of Clients so not that desperate that I need to rush this.

I phoned Inland Revenue and advised I was now self employed (as well as being employed part time elsewhere), I also completed a form for exemption of NIC contributions as for this year at least I believe I will be under the threshold (expect to make less than £4000, something profit).

I have low overheads, mostly stationery, so can work from home most of the time though find most people like me to go to them for the bookkeeping, which I am trying to turn back into working from my home again.

I have a separate bank account NOT a business bank account, as my invoices out are all paid by BACS and misc expenses put on my credit card and reclaimed via bacs transfer again.

I will not be registering for VAT as again I will be under the threshold (not for too long though I hope!!)

I have found lots of useful advice via the Business Link website. They offer free courses - you may find the Bookkeeping one of interest but you may get by without it as Accounting Express is fairly easy to understand (you can always pm me if you are stuck).

I also took the questionnaire on Business Link which tells you which legislation affects your business.

Once I have my formal bookkeeping qualifications I will be taking out indemnity and liability insurance, until then I invoice via my Accountant who has the necessary cover.

I have no intention of going Limited for some time, am happy doing what I do as a sole trader, like you I dont want to earn mega bucks, I want to just earn a decent wage doing a job I enjoy and being my own boss.

I wish you luck with your venture and wish I was sat at the side of Lake Garda!!

[Chris Ashdown]

Without insurance and being self employed you will be liable for all claims against you be it neglegence or causing an accident say tripping someone up in a office, chances are low but damages claims big bucks

Whilst you state no wish to grow, as a previous self employed you soon grow a number of customers and if they like your work they want you back, if yo are not available they may well put you on the bottom of the list of people to ring next time, a few of these can soon cut of your income

[YourFriendlyHelp]

hlsps - thanks for your views - much appreciated. Confirms I need to speak to IR

Chris - again cheers. The only possible claim is negligence - (eg. if I touch a computer and it goes bang and I get the blame) - any suggestions for insurers as i'd have thought it would be expensive and quite difficult to get? Its not something I would want to insure!! As for loosing customers, you are dead right - something to consider.

[JGOffshore]

Hi,

There are 5 or six posts on http://link4business.info which can help you.

Can I suggest you start here Starting a Business (http://link4business.info/category/business-management/starting-a-business/)?

You will need to navigate around a few posts but I'm sure you will find some information of interest.

[stuartm]

Just a couple of points - even though you may not exceed the VAT threshold - which from memory is over 60K now - you may wish to be vat registered anyway so you can claim back your vat paid on purchases such as computers, phones etc.
If your customers are also vat registered then they do not care if you charge them vat as they just claim it back too.
Most larger business just expect you to be vat registered.
Speak to an accountant.
As for the accounting software - you might look at fusion accounts - but I'm biased as I work for them.
Good luck!

[YourFriendlyHelp]

JG - great link - got some good info from there as well as links to HMRC

Stuart - Point noted - but not intending to buy anything (have existing "stock" :))

[Monica_ChilliApple]

You ofcourse need to speak to IR ASAP :)

[Zeno]

Please don't rely on anything HMRC says or that you read in their literature. It's like asking a used car saleman advice on buying a car.

Please go and see an accountant. Most will give you an hour or so for free, help you complete any forms that you need and get you off in the right direction.

Honestly, a good accountant should may be able to save you more tax than their fees.

Ask in the accountancy section for a quote and you will be surprised.

[Robert Craven]

A thought...
I run Let's Talk seminars for growing/existing businesses... and they are free to attend (should be 200+ pounds) - practical, results-focused half-day focused events (on profit and sales!). You'll love it!
Google for Directors' Centre and lets-talk!!

Robert Craven
Keynote Speaker and Author