Advice on starting a small business

[WorkingMum23]

Hi,
I'm thinking of starting a small business from home since I have a health condition I wouldn't be able to work full time at it so just looking at doing it part time and unlikely to be earning over the threshold for tax or nic. Having said that I like to be prepared so what it the general rule for what should be put aside to cover for tax/nic/student loan repayment? If I start it as a ltd company can I just pay myself via paye and not dividends?

 

[MarkOnline]

Just get it started. You can sort these things out as your money comes in. Just make sure you keep all your receipts.

 

[MBE2017]

As suggested just get going, if things go well, put aside 25% to be safe to begin with.

 

[JEREMY HAWKE]

Very often your start up cost can consume your early profits so I will go with the rest of them just start up if thats what you want to do

 

[Scalloway]

If I start it as a ltd company can I just pay myself via paye and not dividends?

Paying yourself a wage will reduce company profits and does not have to be withdrawn from the company bank account if it does not have funds. If you already are on PAYE you will pay Income Tax on the full salary.

Dividends can only be paid from company profits.

 

[Dominic Flynn]

Similar comments to MarkOnline. Just get going and keep track of your expenses. Could use tools like Excel, Google sheets or good old-fashioned pen and paper to keep track of income and expenses.

Part-time is very possible. I'm currently in start-up mode while working a full-time job and with a new baby. It's very much an evenings and weekends activity, but progress does come with persistence.

Good luck!

 

[MrHarryPotter]

You can maximise your tax efficiencies by paying yourself a salary and dividends, so more of the money your company earns ends up in your pocket.

 

[Anthony Phillips]

As a Ltd company you could pay yourself the minimum if you wanted to (paying dividends is done if/when you make profit and if you want to) which is easily managed using a payroll service like Payroo , which is cheap to free and easy to use.

 

[WorkingMum23]

Thanks everyone. My plan is to put aside 30% of every sale I make would this cover my tax and nic I need to pay? I have a outstanding student loan which hasn't been paid back yet does anyone know what percent I need to put aside just in case? I like to plan ahead as my dad many years ago got into trouble and he had to sell our family home, I also have two children so want to make sure I run everything properly and safeguard my home.

 

[Scalloway]

Student laoan repayment calculations are here.

https://www.gov.uk/repaying-your-student-loan/what-you-pay

 

[MarcusUK21]

Good luck with the business. What type of business will it be?

 

[WorkingMum23]

Good luck with the business. What type of business will it be?

Hi, thank you. I'm starting a small ironing business. I'm not sure whether I should start as a sole trader or ltd. The thing that worries me about sole trader is the payment on account situation I wouldn't want to be caught out by a big bill! Having said that with a ironing business I probably would never earn enough to worry about it but I like to be prepared! I'm worried about getting a accountant, I know I definitely need one as I couldn't do it myself but how would I afford one just starting out? Seemed like such a good idea at the time but I'm getting anxious already!

 

[Scalloway]

If it is a small ironing business I can't see starting a limited company being any benefit.

Because you will pay your first tax bill in January 10 months after the end of your financial year you should have earned most of the profit that a payment on account would be for.

 

[MarcusUK21]

Hi, thank you. I'm starting a small ironing business. I'm not sure whether I should start as a sole trader or ltd. The thing that worries me about sole trader is the payment on account situation I wouldn't want to be caught out by a big bill! Having said that with a ironing business I probably would never earn enough to worry about it but I like to be prepared! I'm worried about getting a accountant, I know I definitely need one as I couldn't do it myself but how would I afford one just starting out? Seemed like such a good idea at the time but I'm getting anxious already!

I understand now. Most accountants will give you free advice to start. But you are right to be thinking ahead. Soletrader seems best option. Some of the more savvy members here can help you I’m sure.

 

[WorkingMum23]

I understand now. Most accountants will give you free advice to start. But you are right to be thinking ahead. Soletrader seems best option. Some of the more savvy members here can help you I’m sure.

Thank you. I hope so!