Just gone Self-employed, got a few questions!

[becky24]

Hi, I have been doing domestic cleaning for nearly 6 years now for a couple of family friends and recently starting advertising and have a lot of interest and now more clients so I have decided to start my own business within the cleaning industry!

However I have a few questions which I am hoping someone can help me with!

1 - If I earn under £5500 a year is it worth applying for a small earnings certificate or to just pay my NI's?

2- Do I need a separate business bank account? Most of my clients pay me cash except one who does via bank transfer.

3- I have registered for self assessment, do I still need an accountant to go over my books at the end of each year?

If there is already a thread with this info on then I would appreciate it if someone could direct me!

Thank you in advance

 

[plymgary]

Hi Becky,

I'm not sure on the other questions but you can get some free business bank accounts. This would make it easier to keep track of any business income, and you never know, one day you might be getting loads in each month.

I never had an accountant as I didn't feel it necessary below the VAT threshold. There's some spreadsheets you can get on EBay in which you can put in the relevant details. If you keep a file on everything (financial statements etc.) then it's not difficult. However, if you're not great with figures and accountant might be the way to go.

 

[becky24]

Hi,

Thanks that sounds great. I have started to write everything down in a cash book - my income and expenditure and kept all receipts etc. Hopefully this will be enough then for now!

Will look into free business accounts

 

[k100danny]

if this is your only source of income then generally you will not need and accountant, you can buy accounts books from highstreet stationary stores or just use a normal lined pad, also get yourself a folder, keep receipts for all of your costs in this in date order, and write down any money you earn. take one away from the other and you have what you've made. register for class 2 NI (or it may be4) its been a while since i was self employed. this is direct debit and was roughly £13 a month. this covers you for your pension ect.

self assesment tax returns are quite easy to do but even if you do get an accountant to do it at the year end, if you've kept very neat records it wont be a big fee and they might be able to give you some advice on saving a few pounds or claiming for things you didnt know you could, saving you at least their fee.

 

[Socio South West]

I would advocate paying at least the minimum National Insurance contribution - especially if you are thinking about starting a family sometime to make sure you get the complete package of benefits available, even if your earnings are below the NI thresholds.

 

[becky24]

Thank you both! Thats great information. Yes I was thinking I may as well pay my NI's (I think its £2.10 a week! so not going to break the bank).

I have bought an accounts book and started recording everything, so I may just enquire at a few accountant companies and see what they suggest.

 

[Jeremiah@RHJ Accountants]

I would recommend that you have a separate business bank account as it will makes things easier to record all the business transactions come self assessment time.

You can find free bank accounts out there or just pop into you local branch for your personal account and i am sure they can help you.

Although i do advise all my clients who do there bookkeeping to do this on a monthly or quarterly basis.

If you are happy to do the self assessment and bookkeeping and have the time to learn this, then you may be ok with out an accountant.

If not you can always at the year end/ self assessment time ask an accountant to prepare the this and as long as the records have been kept in good order i cannot see it being anymore than £250 and that is at the high end of fees that most accountants charge.

Is this your only source of income because if you are in employment then this would need to go on the self assessment too.

 

[becky24]

Hi, thank you thats really helpful!

It is my only income at the moment.

I'm finding doing the books okay so far, so I will see how it goes and maybe enquire at a few accountants about a once a year job instead.

 

[Jeremiah@RHJ Accountants]

Your welcome

I wish you the best in your new venture and as you say you can always at the year end ask an accountant to have a look and see if you have missed anything.

This may help you too

http://www.hmrc.gov.uk/factsheets/expenses-allowances.pdf

 

[find-accountants.com]

If I were you I would also get a tax accountant to provide written advice on all the start up issues - efficient corporate structure, registration, accounting etc... You can easily get an accountant for as low as £150 per year for small start ups.advice). Therefore there is no harm in giving it a go, even if you just want to get corroborating advice from a specialist – its free.

 

[Bedazzled]

I would recommend that you have a separate business bank account as it will makes things easier to record all the business transactions come self assessment time.

You can find free bank accounts out there or just pop into you local branch for your personal account and i am sure they can help you.

Although i do advise all my clients who do there bookkeeping to do this on a monthly or quarterly basis.

If you are happy to do the self assessment and bookkeeping and have the time to learn this, then you may be ok with out an accountant.

If not you can always at the year end/ self assessment time ask an accountant to prepare the this and as long as the records have been kept in good order i cannot see it being anymore than £250 and that is at the high end of fees that most accountants charge.

Is this your only source of income because if you are in employment then this would need to go on the self assessment too.

Hi Jeremiah,
I am in the process of setting up a cleaning company also. I had an initial meeting with an accountant this week. They said they wanted £450 a year to prepare my accounts and tax return. reading your post above, I take it I am being charged well over the odds?? I did think it was strange when she wrote £450 in big numbers on my initial enquiry form!

 

[Bedazzled]

Hi, I have been doing domestic cleaning for nearly 6 years now for a couple of family friends and recently starting advertising and have a lot of interest and now more clients so I have decided to start my own business within the cleaning industry!

However I have a few questions which I am hoping someone can help me with!

1 - If I earn under £5500 a year is it worth applying for a small earnings certificate or to just pay my NI's?

2- Do I need a separate business bank account? Most of my clients pay me cash except one who does via bank transfer.

3- I have registered for self assessment, do I still need an accountant to go over my books at the end of each year?

If there is already a thread with this info on then I would appreciate it if someone could direct me!

Thank you in advance

Hi Becky,
What area are you in? I am in the process of setting up a cleaning business also. I would love to know what advertising methods you used to get a lot of interest?
Thanks.

 

[Talay]

I think the consensus here should be that rather than continue blind and either hope that everything will be ok or feel a need to outsource to an accountant through lack of knowledge, those unfamiliar with any form of accounting, cashflow, P&L etc., should get to grips with that as a matter of some urgency.

The tools you need to plan for the future, for expenditure, for cashflow forecasting, etc., are exactly the skills you need to prepare your own basic accounts and at least understand what is going on.

As an example, I saw accounts prepared by some supposed chartered accountant, who is actually registered and practising, where some positives were listed as negatives in the accounts, totally throwing the figures out of kilter, nevermind to say not balancing, yet the business owner could see nothing wrong !

For the uninitiated, the first concept of accounting is to become familiar with debits and credits and the polarity of numbers. Not a 5 minute job but not 500 hours either.

 

[Bob]

I think the consensus here should be that rather than continue blind and either hope that everything will be ok or feel a need to outsource to an accountant through lack of knowledge, those unfamiliar with any form of accounting, cashflow, P&L etc., should get to grips with that as a matter of some urgency.

The tools you need to plan for the future, for expenditure, for cashflow forecasting, etc., are exactly the skills you need to prepare your own basic accounts and at least understand what is going on.

As an example, I saw accounts prepared by some supposed chartered accountant, who is actually registered and practising, where some positives were listed as negatives in the accounts, totally throwing the figures out of kilter, nevermind to say not balancing, yet the business owner could see nothing wrong !

For the uninitiated, the first concept of accounting is to become familiar with debits and credits and the polarity of numbers. Not a 5 minute job but not 500 hours either.

 

[Bob]

That sounds a very apocryphal story @Talay but I have noticed that you don't appear to have a lot of time for accountants whether qualified or not. I'd love to see those accounts to which you refer as most of us can pretty much balance the accounts these days even if we don't have other skills. @becky24 is talking about whether her income will exceed £5,500 so I suspect a knowledge of cashflow forecasting won't be high on her list of priorities.

 

[Talay]

That sounds a very apocryphal story @Talay but I have noticed that you don't appear to have a lot of time for accountants whether qualified or not. I'd love to see those accounts to which you refer as most of us can pretty much balance the accounts these days even if we don't have other skills. @becky24 is talking about whether her income will exceed £5,500 so I suspect a knowledge of cashflow forecasting won't be high on her list of priorities.

Quite the contrary. I have a lot of time for accountants when they are required, be that in commerce or practice. Indeed, I count myself amongst their number from some years ago.

However, where perhaps our opinions diverge is on the subject that accountants are required to formulate each and every set of numbers as if it were some mystical challenge or quasi hieroglyphics. True, the man on the Clapham omnibus is probably incapable of deciphering his own bank and credit cards statements accurately enough to give you a figure of net worth but those entering into business should perhaps spend a little time to understand where the pluses and minuses go and to be able to differentiate between income and profit.

Indeed, one of my employees undertook a quick college evening course to come to terms with the subject and now they have developed a keen interest which they will pursue further and with my full support.

Ignorance of finances is a national disgrace and each household should be able to balance their budget over the medium term but the educational system of recent years has bypassed this. Hence, before jumping into business, it might be worthwhile to consider the viability from a fiscal angle rather than just focussing on how much they can get from their labour.

 

[Talay]

Hi Becky,
What area are you in? I am in the process of setting up a cleaning business also. I would love to know what advertising methods you used to get a lot of interest?
Thanks.

Don't bother is my advice unless you want to run it as a quasi one man band with a race to the bottom in terms of the hourly rate you can obtain.

All around the country, this is an industry not only in decline due to fiscal pressures on household budgets but also because the huge number of immigrants who have no possibility of obtaining anything other than minimum wage jobs have targeted this as their domain. There are agencies employing only immigrants and employing them illegally on rates as low as £4 an hour (I have actually seen £2.50 an hour) which makes therm capable of offering headline rates to clients of less than £10 an hour, which is impossible if the worker is legitimate, VAT, NI and taxes are paid and the minimum wage is not breached.

Customers do not value the professionalism. They do not value the security of full insurances. They do not care about anything other than the hourly rate, whether you charge by the hour or have an implied rate masked by a per property cleaning cost. This is across council houses to multi million pound mansions.

One of my businesses operated in this area, with over 100 properties but we offloaded it last year when the long term future was bleaker than the near and mid term. Very profitable and for a good price but to someone who came easily into money.

If there is one thing I have learned from the last recession it is that the fear of going into "business" or should I say self employment is vastly diminished. When the only options are unemployment or a minimum wage job, turning your hand to cleaning is a very easy option with low barriers to entry and virtually no skills required.

If you still want to go ahead, fine if you are content to limit it to your job and maybe one helper but the days of building a larger scale business from this line of work and doing it legally are mostly gone. Do try however to understand the different charging concepts operated, whether staff are employees or contractors and where profitability comes from. The main 3 models are vastly different by concept and you will come across each when quote for jobs.