One-month buffer

[onesixty]

Hi Guys,

My business is going ok and i've made about £25k in the first 6 months - all of which i have taken to pay my wages and cover business costs, however i am now on track with my clients to earn a consistent £4 - 8k a month if i carry on working hard.

That's great but doesn't help my immediate problems of not having much money personally.

The income has grown each month but started quite low and i'm still struggling to catch up as a result.

If i wanted get a bit of a buffer of 5k to help with this - are the only options friends and family - obviously investors, etc wouldn't be interested right?

Thanks

 

[bodgitt&scarperLTD]

If you're really making 8K per month, banks will be falling over themselves to give you a personal loan for a measley 5k...

 

[intheTRADE]

Yeah friends or family is your best option.

You wont get an investment if the money's for you personally and even if you did, it would be madness to give away equity in your business for the small amount of 5k

You could go to a bank for a personal loan

 

[onesixty]

ok thanks for the advice.

 

[Socio South West]

There is a world of difference between Taking £25k and Making £25k - It's very easy to appear short of money if you are taking £25k - you could be making nothing.

 

[mattk]

Do you have £5k in your business? If so, you can take a Director's Loan out to give you a buffer and then pay it back when you are able to draw salary/dividends.

 

[olivermason99]

You are already making some good numbers but i would suggest to try more digital marketing to increase sales.

 

[WeddingsInWales]

Beware the taxman, for he will soon cometh! Do not spend all the money you are earning now as if it was 'yours'. Set some aside now for tax.

If you declare a profit on your first trading year (an accountant may help minimise the level of profit by identifying legitimate expenses to put against the income), you will be hit with a double whammy of income tax. This is because you will be assumed to be making at least a similar profit in the following financial year.

Thus on one of my businesses (a property rental in my own name), a period of no profit was followed by a profit of £40k, but by the time the tax bill was due, including forward payment of tax assumed on the current year of account, I had a bit of a shock. I had assumed the tax bill would be X and had set aside that amount, but through also paying tax on the current year 'on account' as it were, the tax I had to pay was about double what I expected.

I should have remembered this as it has happened before on other businesses when they moved into taxable profit.

You will definitely need to set aside some money for the income tax if, as it rather sounds, you are already living off the 'spare' turnover as it comes in.