Sole Trader or Ltd? Affecting Benefits?

[HardlineMedia]

Hello, bear with me on this one as I may not explain myself in the best way and my situation may sound like a bit of a tricky one.

Basically, I have been unemployed for 3 months and claiming JSA, Housing Benefit and Council Tax Benefit, having previously been working in finance. I am currently doing work experience in a design studio 2 days a week which doesn't affect the benefits I receive.

I have been saving for while and have some savings already and will have the money to launch my business within the next 4 weeks. The money will be used for the startup costs that I have worked out.

Saying that, as soon as I register as self employed as a sole trader, all profit is considered yours right? In terms of benefits, what about if I were to be making no profit initially for say the first 2 or 3 months? How would this affect my benefits? What could I claim to help me live in the meantime?

If I were to set up as a Ltd would this be better? If the company was not making a profit so therefore I didn't pay myself would I be entitled to benefits during the period that the business cannot afford to pay me?

Would income be evaluated regularly?

I'm very confused at the minute and am slightly worried about being left penniless and in rent arrears until the business begins to make a profit, if/when. Will help still be available during this time or should I just suck it up and try to save so that I can cover living costs for a few months in advance while the business gets off the ground, so delaying the start?

 

[Scalloway]

You may be able to get help from the Job Centre

https://www.gov.uk/moving-from-benefits-to-work/starting-your-own-business

 

[Karimbo]

watched a documentary on this yesterday. job centre has targets to meet to push people off jsa. they are encouraging people to get off benefits and become self employed even if someone has no business acumen what so ever.

There was a guy who was interested in photography and jobcentre built a business plan for him, applicant said he is bad with money and he has no business skills. job centre approved his business plan and he's made something like £260 in 8 months.

Obviously were all business savvy and most of us here are in business. but the vast majority of people in the country do not have the nouse to run their own business and much better off employed so there is a structure to their work life that they can fall back on.

job centre is the best person to answer your question on benefit entitlement.

 

[apricot]

I changed my company from sole trader to ltd when I register for vat. The only difference is, i needed to work with an accountant and they deal with vat payments. Everything else is the same. Until you start earning and until you make your own bookkeeping, i don't think you need become a ltd company. However, it might be better speak to accountant, they should be able to help you better.

 

[SwindonSteve]

You might be entitled to working tax credits (?).