Starting (restarting) a sole trader company

[sb1989]

Hello everyone,

First I just wanted to introduce myself, I am 32 years old and previously ran my own roofing company, it was sort of successful until Covid hit and I decided to give it up at the time due to personal reasons and financial reasons, however I am very much thinking of getting back into the business once again, I will try to explain my ideas and past as best as possible and hopefully get some useful ideas and suggestions from you guys.

So, I was running a roofing company that served domestic customers and done small roof repairs as well as other jobs, my main skill was in the repointing business as this is what I am quite good as, repointing houses, brick walls or chimneys was what I enjoyed, the problem I found was that I had multiple websites with multiple google businesses and found it difficult to manage them all, also I thought it was logistically not a sensible thing to do.

What I am wondering is this, I am able to do both small roof repairs as well as brickwork repointing, however I would like my main income to come from brickwork repointing, do I have multiple websites like I did before or do I just have one website and concentrate on building just that one business?

As mentioned before I had about 5 different websites offering different services, so 1 for gutter repairs, 1 for brickwork repointing, 1 for chimneys etc although these websites did bring in the work I was wondering if I was stretching myself too thin as a sole trader and that I should just be concentrating on just 1 website and 1 service which was brickwork repointing.

Is starting a new business given our current climate a good idea right now? Vans are extremely hard to come by these days if you are short on cash and what is out there isn't great, though this wouldn't be a main stumbling block to starting a business, just a challenge.

Also what I found was as I am sure many sole traders do is that taxes seemed to make little sense to me, as far as I understand they charge you based on your earnings and then you are required to pay another payment upfront based on next years potential earnings, this really screwed me over, though I must admit my organisation was good with the business however the taxes not so much, one was I was thinking of combatting this was to have 3 bank accounts, 1 personal, 1 business and 1 savings whereby 20% of each payment would go into the savings ready for the tax returns, does this seem like a sensible idea or no?

I would be extremely grateful for any advice or suggestions to what I have mentioned above, and if anyone has any questions I would be happy to answer, I hope I made sense of what I am trying to ask and explain

 

[Deleted member 335660]

Hi, Well the first thing is you only want one website. It takes enough time looking after that and even if you offer other services it can be done on one platform. I suggest you come up with some name like brickwork and roofing company.

Secondly whatever situation you are in (Limited Company, Sole Trade) you have to pay 20% income tax after earning your personal allowance. If your personal allowance is £10,000 then you pay 20% on everything over £10,000.

So it is a good idea to put this share of your income away into a savings account. If you are a sole trader then no need for a business account unless you want to keep them separate.

 

[paulears]

If the services are similar, then it’s one website with two different services, but with the common ‘flavour’. My business has two totally different sides to it, so I have two totally separate websites. I’ve always gone down the route of how I would treat a random business I located via the net. If I wanted an expert at say, tiling, then if I found them offering plumbing services, I’d not worry as I’d think kitchens - plumbing and tiling could easily work together. If I saw them offering tiling and lawn mower repairs, I’d think this a strange pairing which would ring warning bells, but they could be perfectly competent at both. What would a customer think?

I might be in a church recording an opera singer one day, and then fitting a chart plotter on a fishing boat the next. When one income stream died due to covid, the other got me through, and was a restart of something from the 80’s. I see no reason to stop it now the other is picking up as I can at the moment manage both with a bit of juggling. The tricky bit for me is the difference in buying things. One I might make a purchase, and keep the item for years, hiring it out and using it, but the radio side means I have to buy stock, which is treated differently in the accounts. My accountant asked me about a huge (to me) loss in the accounts because I’d not separated the items I was buying. I still have the same amount in the accounts, but as it’s still sitting there as stock, apparently this is different.

on the tax front, tax is essentially very simple. As a sole trader, your real income is the money you bring in, less the costs of doing business. Income vs expenditure. You end up with an amount. Deduct the allowance HMRC give everyone, and you pay tax at 20% and NI on that. Ideally you have funds as a buffer, ready for the end of year.

the payment on account is not always required. HMRC want to make sure they get their money, so early on, they ask for money up front, just in case. If you gave them too much, they give it back. I’ve not had to do any money on account for years now. the accountant does the books, I pay the bill.

 

[ifairhurst]

When you say 'the accountant does the books' , what do you actually mean. Do you just hand him a box of receipts and invoices and let him figure it out?
I was considering talking to an accountant but I log all income and expenses on a spreadsheet which then calculates profit. So I don't know what added value an accountant would provide me with. Or am I missing something?

 

[Scalloway]

what added value an accountant would provide

It depends. If your business is really simple then DIY will be ok. If you start being away on jobs overnight, buying vehicles. registering for VAT then they will be able to advise on the correct way to deal with things.

 

[paulears]

"does the books" - the modern version, as in remotely accessing my software, fixing the obvious errors I have made, finding duplicates, then completing the end of year accounts from what I have given him. As for receipts and paper, a long gone thing of the past. No receipts in a carrier bag, ever again! Frankly - I can see most of the totals in free agent, but my accountant seems to put things into the self assessment return that I'd never have thought of or even understood.

 

[ifairhurst]

Ah, OK. I should have said... I'm sole trader. Been window cleaning for about 2 years using water fed pole and pure water system. My initial outlay was for van and purification system which was all around 10k, so I have those classed as fixed assets and recording them over 4 years. Other things like insurances, diesel, day to day costs I list and offset against income. My turnover this year will be around 40k.
I've mainly come here to see if I can pick up any tips on allowable expenses I've not so far discovered which I can put against my profit.
Any nuggets of info would be appreciated!
Thank you

 

[Scalloway]

classed as fixed assets and recording them over 4 years

You can either claim the whole cost of assets against your taxable profit as Annual Investment Allowance AIA), or written off at 18% of the reducing value each year.

Claim capital allowances

Claim capital allowances so your business pays less tax when you buy assets - equipment, fixtures, business cars, plant and machinery, annual investment allowance, first-year allowances.

www.gov.uk

Work out your writing down allowances

How to work out your writing down allowances. Work out main rate pools, special rate pools, single asset pools, small pools allowance, long life assets, short life assets

www.gov.uk

 

[sb1989]

Thanks for the replies, creating 1 website with the main service being brickwork repointing and secondary roof repairs always made sense to me, both go hand in hand with each other so compliment each other really well.

To be honest on the accounting side of things 1 savings account and 1 personal account makes sense, I use to use QuickBooks and just separated out business from personal with income and expenses, 1 thing I would do different this time would be use my iPad to upload all of my receipts as well and using the mileage tracker, this keeps the books a bit more organised, though I will still likely use an accountant to file my end of year returns.

Before me and my father were able to get our websites know on Google MyBusiness and in some cases number 1 or 2 in the generic searches, although this brought in the work it was not enough, I tried Google Ads, Facebook Ads but these didn't really seem to work, I know this is a whole other topic in itself but what is the best way generally to advertise a small local business? When I had a Facebook page I never got any work from it, when people did ask they would offer silly money for services. Is it even worth having a social media presence when you are such a small company?

 

[ifairhurst]

You can either claim the whole cost of assets against your taxable profit as Annual Investment Allowance AIA), or written off at 18% of the reducing value each year.

Claim capital allowances

Claim capital allowances so your business pays less tax when you buy assets - equipment, fixtures, business cars, plant and machinery, annual investment allowance, first-year allowances.

www.gov.uk

Work out your writing down allowances

How to work out your writing down allowances. Work out main rate pools, special rate pools, single asset pools, small pools allowance, long life assets, short life assets

www.gov.uk

OK, thank you..
So with a 10k investment it would look something like this:
Year 1 claim = £1800 (total carry over to year 2 = £8200)
Year 2 claim = £1476 (total carry over to year 3 = £6724)
Year 3 claim = £1210.32 (total carry over to year 4 =£5513.68)
Year 4 claim = £992.46 (total carry over to year 5 = £4521.22)
Year 5 claim = £813.82 (total carry over to year 6 = £3707.40)
....and this would carry on for the life of the asset until its either sold or scrapped? Is that correct?

 

[Scalloway]

Yes that is how it works.

 

[ifairhurst]

Thank you

 

[Washington]

Thanks for the replies, creating 1 website with the main service being brickwork repointing and secondary roof repairs always made sense to me, both go hand in hand with each other so compliment each other really well.

To be honest on the accounting side of things 1 savings account and 1 personal account makes sense, I use to use QuickBooks and just separated out business from personal with income and expenses, 1 thing I would do different this time would be use my iPad to upload all of my receipts as well and using the mileage tracker, this keeps the books a bit more organised, though I will still likely use an accountant to file my end of year returns.

Before me and my father were able to get our websites know on Google MyBusiness and in some cases number 1 or 2 in the generic searches, although this brought in the work it was not enough, I tried Google Ads, Facebook Ads but these didn't really seem to work, I know this is a whole other topic in itself but what is the best way generally to advertise a small local business? When I had a Facebook page I never got any work from it, when people did ask they would offer silly money for services. Is it even worth having a social media presence when you are such a small company?

Did you start the business ?

Trying to get building services is a nightmare at the moment, I assume if you did start the business you will be doing well ?