Discussion
Finally resigned from my job last Monday and have started a business with a colleague. It feels so good, after 15 yrs of making money (or not 
)for someone else, it's now all down to me 
Since I'll be taking a significant drop in salary
I was wondering if there are any 'tricks' to maximise my income at minimum cost to the company? E.g. I'll be using my own car and claiming the maximum tax free milage allowance (40ppm x 10k).
)for someone else, it's now all down to me Since I'll be taking a significant drop in salary
I was wondering if there are any 'tricks' to maximise my income at minimum cost to the company? E.g. I'll be using my own car and claiming the maximum tax free milage allowance (40ppm x 10k).Are you operating through your own company or as a partner in a partnership?
Do you have a business premises are you operating from home?
Have you introduced any personally owned assets into the business (furniture, computers etc)?
Are you injecting any cash into the business in the form of capital or a loan?
Do you have a business premises are you operating from home?
Have you introduced any personally owned assets into the business (furniture, computers etc)?
Are you injecting any cash into the business in the form of capital or a loan?
Edited by Eric Mc on Sunday 9th November 13:29
Ah, Eric, I was hoping you'd be around
>Are you operating through your own company or as a partner in a partnership?
It's a limited company with 3 employees/shareholders - two with 47.5% and one with 5%.
>Do you have a business premises are you operating from home?
Rented office with communal warehouse facility.
>Have you introduced any personally owned assets into the business (furniture, computers etc)?
No substantial personal assets have been introduced but I guess they could be if it was beneficial? Everything has been funded on bank overdraft (@ base +2.5%) secured on the two major shareholders properties.
As an aside, the bank (LTSB) who were great at the beginning are now being complete *****. OD rate was supposed to be +1.5% and at 11th hour they have asked us to sign a debenture which we're extreemly reluctant to do.
>Are you injecting any cash into the business in the form of capital or a loan?
As above, no cash - only security for OD.
>Are you operating through your own company or as a partner in a partnership?
It's a limited company with 3 employees/shareholders - two with 47.5% and one with 5%.
>Do you have a business premises are you operating from home?
Rented office with communal warehouse facility.
>Have you introduced any personally owned assets into the business (furniture, computers etc)?
No substantial personal assets have been introduced but I guess they could be if it was beneficial? Everything has been funded on bank overdraft (@ base +2.5%) secured on the two major shareholders properties.
As an aside, the bank (LTSB) who were great at the beginning are now being complete *****. OD rate was supposed to be +1.5% and at 11th hour they have asked us to sign a debenture which we're extreemly reluctant to do.
>Are you injecting any cash into the business in the form of capital or a loan?
As above, no cash - only security for OD.
Edited by VX Foxy on Sunday 9th November 14:04
VX Foxy said:
Finally resigned from my job last Monday and have started a business with a colleague. It feels so good, after 15 yrs of making money (or not )for someone else, it's now all down to me
Since I'll be taking a significant drop in salary I was wondering if there are any 'tricks' to maximise my income at minimum cost to the company? E.g. I'll be using my own car and claiming the maximum tax free milage allowance (40ppm x 10k).
What sort of business are you? I am doing exactly the same at the moment so GOOD LUCK..... )for someone else, it's now all down to me Since I'll be taking a significant drop in salary
I was wondering if there are any 'tricks' to maximise my income at minimum cost to the company? E.g. I'll be using my own car and claiming the maximum tax free milage allowance (40ppm x 10k).VX Foxy said:
Ah, Eric, I was hoping you'd be around
>Are you operating through your own company or as a partner in a partnership?
It's a limited company with 3 employees/shareholders - two with 47.5% and one with 5%.
>Do you have a business premises are you operating from home?
Rented office with communal warehouse facility.
>Have you introduced any personally owned assets into the business (furniture, computers etc)?
No substantial personal assets have been introduced but I guess they could be if it was beneficial? Everything has been funded on bank overdraft (@ base +2.5%) secured on the two major shareholders properties.
As an aside, the bank (LTSB) who were great at the beginning are now being complete *****. OD rate was supposed to be +1.5% and at 11th hour they have asked us to sign a debenture which we're extreemly reluctant to do.
>Are you injecting any cash into the business in the form of capital or a loan?
As above, no cash - only security for OD.
I was just looking at the possibilities of starting off the business with some credit in your director's current/loan account. This could arise if you had put in some private assets and/or cash. It doesn't look like you have to any great extent.>Are you operating through your own company or as a partner in a partnership?
It's a limited company with 3 employees/shareholders - two with 47.5% and one with 5%.
>Do you have a business premises are you operating from home?
Rented office with communal warehouse facility.
>Have you introduced any personally owned assets into the business (furniture, computers etc)?
No substantial personal assets have been introduced but I guess they could be if it was beneficial? Everything has been funded on bank overdraft (@ base +2.5%) secured on the two major shareholders properties.
As an aside, the bank (LTSB) who were great at the beginning are now being complete *****. OD rate was supposed to be +1.5% and at 11th hour they have asked us to sign a debenture which we're extreemly reluctant to do.
>Are you injecting any cash into the business in the form of capital or a loan?
As above, no cash - only security for OD.
Edited by VX Foxy on Sunday 9th November 14:04
As the business has a dedicated business premises there is limited scope for providing "Business Use of Residence" type charges - these too can help generate a "credit" entry to your director's loan/current account.
Having a credit balance on a directors loan/current account is helpful if the director wants to draw some cash "tax free" from the company. He is, in effect, paying back to himself money he has alreadt "loaned" to the company.
Once the business is up and running and generating income/profits you will need to sort out a payment strategy for the directors/shareholders that you are all in agreement with.
Without wishing to sound rude, have you actually thought any of this through?
To ask now you are in at the deep end about 'bonuses' and other such questions gives me the impression (as a business owner for more years than I care to remember) that you may not have done.
I would suggest you make an appointment with good accountants to discuss your current and future financial situation as a matter of urgency.
There are ways you can extract money from a company, some of which can make you quite a lot of money, but most of the time it's no more than salary or dividends (and usually a combination of both of course!). Whatever you do, you will almost always have a tax implication to go with a remuneration of any kind.
Please accept this post in the manner in which it is written and go get some professional advice otherwise you'll go bust quicker than you can say 'credit crunch'.
To ask now you are in at the deep end about 'bonuses' and other such questions gives me the impression (as a business owner for more years than I care to remember) that you may not have done.
I would suggest you make an appointment with good accountants to discuss your current and future financial situation as a matter of urgency.
There are ways you can extract money from a company, some of which can make you quite a lot of money, but most of the time it's no more than salary or dividends (and usually a combination of both of course!). Whatever you do, you will almost always have a tax implication to go with a remuneration of any kind.
Please accept this post in the manner in which it is written and go get some professional advice otherwise you'll go bust quicker than you can say 'credit crunch'.
VX Foxy said:
Oh well, thanks anyway Eric.
Any suggestions for paying bonuses efficiently - until we're in a position to pay dividends?
Bernie is spot on. If the company can afford bonuses, then it probably could afford dividends i.e. it needs to be making profits before either are contemplated. For the moment, ensuring that the business:Any suggestions for paying bonuses efficiently - until we're in a position to pay dividends?
i) covers its day to day cash flow requirements
ii) provides each of you with a living wage/income
would be the basic priorities.
You also have a minority shareholder in the mix so their situation regarding bonuses and dividends also needs to be taken into account.
Bernie-the-bolt said:
Please accept this post in the manner in which it is written
No problem 
I would the first to admit that I have a big knowledge gap when it comes to accounting, so we do have the services of an experienced (ycrta old
). However, I can assure you that this start up has been very carefully thought out. We have already turned over £60k have confirmed orders for 2009 which, while not making us rich will cover our costs - and we haven't started 'selling' yet VX Foxy said:
Bernie-the-bolt said:
Please accept this post in the manner in which it is written
No problem I would the first to admit that I have a big knowledge gap when it comes to accounting, so we do have the services of an experienced (ycrta old
). However, I can assure you that this start up has been very carefully thought out. We have already turned over £60k have confirmed orders for 2009 which, while not making us rich will cover our costs - and we haven't started 'selling' yet Don't forget to add your salaries to your costs (and ENI) otherwise you will be working for nothing and that's not a good business model! Assuming you both had a decent salary (say £50k+), with a reasonable margin you should be looking at minimum of £250k-$300k T/O+ in year 1 to make it worth your while. That may or may not sound like quite a lot, but it's amazing just how difficult it can be to generate that sort of T/O from scratch.
All the best though!
Eric Mc said:
VX Foxy said:
Oh well, thanks anyway Eric.
Any suggestions for paying bonuses efficiently - until we're in a position to pay dividends?
Bernie is spot on. If the company can afford bonuses, then it probably could afford dividends i.e. it needs to be making profits before either are contemplated. For the moment, ensuring that the business:Any suggestions for paying bonuses efficiently - until we're in a position to pay dividends?
i) covers its day to day cash flow requirements
ii) provides each of you with a living wage/income
would be the basic priorities.
You also have a minority shareholder in the mix so their situation regarding bonuses and dividends also needs to be taken into account.
The minority share holder was given his 5% share as a gesture to recognise his importance to the success of the company. It is planned that each shareholder will be renumerated equally, regardless of % share. Obviously the minority shareholder will need his dividend topping up in some way.
Bernie-the-bolt said:
I'm glad it appears to be going well so far (£60k T/O - over what period of time?)
Don't forget to add your salaries to your costs (and ENI) otherwise you will be working for nothing and that's not a good business model! Assuming you both had a decent salary (say £50k+), with a reasonable margin you should be looking at minimum of £250k-$300k T/O+ in year 1 to make it worth your while. That may or may not sound like quite a lot, but it's amazing just how difficult it can be to generate that sort of T/O from scratch.
All the best though!
To give you a better idea of where we're at:Don't forget to add your salaries to your costs (and ENI) otherwise you will be working for nothing and that's not a good business model! Assuming you both had a decent salary (say £50k+), with a reasonable margin you should be looking at minimum of £250k-$300k T/O+ in year 1 to make it worth your while. That may or may not sound like quite a lot, but it's amazing just how difficult it can be to generate that sort of T/O from scratch.
All the best though!
Office opened 1st August and first employee started work - setting up office and beginning product design. Second employee started at the beginning of October and third employee last week
First order (30k) was completed in Oct and second (30k) in Nov. Projected T/O for 09 is 650k and 1.1m in 2010.We all ave a lot of experience (50yrs between us) in this industry and feel that our projections are realistic.
VX Foxy said:
Bernie-the-bolt said:
I'm glad it appears to be going well so far (£60k T/O - over what period of time?)
Don't forget to add your salaries to your costs (and ENI) otherwise you will be working for nothing and that's not a good business model! Assuming you both had a decent salary (say £50k+), with a reasonable margin you should be looking at minimum of £250k-$300k T/O+ in year 1 to make it worth your while. That may or may not sound like quite a lot, but it's amazing just how difficult it can be to generate that sort of T/O from scratch.
All the best though!
To give you a better idea of where we're at:Don't forget to add your salaries to your costs (and ENI) otherwise you will be working for nothing and that's not a good business model! Assuming you both had a decent salary (say £50k+), with a reasonable margin you should be looking at minimum of £250k-$300k T/O+ in year 1 to make it worth your while. That may or may not sound like quite a lot, but it's amazing just how difficult it can be to generate that sort of T/O from scratch.
All the best though!
Office opened 1st August and first employee started work - setting up office and beginning product design. Second employee started at the beginning of October and third employee last week
First order (30k) was completed in Oct and second (30k) in Nov. Projected T/O for 09 is 650k and 1.1m in 2010.We all ave a lot of experience (50yrs between us) in this industry and feel that our projections are realistic.
It is still very possible to start a business and make a lot of money.
Good luck and keep us all posted re your new baby!
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