small business startup
Discussion
Hi all well it appears I am about to start my own small business. After 3 years of being a house husband, looking after my little lad and being an employee part time at weekends an opportunity has arisen.
A friend has asked me to take on some PAT testing for his company. I am booked on a course for the new year and have access to a machine on long term loan.
He would also like me to eventually take on some testing on other stuff which I will do the relevant courses on. I have opportunities to provide testing for other contacts too who have expressed interest.
My questions are:
I would have some expenditure in setting up the business I understand this would all be tax deductible is there a good guide somewhere on doing this?
What can I claim for ? Thinking mobile phone, laptop, a vehicle, tools, tester, supplies? what If I use stuff I already own?
Do I need an accountant straight away? or can I just do it myself?
Is there an advantage to going vat registered from the beginning even If I am under the compulsory threshold, given the company I would be billing would not mind and it would allow me to reclaim vat on set up costs?
I could go self employed in my other part time job would this be a benefit?
What about national insurance contributions especially if I keep being employed my PT job which currently I am PAYE?
How much public liability do I need? (I have asked friend what his company may require) is it costly?
If I'm honest I'm not looking to build a huge company just give me perhaps 5 to 10 years work till I retire again fully (I once had a life as a senior manager in a PLC that I did very well from a floatation after being taken private) especially in the non racing season. But I would like to do it in a tax efficient (not avoiding) and professional manner.
Thanks in advance
A friend has asked me to take on some PAT testing for his company. I am booked on a course for the new year and have access to a machine on long term loan.
He would also like me to eventually take on some testing on other stuff which I will do the relevant courses on. I have opportunities to provide testing for other contacts too who have expressed interest.
My questions are:
I would have some expenditure in setting up the business I understand this would all be tax deductible is there a good guide somewhere on doing this?
What can I claim for ? Thinking mobile phone, laptop, a vehicle, tools, tester, supplies? what If I use stuff I already own?
Do I need an accountant straight away? or can I just do it myself?
Is there an advantage to going vat registered from the beginning even If I am under the compulsory threshold, given the company I would be billing would not mind and it would allow me to reclaim vat on set up costs?
I could go self employed in my other part time job would this be a benefit?
What about national insurance contributions especially if I keep being employed my PT job which currently I am PAYE?
How much public liability do I need? (I have asked friend what his company may require) is it costly?
If I'm honest I'm not looking to build a huge company just give me perhaps 5 to 10 years work till I retire again fully (I once had a life as a senior manager in a PLC that I did very well from a floatation after being taken private) especially in the non racing season. But I would like to do it in a tax efficient (not avoiding) and professional manner.
Thanks in advance
mad4amanda said:
A friend has asked me to take on some PAT testing for his company.
I would have some expenditure in setting up the business I understand this would all be tax deductible is there a good guide somewhere on doing this? What can I claim for ? Thinking mobile phone, laptop, a vehicle, tools, tester, supplies? what If I use stuff I already own?
Do I need an accountant straight away? or can I just do it myself?
Get an accountant or intelligent bookeeper at the outset. They will show you how to set up your books and tell you what you can and can't do.I would have some expenditure in setting up the business I understand this would all be tax deductible is there a good guide somewhere on doing this? What can I claim for ? Thinking mobile phone, laptop, a vehicle, tools, tester, supplies? what If I use stuff I already own?
Do I need an accountant straight away? or can I just do it myself?
Do you need a vehicle? PAT machines are small, just stick it in your boot and assign a percentage of all motoring costs to the business.
mad4amanda said:
Is there an advantage to going vat registered from the beginning even If I am under the compulsory threshold, given the company I would be billing would not mind and it would allow me to reclaim vat on set up costs?
Do the maths and see. If you don't, the gross amount you pay for set-up costs will be allowable, so it's not too bad. Seems to me that once you've got the kit you'll be charging fees only, so I'd say in the long run it's not worth the continual extra work and responsibility.mad4amanda said:
I could go self employed in my other part time job would this be a benefit?
Again, you'll need to do the maths and see. My hunch is 'probably'.mad4amanda said:
What about national insurance contributions especially if I keep being employed my PT job which currently I am PAYE?
You'll pay another class of NI on profits - an accountant/bookeeper will sort this all out for you.mad4amanda said:
How much public liability do I need? (I have asked friend what his company may require) is it costly?
Do you actually need any? But anyway, PL is relatively cheap.Edited by Simpo Two on Sunday 13th December 21:10
Your right I will start using my car, I may only want a small van if the other stuff comes on line as I would need to carry more kit and some replacement and service parts.
Regarding the insurance I assumed that I would need it as a subcontractor, maybe not then?
I will have an ask of self employed people I know and see who has a good bookkeeper or accountant they would recommend.
Thanks for your input it helps to shape my thinking and plans.
Regarding the insurance I assumed that I would need it as a subcontractor, maybe not then?
I will have an ask of self employed people I know and see who has a good bookkeeper or accountant they would recommend.
Thanks for your input it helps to shape my thinking and plans.
mad4amanda said:
Your right I will start using my car, I may only want a small van if the other stuff comes on line as I would need to carry more kit and some replacement and service parts.
I can only speak from my experience as a sole trader for 24 years, but generally simple is better than complicated, and organic growth is more sustainable than smoke and mirrors.mad4amanda said:
Regarding the insurance I assumed that I would need it as a subcontractor, maybe not then?
You may need it as a condition of business, I can't say. When I started I armed myself to the teeth with insurance, never needed it and soon shed it - but that's just me and was appropriate to what I did. In your case, if you f
k up and something you tested burns a house down, you may be responsible.mad4amanda said:
Thanks for your input it helps to shape my thinking and plans.
I hope it's useful, and perhaps some other self-employed folk will chip in too. Get work, do work, send in bit of paper, get paid, account for it, live happily after
Get some liability insurance. Cheap enough and will protect you from the injury lawyers in the event of some idiot tripping over you when you are testing,or something blowing up after you have tested it.
May also be worth getting a basic disclosure CRB if you are going to be near kids or vulnerable adults etc.
Enjoy being self employed
May also be worth getting a basic disclosure CRB if you are going to be near kids or vulnerable adults etc.
Enjoy being self employed
Why do you think you can switch from "employed" to "self employed" in your current part time job?
HMRC always insists that you cannot "chose" to be self employed when the situation is one of being engaged as an employee.
Obviously, your new PAT testing activity is a genuine self employment - but having a new self employment running parallel to an existing employment does not, in itself, suddenly mean that the existing employment can magically transform itself into a "self employment".
Also, if you DO end up with two separate self employment activities, from an HMRC point of view, they are still two separate self employments and would need separate accounts to be prepared and separate disclosure in your annual Self Assessment tax return.
Regarding NI, Self Employed people pay NI in two ways, Class 2 as a regular monthly direct debit or quarterly bank payment AND Class 4 as part of their annual Self Assessment liability.
These amounts are based on the TAXABLE PROFITS of the sole trader activity. If the profits fall below certain limits, no NI is payable.
Note however, that Class 2 is being abolished and being merged into Class 4 although we are still waiting full details of the new (no doubt higher) amounts that will be paid under this new Class 4 NI.
HMRC always insists that you cannot "chose" to be self employed when the situation is one of being engaged as an employee.
Obviously, your new PAT testing activity is a genuine self employment - but having a new self employment running parallel to an existing employment does not, in itself, suddenly mean that the existing employment can magically transform itself into a "self employment".
Also, if you DO end up with two separate self employment activities, from an HMRC point of view, they are still two separate self employments and would need separate accounts to be prepared and separate disclosure in your annual Self Assessment tax return.
Regarding NI, Self Employed people pay NI in two ways, Class 2 as a regular monthly direct debit or quarterly bank payment AND Class 4 as part of their annual Self Assessment liability.
These amounts are based on the TAXABLE PROFITS of the sole trader activity. If the profits fall below certain limits, no NI is payable.
Note however, that Class 2 is being abolished and being merged into Class 4 although we are still waiting full details of the new (no doubt higher) amounts that will be paid under this new Class 4 NI.
Hi Eric I hoped you might join in. I appreciate reading your replies to topics such as this though I cannot pretend to understand them all fully.
Re employment status:
Purely as there are some who do the same work as I do on a self employed basis whereas I am employed on a 12 month contract which is renewed every year. I have no fixed hours, I apply for work I wish to undertake by a process of submitting availability monthly in advance rates are agreed in advance at the start of the year with all of us. If I don't like a job or feel it is not worth the rate I don't apply for it or go back and say I will do it for £x.
I also provide more specialised services than most, including stuff that only I do, by a form of tender in advance, but this time on an annual basis at rates suggested by me and agreed in advance.So I already know what weekends I am working in 2016 and for how much, a rate negotiated by me.
I guess I feel I am already operating like a self employed person. i.e. if I don't work I don't get paid, I decide my hours I want to work and the rate by what I apply for, no company sick etc only statutory (never claimed it for the very few odd days I have been ill). Holiday is currently paid as a % on top of monthly hours worked which I would miss out on but this may be offset by savings in deductions?
Could I not roll all my services I provide under one umbrella I will have several separate unrelated income streams, clients and contracts can 1 company, i.e. me, not undertake several distinct activities yet submit I set of accounts?
Your advice would be most welcome.
Re employment status:
Purely as there are some who do the same work as I do on a self employed basis whereas I am employed on a 12 month contract which is renewed every year. I have no fixed hours, I apply for work I wish to undertake by a process of submitting availability monthly in advance rates are agreed in advance at the start of the year with all of us. If I don't like a job or feel it is not worth the rate I don't apply for it or go back and say I will do it for £x.
I also provide more specialised services than most, including stuff that only I do, by a form of tender in advance, but this time on an annual basis at rates suggested by me and agreed in advance.So I already know what weekends I am working in 2016 and for how much, a rate negotiated by me.
I guess I feel I am already operating like a self employed person. i.e. if I don't work I don't get paid, I decide my hours I want to work and the rate by what I apply for, no company sick etc only statutory (never claimed it for the very few odd days I have been ill). Holiday is currently paid as a % on top of monthly hours worked which I would miss out on but this may be offset by savings in deductions?
Could I not roll all my services I provide under one umbrella I will have several separate unrelated income streams, clients and contracts can 1 company, i.e. me, not undertake several distinct activities yet submit I set of accounts?
Your advice would be most welcome.
I found this lot to have loads of useful information when I started contracting
https://www.ipse.co.uk/
https://www.ipse.co.uk/
mad4amanda said:
Hi Eric I hoped you might join in. I appreciate reading your replies to topics such as this though I cannot pretend to understand them all fully.
Re employment status:
Purely as there are some who do the same work as I do on a self employed basis whereas I am employed on a 12 month contract which is renewed every year. I have no fixed hours, I apply for work I wish to undertake by a process of submitting availability monthly in advance rates are agreed in advance at the start of the year with all of us. If I don't like a job or feel it is not worth the rate I don't apply for it or go back and say I will do it for £x.
I also provide more specialised services than most, including stuff that only I do, by a form of tender in advance, but this time on an annual basis at rates suggested by me and agreed in advance.So I already know what weekends I am working in 2016 and for how much, a rate negotiated by me.
I guess I feel I am already operating like a self employed person. i.e. if I don't work I don't get paid, I decide my hours I want to work and the rate by what I apply for, no company sick etc only statutory (never claimed it for the very few odd days I have been ill). Holiday is currently paid as a % on top of monthly hours worked which I would miss out on but this may be offset by savings in deductions?
Could I not roll all my services I provide under one umbrella I will have several separate unrelated income streams, clients and contracts can 1 company, i.e. me, not undertake several distinct activities yet submit I set of accounts?
Your advice would be most welcome.
The arrangements you currently work under as an employee certainly do have elements that COULD be interpreted as actually a "self employed" situation. HMRC do not feel that people can chop and change their status with the same "engager". You are either one thing or the other.Re employment status:
Purely as there are some who do the same work as I do on a self employed basis whereas I am employed on a 12 month contract which is renewed every year. I have no fixed hours, I apply for work I wish to undertake by a process of submitting availability monthly in advance rates are agreed in advance at the start of the year with all of us. If I don't like a job or feel it is not worth the rate I don't apply for it or go back and say I will do it for £x.
I also provide more specialised services than most, including stuff that only I do, by a form of tender in advance, but this time on an annual basis at rates suggested by me and agreed in advance.So I already know what weekends I am working in 2016 and for how much, a rate negotiated by me.
I guess I feel I am already operating like a self employed person. i.e. if I don't work I don't get paid, I decide my hours I want to work and the rate by what I apply for, no company sick etc only statutory (never claimed it for the very few odd days I have been ill). Holiday is currently paid as a % on top of monthly hours worked which I would miss out on but this may be offset by savings in deductions?
Could I not roll all my services I provide under one umbrella I will have several separate unrelated income streams, clients and contracts can 1 company, i.e. me, not undertake several distinct activities yet submit I set of accounts?
Your advice would be most welcome.
IF you do end up being "self employed" on more or less the same terms that you are currently engaged as an "employee", HMRC could be quite curious. However, as in all these things, whether HMRC ever bothered to do anything about this is doubtful. This whole area is a total mess as far as HMRC is concerned and they have more or less completely lost the ability to monitor the abuse of employer/employee situations that permeate the UK workplace these days.
If you do manage to transform yourself into a aself employed situation with your current employer, then you will have two streams of self employed income - both unrelated.
Therefore, as far as HMRC is concerned, you have two separate "trades" which need to be disclosed separately for tax purposes. Each will have their own separate stream of income and their own separate set of allowable coasts and allowances for offset against their respective incomes. Each will therefore show their own separate profits or losses each tax year.
Note, however, that for VAT turnover threshold purposes, you need to add together the turnover totals for both separate activities. The current registration threshold is £82,000 annual income, so this may not be an issue for you.
Eric Mc said:
Note, however, that for VAT turnover threshold purposes, you need to add together the turnover totals for both separate activities. The current registration threshold is £82,000 annual income, so this may not be an issue for you.
In other words, with VAT it is the *person* who is registered, not the business.You (OP) can of course register voluntarily below the threshold if it will be advantageous to you. Please note you will not have a 'company' as that refers to a limited company which you will neither be nor have
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