Setting up shop - advice needed.

[AlexGSi2000]

Afternoon,

I'm after some advice / guidance on potentially setting up shop, I'm a complete novice when it comes to anything HMRC / Companies House related.

I'll set the scene;
I've been into cars since I can remember, ever since working on my first car almost two decades ago, its turned into somewhat of an obsession.
This resulted in eventually renting an industrial garage that I use for storage and working on my cars, tooling I have acquired throughout the years as I have needed for my vehicles, including the likes of a 2-poster ramp.
I carry out all mechanical / electrical diagnostic works on my own vehicles - the only other garages I have been in over the past 15 years have been MOT bays.

As I spend the vast majority of time at my garage outside of my normal work hours (9-5 Mon-Fri), all of my friends / family know me most for cars.
I have therefore ended up looking after the family & close friends cars, this has been typically servicing, but diagnostic work and the likes of a few engine rebuilds.
Word has spread, which is nice and I'm starting to get the odd query from "a friend of a friend".

For the work I have done so far, I've charged for parts/consumables but never for time - of course I have been gifted the odd box of beers, but as I've mostly worked for friends I've had favours in return.

After hearing about the cost of works done at other garages - I've recently been contemplating taking on work from "friend of friends" and charging for time.

I'm not setting out to make as much money as possible, its more so it goes through the books and I'm all above board.
Based on my estimate I anticipate the time worked will generate between £200/300 per month.

This may rise depending on how things go, I'm fairly comfortable in my day job at the moment, however things have recently become volatile as cuts are made, so there may be a slight possibility in the future of turning to the tools for my income for a period.

I'm thinking if I set up properly it may bring other conveniences such as accounts with suppliers.etc

In my head (and in no particular order) I think I will need to consider the following;

- Research
- Registration with companies house / register company
- Book Keeping / records management (I already keep fairly fastidious records of my own and friends vehicles)
- Tax / Self assessment
- Insurance
- Waste
- Have a chat with current employer to see if its permissible

Any advice would be appreciated as I have a lot to learn.

Edited by AlexGSi2000 on Tuesday 30th September 17:48

[Steve H]

AlexGSi2000 said:

In my head (and in no particular order) I think I will need to consider the following;

- Research
- Registration with companies house / register company
- Book Keeping / records management (I already keep fairly fastidious records of my own and friends vehicles)
- Tax / Self assessment
- Insurance
- Waste
- Have a chat with current employer to see if its permissible

Any advice would be appreciated as I have a lot to learn.

Edited by AlexGSi2000 on Tuesday 30th September 17:48

Insurance may be tricky and may well seem expensive at first but is essential. On the upside, a good trade policy will also cover your own cars and may offer a degree of flexibility that you would struggle to find elsewhere.

I would forget Ltd company options, just keep records of your income and all costs and declare it as self assessment, a local accountant or book keeper would be able to help you with this. In this and all things, keep it simple, keep it efficient and where possible keep it under the radar.

I can’t see what it has to do with your current employer as long as it doesn’t interfere with the work you do there.

If you are only doing a few hours a week things like waste can probably be dealt with at the local tip etc.

Even if you are only doing a few hours a week, you should be aiming to earn more than you suggest in your post. Partly because if you don’t it really isn’t worth the effort but mostly because being too cheap just attracts the dross of the car driving world and you will soon get tired of dealing with them.

One thing that is very true in this game is that you end up with the customers you deserve .

[steve_n]

Sounds exactly like my friend with a modest garage unit. He started out like you, working on his own cars and a few for friends & family. Setup as a limited company because it's not that hard and uses an accountant.

Started by charging me £40/hr, now it's £45 and £50 if not friends & family. His IT employed role had the opportunity for voluntary redundancy and he took the leap within the last couple of months to go full time on his business. Sells a few small cars and does garage servicing/repairs/car transportation. So far it's working well and he's already taking on an extra unit to be the car sales front/more storage.

Don't feel guilty about charging for your time. Working on cars is hard, I always work on mine with him and it's exhausting.

Insurance is important and you can put warranties on consumer cars for a reasonable price.

[Jon39]

Are you an ambitious businessman, or just enjoy working on cars?

Years ago a friend opened a motor accessory shop in outer London.
He enjoyed working on his cars.

Coincidentally, I later learnt that in the same year, another man had opened a motor accessory shop in a different outer London suburb.
That business gradually transitioned into becoming a motor factor, offering prompt delivering of car parts to garages.

Many years later, that motor factor business was sold for £450 million.
My friend's shop had long since failed and closed down by then.
He blamed his failure on Halfords opening in the area.
I think it was more likely his lack of vision, ambition and determination.

Two people starting in exactly the same way. One succeeds and one fails.

[Simpo Two]

AlexGSi2000 said:

Based on my estimate I anticipate the time worked will generate between £200/300 per month.

I'm thinking if I set up properly it may bring other conveniences such as accounts with suppliers.etc

In my head (and in no particular order) I think I will need to consider the following;

- Research
- Registration with companies house / register company
- Book Keeping / records management (I already keep fairly fastidious records of my own and friends vehicles)
- Tax / Self assessment
- Insurance
- Waste
- Have a chat with current employer to see if its permissible

Any advice would be appreciated as I have a lot to learn.

Opening accounts with suppliers would be very useful, so you can get credit terms and perhaps a trade discount as well.

Not convinced that you need to be a limited company - certainly at £2,400 - £3,600pa there's no tax advantage, only extra complexity and responsibility/paperwork. But consider registering voluntarily for VAT so you can reclaim it on everything you buy in. This will of course put your price up by 20% to the consumer so consider whether the majority of your turnover would be parts or labour. If it's mostly labour it's probably not worth it. The nice thing is that you earn a living elsewhere so anything you earn through this venture is a bonus