New business startup advice
Discussion
I am been offered a contractors position which will work around my current job..
The contract is for 3 years and would provide a good second income form the second year.. But the start up costs are quite big and are in excess of the first year contract fees, but the costs in years 2 and 3 are minimal as all the equipemt is purchased up front. Only costs to keep the equipment running 100% will be incured.. But in the first year i am forecast to make a £3000 loss. Can this loss either be offset against my PAYE or future year profits from the venture?
My loss accoutning loss is actually a bit higher as to reduce the loss i have decided not to pay myself any moeny from the venture for 3 months.. Should i be putting all my time down to the job i.e. the salary i should be drawing but this will increase the loss further!
I do not want any external funding all the money will be my own cash..
Thanks
Steve
The contract is for 3 years and would provide a good second income form the second year.. But the start up costs are quite big and are in excess of the first year contract fees, but the costs in years 2 and 3 are minimal as all the equipemt is purchased up front. Only costs to keep the equipment running 100% will be incured.. But in the first year i am forecast to make a £3000 loss. Can this loss either be offset against my PAYE or future year profits from the venture?
My loss accoutning loss is actually a bit higher as to reduce the loss i have decided not to pay myself any moeny from the venture for 3 months.. Should i be putting all my time down to the job i.e. the salary i should be drawing but this will increase the loss further!
I do not want any external funding all the money will be my own cash..
Thanks
Steve
That's fine - and more useful to you if you make a genuine tax relievable trading loss.
In the tax year the loss is incurred, you can offset the loss sideways against other income in the same tax year. In theory, that means you should be able to obtain a refund of some of the PAYE deducted on your salary.
If you chose not to offset the loss against other income in the same tax year, you can carry it forward but only for offset against the future profits from that particular trading activity.
You have to be careful in the way in which you arrive at your loss figure. The computations required have to comply with both standard accounting practice and tax regulations. This is particularly important when considering any claims for Capital Allowances on assets purchased in this first year of trade.
In the tax year the loss is incurred, you can offset the loss sideways against other income in the same tax year. In theory, that means you should be able to obtain a refund of some of the PAYE deducted on your salary.
If you chose not to offset the loss against other income in the same tax year, you can carry it forward but only for offset against the future profits from that particular trading activity.
You have to be careful in the way in which you arrive at your loss figure. The computations required have to comply with both standard accounting practice and tax regulations. This is particularly important when considering any claims for Capital Allowances on assets purchased in this first year of trade.
Edited by Eric Mc on Thursday 13th March 12:15
upto £50K per year?Eric Mc said:
I presume you are referring to the new 100% Capital Allowances available to small businesses after 5 April?
As an aside, it doesn't seem clear what (if any) changes will take effect on expensive cars? There was some talk of allowances at different rates based on emmissions but I don't think this has taken effect yet? Presumably thinhs will continue as before but the WDA will reduce to 20%? Will a ballancing allowance on cars be available for April 08?Gassing Station | Business | Top of Page | What's New | My Stuff