From ESA to self employed?

[shoelaces]

Can anyone help me?

I want to pursue a business idea but I'm not sure how it works with ESA and don't want to ask the job centre. They get their own rules wrong half the time anyway!

I won't be technically self employed, as I have been advised to set up a limited company and then be an employee/director of that company.

At first, I won't be working anywhere near 16 hours a week and don't expect to earn more than £120 per week for months, if at all. The business idea could fall flat on its arse... and I don't want to run the risk of cutting my benefit off if I can't earn money straight away.

Does anyone know? TIA

When you say earn, do you mean turnover? Or do you mean pay yourself? I'd suggest you understand the legal requirements expected of company directors before you try this. It's very possible that you are not entirely aware of your legal responsibilities and their implications on your financial set up. By the way if your limited company is not profitable, and you are claiming benefits, you will be investigated. HMRC are clamping down on this.

Thanks Ginger. I will look in to this. I think my business could be profitable, if I were able to do it full time AND only after having built it up. I don't know if I'm physically capable of doing it FT, which is why I'd like to try giving it a go and seeing just how many hours I can do. It's very different and more physically demanding than I have ever done before. I don't really know the rules for ESA and am just learning about being a ltd company.

@shoelaces unless you know the ebbs and flows if you industry intimately, you need to do a business plan, cash flow forecast for st least 3 (if not 5) years, and evidence that you can personally finance a business if your projections were inaccurate.

The days of people setting up limited companies to avoid personal liability (or to avoid declaring earnings or dividends) are long long gone.

Please, do it the right way.

I hope it's not an MLM you're pursuing (forever living, Arbonne)? Because they love to target vulnerable people such as yourself.

Thanks for the replies. It's not MLM but a genuine business. I'm getting help from a local enterprise council - they are helping me get to a point where I have a full business plan etc. I just need to work out whether I can try to get this business off the ground while still claiming ESA. The restrictions of my physical health may mean that I'm not able to earn enough. ESA has permitted work option and I need to know if I can do this as permitted work, as an employee of the ltd company, where I might not earn enough to pay myself a salary.

You may find that if the work your doing is in contradiction with your illness that entitles you to ESA then you may lose your ESA
What I mean is if your illness is say one of mobility limited walking but your job is one that means you have to walk a lot then you could lose your ESA on this basis . This happened to a friend of mine
Plus I think if your on income related ESA they only ignore the first £20 of earnings

Lots of info here

www.entitledto.co.uk/help/Permitted-Work-Rules

Thanks very much Magpie. I have mobility problems but that hasn't stopped me working in the past. I'm signed off for anxiety and depression, caused by severe and repeated instances of workplace bullying and harassment. I'm claiming contributions based ESA.

I want to try running my own business for my own sanity. I've found it so hard trying to pick myself up, dust off and start interviewing again when employment feels like a painful merry-go-round. I'll take a deep breath and call them. I'll wait until I'm ready to start trading. Thank you.

You might be interested in the NEA scheme? www.gov.uk/moving-from-benefits-to-work/starting-your-own-business

Just be careful as the chances are as soon as you start work you may get called in for an medical
This is what happened to my friend when she did permitted work lost her ESA and eventually her PIP
Plus if your in universal credit area they have different rules on being self employed and a minimum income you have to earn but Im not sure how this works with permitted work on ESA