Any advice for a new business? What do we need?

[ZeldaUpNorth]

Ok so dp is starting his own little gardening business. We have flyers and business cards to put out next week. I've ordered an invoice book. What else do we need? I know we need insurance (public liability?) but going to wait to make sure we get some business before we fork out for it. Do we need to register with hmrc already or not until we actually make a profit? I'm doing the business side of things and didnt realise it would be so complicated. Am i forgetting anything? (probably loads lol)

Also if the client pays cash what should we do with the cash? Is it ours to spend (but make a note of) or do we need to put it into a bank (do we need to open a special business account?) ARGH! lol

Zelda, definitely set up a business account and many will offer free banking for the first year. Are you going to be a Ltd company? If so you may be helped with WTC/FTC if there are any lean times. My dh has been self employed all his working life, just recently we have become a Ltd and already we are £ in front with benefit to help. The money goes into the business that does not belong to you. Then your dh draws a wage preferably minimum wage then he is entitled to the above. You also become a director/company secretary and if you are not currently employed somewhere else, you also draw the minimum wage. This in effect gives you both a shot at benefits to help whilst starting up. You then if necessary take a dividend out of the business but you have to pay tax on this, so obviously only take it if you need it. I was sahm but was advised by our acountant to do this and we now have twice as much WTC/FTC and other non monetary benefits. Wished we had been advised of this before. Obviously it depends on how many dc's you have whether it is worth it for you, but well worth a look if it means a bit of security.

Good luck with the new business. You do need to register with HMRC
www.hmrc.gov.uk/sa/register.htm
HMRC want you to register as soon as you are ready to start business.

You will need to start paying Class 2 NIC (paid quarterly normally, approx £2.60 per week). This covers your entitlement to basic state benefits. In addition you will also be liable to class 4 NIC on your profits over £7,225 @9%. This is in addition to your tax liability.

If you havent actually started the business yet it may be worth waiting until April 2012 to register and then you wont need to submit a tax return or pay any tax until Jan 2014!

I would recommend recording your income in an excel spread sheet. Use one sheet for income, another to record your expenses. The cash you can spend as you please but remember you may have a tax liability at the end of the year so its wise to put some away each month to cover that.
Record all income, date, amount & customer
Record all expenses, mileage @45p, tools, insurances etc. Keep all your receipts. I would put them in a folder, file by month and x ref to your excel spread sheet.
Register online with all the free local directories eg yell.com, qype
What is your marketing plan? How will customers know you exist?
May be worth getting a website, even a basic homepage with contact details.
What about a FB page for your business? Its a free way to tell all the people you know what you are doing.
If you need any further information pm me
Emma

OP
I wrote this for ebayers
but a lot of the information is relevant to any trader
feel free to print out and highlight bits
cgi3.ebay.co.uk/ws/eBayISAPI.dll?ViewUserPage&userid=talkinpeace

Hi thanks for all the advice its a great help. When does the business officially start? When we get our 1st customer? 1st payment? or when we hand the leaflets out?

I think we will just be a sole trader (is that the right term, its been quite a few years since i did business studies at school!)for now.

I very much doubt we will be making thousands of pounds a year (but one can hope) so dont think we will have to pay tax but will still register when we're ready.

Oh and i've made a facebook page already and have 500 leaflets to deliver (just trying to decide which areas) and put an ad on free ads. Will do the yell.com etc tomorrow.
If we already have the tools (bought last year) can we still use those receipts or is it too late?

www.businesslink.gov.uk/bdotg/action/layer?topicId=1073875654

This link has lots of information which is relevant to you.

You should register when you first open for business, not when you make your first sale.
You can claim start up expenses, keep the receipts for those tools!

Emma

can we still use those receipts or is it too late?

No it's not too late, you have about six years - don't be in too much of a hurrry to register as self employed either, unless you have some profits you want to offset in 2011/12. This is a big grey area so if you don't earn any money until April, don't register until April.

Thanks for the advice, is it after April 6th to register if i dont want to pay tax until 2014? Its just dp has a couple of jobs already (just family) but he can put them off for a few weeks if it would be better?

Another Q. Does all things (bank account mostly) need to be in dp's name as its me that will be doing all that stuff?

Oh if you can earn some money in 2011/12 it would probably be worth getting as much income in as you can so in this case don't hold off. Do you have any other income in 2011/12? Does your husband? How much is he likely to earn as a minimum; and how much if it really takes off?

It may well be worth you setting up as a partnership. Have you looked through the information available at the government run Business Link?

You might want to talk the possibilities through with an accountant.

Make an appointment with both business link and a start up manager at your bank. Barclays, HSBC, Natwest and Lloyds all have small business managers and offer up to 2 years free banking. They will help you with all of this and it won't cost anything.

Yeah dp works 16 hours elsewhere and is keeping that on and doing gardening on his days off. I have no other income (except ctc and cb). We bank with Natwest and i've looked at their business bank accounts and they seem good. May make an appointment for next week. I'm only expecting him to have about 5-ish jobs a week (so maybe £80-well thats not including expenses), i'm trying not to build our hopes up and think if we do better than that its an extra bonus.
The main reason we are doing this is because thy have changed the tax credits and if dp only works 16 hours our WTC will stop so hoping a few gardening jobs will make up the difference so we can still claim-i've had no luck in the job department.

I've said it before but i'm really appreciating all the help, i've not really got anyone in RL to sound things out to/ask for help.

My business bank account is DowagersHump trading as (t/a) My Business so in your case Zeldasdp t/a Gardening

I have a free £500 charge card which I can use to buy things on and then that gets taken out of the business account at the end of every month. I find it much easier to manage my money if I do everything for the business via the business account.

I wouldn't use a business bank account or even tell the bank if I were you (if you tell them you are running a business they will keep trying to sell you insurance/pensions etc. you don't need and can't afford) - the terms of your personal account probably say you can't use it for business transactions but many many self employed people do exactly that.

I can't give direct advice on a forum (www.mranchovy.com/about/legal/professional-advice here's why) but I would say that you should look into setting up as a partnership with your DH doing the work and you working in the business doing all the administration, advertising, paperwork etc. You will want to look at taking at least 50% of the partnership profits to use up your personal allowance, and you can count hours you work in the business towards the 24 hour total.

So how do i start up as a partnership? Will we both have to register as self employed? Going to look over all the information given again as i didnt read about partnerships, but it sounds like a good idea :)

MrAnchovy there are many reasons why having a business bank account is better for small businesses. The main one being it is kept separate from personal finances so in the event of being called for a tax audit it is easy to differentiate between business monies and personal monies.

Also regular small amounts of cash/cheques being paid in will soon get picked up by the cashiers and you will be asked to move to a business account. For trade accounts it is also better that it is an account in the business name. It looks more professional to clients to write a cheque to XYZ Gardening rather than just Mr X. If anyone does inadvertently write a cheque to the business name you would not be able to pay in to a personal account

Quite Whatevertheweather. I had to open my business bank account for exactly that reason!

And no one from the bank has ever tried to sell me anything

MrAnchovy there are many reasons why having a business bank account is better for small businesses.

I disagree - there are some, but to most micro-businesses they are small and are outweighed by the costs.

The main one being it is kept separate from personal finances so in the event of being called for a tax audit it is easy to differentiate between business monies and personal monies.

In the unlikely event of a tax inspection or investigation HMRC will go through every item paid into every account you have to see whether you should be paying tax on it so it makes no difference. Many micro-businesses use a second personal account which enables you to do this without exposing yourself to business account charges anyway.

Also regular small amounts of cash/cheques being paid in will soon get picked up by the cashiers and you will be asked to move to a business account.

But that's not an advantage of having a business account, that's just saying that the bank might force you to have one anyway. I would say the majority of the micro-businesses I know use personal accounts year after year without hassle.

For trade accounts it is also better that it is an account in the business name. It looks more professional to clients to write a cheque to XYZ Gardening rather than just Mr X. If anyone does inadvertently write a cheque to the business name you would not be able to pay in to a personal account.

This is true but may not be a big thing for many micro-businesses who are often paid mainly in cash anyway.

Bear in mind that although most banks will give you a so-called 'free' business account for a year or more, the charges after that can be very high in relation to transaction volume for a micro-business, and if someone bounces a cheque on you and you go overdrawn can wipe out a significant amount of profit.

I agree with Mr Anchovy, there is no need for a business bank account. I assume the volume of transactions will be low anyway. You could open a separate personal account for business transactions if you wanted to keep them separate. Thats what I have done for my business. (accountant BTW)
You may get free business banking to start with but one that period is up you get hit with charges for everything!
I also second the advice to get an accountant, the costs are not massive for small start up businesses. A good accountant can often save you more than they cost you.

Thanks for the advice on bank accounts, dp has a bank account that all our monies (wages, ctc, wtc and cb) go into. I have a bank account but it is not used very much. Usually just if i want to save a little for a trip or holiday, so effectively i "could" use that? I reckon the majority of payments will be cash anyhow so wont be using it very much.

I asked this before but if we are paid by cash, do i need to deposit that into the account or just make a note of it?

Just make a note of it. You might like to keep a book/spreadheet with columns like this (probably won't look right, but you get the idea).

Bank | Cash | Date | Description | Income | Consumables
123.45 | | 20 Jan | F. Smith | 123.45 |
| 50.00 | 21 Jan | J. Bloggs | 50.00 |
|(71.23)| 22 Jan | Weedkiller | | 71.23

The NI Contributions, I understood that they dont need to be paid if you are earning less than £5k ish a year?

They don't, but read this first.