Self Employed and Working Tax Credits

[intheforest]

First Post, so be gentle.

Myself and my partner are now ready to start a business. In fact, we are looking at two separate businesses. To this, we will need working tax credits at least in the first year until we get off the ground.

Given that the cost of running two businesses is twice running one we are wondering if we can run one business, but are confused about claiming the couple allowance on working tax credits.

Do we both need to work in the business and how many hours, or just one of us.

To this, would we need two businesses or just use one with two different products.

What I have gleened to date is one business, one working minimum 30 hours, we can then claim full couple allowance and the 30 hour allowance ?

The other thing is how do you transition from JSA without losing any benefit.

I appreciate its a lot of questions, but search as I may, I cannot find the answers but always seem to end up on mumsnet for most of the info....Full credit to you and thanks in advance

Well, I know nothing about benefits, but I would say that I'm not sure basing a decision like the structure of a new business/businesses on what benefits you can claim for the first year is sensible. Starting a business is a long term decision, and the structure can be important.

I would suggest deciding whether commercially and in the long term it is better for these businesses to be as one or separate, and then if you feel you are not in a position to both work in either one or two businesses (whichever it is) from the start, either have one of you staying in conventional employment for a bit or if there are benefits available, looking at what these are. But I wouldn't base a decision about whether these should be one or two businesses on something like that. Base it on longer term things like administration, ownership, structure, products, profits, marketing, tax efficiency, etc etc

Thanks flowery. Long term I have spent the last 12 months planning, business planning, and replanning, and am happy that these are both long term viable businesses. As for benefits available, the working tax credit is it and hopefully the businesses take off such we don't need it longer term.

If anyone can answer the questions it would be appreciated.

Well if you've spent a lot of time planning that's great, and I would expect that to include what structure is best for your business ideas, and whether from a legal, tax, marketing and operational point of view they are best as one business or two. My point is don't base such an important decision on such a short term factor which in the long term scheme of things will be tiny financially and may give you serious headaches later on.

But hey, that's just my view. If you want technical advice about how to get as much as you can out of the benefits system during the early stages then the Employment topic might not be your best bet, although hopefully someone who knows about benefits might see it in Active Conversations.

Best of luck with your business/es.

I have to agree with flowery you may need working as credits for a year or so. You could be living with the business structure you create for thirty years.
Business structure was the very first page of my business plan taking into account type and quantity of taxation, ability to obtain a credit line for the business, potential liability and how to protect the business.