Starting Up Self Employed

[DeeJay]

Basically, there is no company in Edinburgh currently looking to take an Electrician on (especially someone who only became time served at the tail end of last year)

So I have entertained the Idea of going Self Employed and trying to drum up a little bit of small works so I have some money to live off, and most importantly stop me from hanging myself from boredum of being in the house all day! headbang

Anyhoo, I have been reading up on it, ordered a small ammount of cheap business cards and been creating a small website (started out as boredum but then got a bit more interested in the idea) so I have been reading up on it over the last week or two but still have some questions, just thought i would post on here and ask you guys.

Business accounts - Been told by someone who works in a bank I would need one of these, googled Business accounts and found Lloyd TSB offer a start-up account, so had a wee spy at it and it says i need to know my "Expected annual turnover", as i have no experience in working on my own I have no idea what my expected annual turnover would be. I know how much i want to make, but have no Idea what i will make?

Tax and National Insurance - I know that i have to register as self employed and pay my own tax and NI, but i have a question regarding this. Say I manage to drum up enough work for a few weeks but then have a dip in work and dont work for another 3-4 weeks, what do i do regard tax and NI? I imagine i wouldnt pay tax because i wouldnt be working, but would i cancel the direct debit for NI and declare my self unemployed or would i have to suck it up and get back on the advetising?

Anymore hints and tips regarding starting up would be greatly appreciated guys, as i said im tying the noose as we speak due to boredum etc!

Cheers :Salute

 

[Evans Electric]

The way things are these days , its probably your best route, DJ. With the bank, just use your current account until things pick up, save on bank charges that way. The bank will start to winge after a while and you may have to alter it.

Open a 30 day account at your local wholesaler and build up a trust ,then ask for 60 days after a couple of years, it helps a lot.

Inform NI that you are now self employed , don't forget after 2 years , you can't sign on the dole .

You won't need to pay tax till next year but put 20% of your earnings in a savings account to cover it.

If you don't work , you don't earn ,if you don't earn you don't pay tax, but still need to pay NI which covers your State Pension. I pay mine every quarter

 

[DeeJay]

Yeah thats what my thinking was Evans. Ok so while im still trying to advertise and start up keep my normal account. With the savings account for the tax, do i do 20% after deductions for material i take it?

So say i inform NI that i am self employed now, i currently dont have work as i am just starting to advertise. What happens if it doesnt take off?

Cheers

Daryl

 

[vandalay]

Think Deke has got the tax angle covered as for your banking most will give you it free to get you started I got 18 months with RBS pretty easily.

Wishing you the best of luck.

 

[m4tty]

If your aged 18 to 30 contact the princes trust if you have it up in Scotland. They run business start up courses free and teach you marketing, advertising. Bookkeeping etc. Highly recommended and they provide business start up loans which are nion interest free. Hth

 

[ProDave]

Book an advert in Yellow Pages. The deadline is some time in May IIRC so plenty of time to get yourself in the next book printed this spring.

In the mean time, I started out advertising in a local paper, and I sent mail shots to people submitting planning applications.

As well as informing the tax man, get yourself some public liability insurance.

When you register as self employed, the inland revenue should send you a book "the right way to start your business" which explains most things in pretty simple terms.

Ask at your job centre if there are any start up grants of any form available or any other assistance.

As soon as you start earning, you will probably not be working full time and probably won't be earning much. Apply for Working tax credit, you may be pleasantly surprised at how much you are entitled to. Quite probably more than you were getting on the dole. If you have children as well, you will get Child tax credit also. As you start to earn more, your tax credit entitlements will reduce, but it may help prop up your income to start with (that's what it's there for)

You will be below the threshold for VAT, so that's a complication you can avoid.

So accounting is simply money in - money out = profit. Just keep good records and you can file your tax return yourself. No need to pay an accountant. Don't forget to keep ALL receipts.

If you already have a vehicle, use that, and charge all business mileage to the business at 40p per mile (it's about time the inland revenue increased that rate given the high cost of fuel now) As things pick up you may want to spend some money on a dedicated vehicle for the business, or just continue using your own vehicle.

You will pay tax at 20% after the first

 

[Evans Electric]

Yes some more good points from Prodave . To answer one of your questions , I think , whether you are earning or not, you will still have to pay the NI . I didn't know about Working Tax Credits TBH.

May I say that when you become self employed , you need a totally different mind set from being employed, you are on your own, its up to you and no one else, and if you don't do it , it don't get done!! There won't be many people who will help you out, but theres a few!! Not everyone is straight and honest , beware of builders bearing gifts, all that glitters is not gold .

Never risk a large amount of money in , say, materials, with someone you don't know well .

On the other side of the coin , you will be free , no boss, no start and stop times , the world is your lobster ,Rodders!!!! :^O

 

[Robojin]

Prodave I think you have a typo on the Tax it's

 

[DeeJay]

Yeah, ive put in an advert for yell.co.uk, google maps, thomsonlocal and also my local paper. How do i find out about these local planning permission applications?

Where is good for insurance? I had a quick quote of

 

[ADS]

Hi Deejay,

Two good links for you, mate.

They're 'english' based sites, but a lot of the info and advice crosses the border anyway - just a few legal bits will be different.

http://www.businesslink.gov.uk/bdotg/action/home?lang=en&r.s=m

https://www.simplybusiness.co.uk/

Hope that's a help.

 

[DeeJay]

Ill have a look at them ADS mate, cheers!

Im going to phone HMRC up and ask about working tax credits etc tomorrow.

Thanks

 

[ProDave]

Yes I may have got the tax free threshold wrong. I know it was increased following the 10p tax band fiasco, but didn't realise it had gone that high.

Self employed can either claim actual motoring expenses, OR they can use their own privately funded vehicle and charge business use to the business at 40p per mile. I choose to do the 40p per mile thing, but I've never bothered to work out if that is the best way or not, I just know it's the simplest way to enter into the accounts.

All planning applications are listed on line on your local council website. I sent mailshots to people building new houses and extensions and got some of my first jobs that way. I only targeted individual householders submitting applications and didn't bother with applications lodged by building firms, figuring they would already have an electrician lined up.

Working tax credit you apply for after you have started work. I found out about this by accident when our daughter was born. I naively phoned the tax man to apply for my married man's tax allowance only to be told that was abolished years ago and was replaced with child tax credit. So I filled in the forms and was surprised to also be eligible for working tax credit. At one point the tax main was paying me

 

[sprocketflup]

I always say that going self employed was both the best and the worst thing I ever did - take from that what you will lol.

In the back of your mind always keep the thought that you work to live, not live to work. Too much work is a bad thing, it messes with your head. Always make sure to leave room for some you/family/kids/whatever floats your boat time, cramming in those extra jobs coz your just starting up isnt worth it in the long run, trust me.

I imagine Im not the only one on the forum that speaks this from experience either.

Anyway All the best, and back on topic now

 

[ProDave]

+1

The hardest thing when self employed is to turn work away.

BUT I DO turn work away if I'm too busy, but more likely I sometimes turn away s%*t jobs that I know are going to be hard work for little money.

 

[DeeJay]

Ah cool ill get onto the council site today, and get myself a template email made up.

Well I dont have a partner or any dependants, but will the working tax credits be affected by people in my household? (Dad, Step-mum, brother and sister)

Well thats good about the certification then, i was worried about this! Didnt want people thinking im not competent because i was getting someone else in to sign off etc...

Have you got any more info on this COC scheme? Do they have a website i can read up on them?

@sprocket - I know what your saying, my uncle says the same about his Combi Boiler business, he had it great over the last 10 years but is really struggling now, he should be fine though hopefully!

Dont worry i will leave time for hitting the sauce haha, nah i know what your saying, dont wanna become unsocial etc,

Really appreciate this help guys, been having a migraine for days from all the reading but it will hopefully pay off!

Daryl

 

[ProDave]

Here's the guidance note for the COC scheme http://www.scotland.gov.uk/Resource/Doc/217736/0092096.pdf

Note in several places it makes it clear it is optional to use an approved contractor (approved in this context means they have fulfilled the requirements for membership of the COC scheme) If you use a COC contractor (or in your case become one) then the contractor is entirely responsible for signing off the electrical installation. The bribe to get you to use a COC contractor is a small discount from your building warrant fee.

If you choose not to use a COC contractor, you pay slightly more for the building warrant and building control are supposed to inspect first fix and certify the electrical installation (as far as the building standards aspects are concerned) the contractor still issues an EIC.

In your case, if you choose, like me, not to join the COC scheme, then you need to make it clear to your customers, when they complete their building warrant application to tick the box to say they are NOT using a COC contractor for the wiring.

As I say this only applies to new builds, or major jobs that otherwise need a building warrant, an ordinary rewire does not need COC approval.

This document tells you what electrical work is excempt from a building warrant http://www.scotland.gov.uk/Resource/Doc/217736/0098173.pdf

Note a rewire of a 3 or more storey house or a flat requires a building warrant, but again, you can choose to use a COC contractor, or choose not to.

I note even the addition of a single extra power point in a flat needs a building warrant, but (cough) I doubt many people do that.

 

[DeeJay]

Thanks Dave, Ive bookmarked those, will have a read of them after lunch and walking my sisters dog(oh the joys of being unemployed!)

Another quick question (sorry if im getting a tad annoying ) - Looking at those planning applications on my council website, should i just send out a standard letter to the smaller extensions etc, with a business card Attached? Whats the best approach would you say?

Thanks

Daryl

 

[ProDave]

Off out to do some proper work in a moment.

I sent two things, a leaflet outlining all the types of work that I do, and a letter addressed to the applicant.

At least make the effort to customise each letter to include the name of the applicant, and what they are proposing, rather than a completely standard letter.

Be polite, make it clear you are able to undertake their work, and would like the opportunity to be considered when they are selecting tradesmen for the job, and finish by wishing them every success with their planning application and building project.

A final point. Never turn down small jobs when you start up. The best example of that was someone called me to sort out a problem with a tv aerial. Since I was passing, I called in, re fitted the plug on the end of the coax and charged him

 

[DeeJay]

Yeah im going to customise them to every person, i just ment a general outlay that i can save and edit easily. Im going to get onto writing this tonight, not looking forward to it as i wasnt the best at writing in english at school! haha!

I wont turn down any jobs aslong as I have the time, even then I have a few friends who are sparks who would help out for a bit extra cash.

Thanks

 

[Sidewinder]

DeeJay,

IF you can stand the nit picking, obviously constructive, there are many of us on here who are spelling and grammar pedants and will help you out with the exact correct punctuation, spelling and phraseology etc. of your letter.

We bite our tongues on the forum posts as they are informal!

My posts included, prior to anyone making comments!

I own & have read "Eats, Shoots & Leaves", check it out!

That is how sad I am, however, my Masters Dissertation was marked on grammar & spelling as well as technical content and layout!