Own Business

[Welderpaul]

From a purely selfish point of view, and because my head is full of the business world today, I would welcome any comments from those who have/want/did have their own business. I'm hoping to gain a bit of insider knowledge, and of course offer any assistance from the hours and hours of reading i have done. Any little gem/nugget of information will make this thread worthwhile!
Oh, and the usual **** taking/daft comments along the way. Off we go then...

 

[irondarren]

Go for it paul. There are two ways to look at running your own bussiness. 1 decide what you want to earn per week, once you have reached that target shut up shop and go home for the rest of the week, or 2 go at it hammer and tongs earn every penny you can, reinvest in better machinery, and just keep earning. If i was you i would look at the minimum amount of wages you can take home each week to survive and don't take any more than that amount. If after 6 months you have a bank account with to much money in, spend some on new kit if required and award yourself a bonus. In my opinion its better to draw a sensible amount each week, and have a dip into the account every 6 months

 

[dcocks]

Hi Paul
I have run my own business for over 20 years although not engineering. it is a golf course chemical spraying business.
Heres a few things i think are important
1- try and get a large customer base much better than a few big customer eggs all in one basket we have around 300 customers always some one needs a job doing.
2- Do not under sell yourself its to easy to be cheap when you first start up i can assure you its very hard to then get your prices up.
3-make sure you get paid i spend one afternoon a month trying to get the cash in bloody hate the job but it is to easy to think they will pay soon some never do without chasing them.
4- Do not employ anyone less you have to . I was much better of when i did it all myself and one bad bloke can ruin your reputation over night. Maybe not so bad in a workshop but but can a nightmare sending them out to do jobs.
5- Be prepared to work loads harder than in a job i do over 60 hrs every week
I can tell you one thing you will not regret it go for it
Regards David

 

[rusty69bus]

hi welderpaul, i want to have a business, this is what i have picked up from the forum so far,

Buisness
insurance (public liability) as welding is a high-risk occupation
recommended MMA Tradesman
metalworker/fabricator limited liability company with public liability isurance,write all your trainig needs off under tax loss against profit along with all new/secondhand tooling deperiatiion, materials
right off against tax any & all training costs, plant & equipment, vehicles, rent, rates etc
work is paid on completion & you will have minimal debts, "Sole Trader". The other thing you will have to consider is becoming VAT registered
service work for Joe Public don't register for VAT, if you sell things to VAT registered businesses do register. Decide for yourself on a scale between the two, bearing in mind registration isn't compulsary for turnover less than £42000 (???) but you can get VAT back on capital expenditure, if you buy it from a VAT registered supplier
On capital, you can't claim capital expenses against income/corporation tax, only the depreciation thereon. There is/was an exemption to this for computer equipment.
if you don't know the client GET A CONTRACT!!!
if it's a new client I get 1/3 up front, 1/3 midway and the balance on completion BEFORE delivery.

 

[Drains]

Tell you what Paul, there was some chancer put up a very similar thread a good few months ago here, which I reckon you ortta look at. I don't fancy his luck much - but you should be fine. Go for it!

 

[dcocks]

Hi the vat limit now is £61000 pa
David

 

[Welderpaul]

Hi the vat limit now is £61000 pa
David

According to Business Link you must register for VAT if you supplied taxable goods and services with a total value of more than £64,000 in the last 12 month period

 

[mishka]

One point I'd make is the following:

if you don't know the client GET A CONTRACT!!!

Like patents, contracts are legal tools - if you can't afford a lawyer/legal team to enforce your contract, its worthless.

A sole trader/small company is most-likely going to be a cash-oriented business, so do everything to protect the cash (payments). Best to spread the payments, with something up-front (at the very least to cover any expenses). And final payment before collection/delivery.

Oh, and that's CLEARED payment, of course Nothing like getting a letter from the bank with a bounced cheque to get the blood boiling

 

[Welderpaul]

Tell you what Paul, there was some chancer put up a very similar thread a good few months ago here, which I reckon you ortta look at. I don't fancy his luck much - but you should be fine. Go for it!

mmmmmm

 

[rtbcomp]

If you think you need an accountant, go for a one man band. When I formed my company I did that, but he joined a big firm who charged me £400 in my first year and I only issued 40 invoices.

Be careful if form a Ltd company, there is a lot of bureaucracy and if you get the t**t of a co-director that I got you won't stand a chance. I've gone back to being self-employed, just keep income and outgoings records and don't have to rely on anyone else.

As far as VAT is concerned, if you supply goods to VAT registered firms, register; if you supply services to individuals don't. You should find a happy medium in between those extremes.

 

[rusty69bus]

hope it's okay if chime in here, what can you write against profits or claim back from the tax man in this type of business?

 

[Ratty]

Like patents, contracts are legal tools - if you can't afford a lawyer/legal team to enforce your contract, its worthless.

I disagree, you make it sound as if it's not worth bothering with contracts unless you're wealthy. With respect thats 8ollix. a) Many people will see the fact they have signed a contract as legally binding and will not want to test it b) If you have an awkward payer and the amount is not huge (I'm sure Paul will know what the top amount is) you can take them to a small claims court which does NOT require expensive lawyers.
Without a contract, you don't have a cat in hells chance of even convincing the client not to mess with you let alone getting your money if they play up rough.

Having said that, the best way to make sure you get paid is to get the money before you part with the goods. Why do some people assume it is ok not to pay for months and months? It's just stealing imo.

Sorry...bit of a sore point. I can give advice...doesn't mean I follow it.

On the other side...if I want a job done by a self-employed specialist, be they plumber, electrician, welder, dry-liner...whatever...what I want is someone who is skilled but also friendly, helpful and reliable. There's nothing pi$$e$ me off more than people who don't turn up when they say they will - and don't phone to let you know. I would expect to pay a fair rate, more if the person is particularly skilled or has little competition!
Everyone is saying it...don't undersell yourself. You're better off getting people to like you and want you to do the job cos you're such a pleasant and helpful chap (and good at what you do).

 

[rtbcomp]

hope it's okay if chime in here, what can you write against profits or claim back from the tax man in this type of business?

Expense/Overheads (Car, rent, rates, heat & power, small tools, interest, professional fees)

Depreciation on equipment (Not cost of equipment)

Basically profit is turnover (money in) less expenses and you are taxed on profit.

You can't claim stock. Money spent on stock is counted as a debit, increase in stock value is a credit. So if you spend £100 on stock and don't sell any before year end you don't get any allowance against tax.

If you sell £10 worth for £20 your stock is now £90, this is a -ve stock movement of £10 on a turnover of £20 which counts as £20-£10=£10 profit.

You can claim depreciation on old stock and losses on ruined stock

 

[Welderpaul]

Depreciation on equipment (Not cost of equipment)

http://www.businesslink.gov.uk/bdot...RCES&itemId=1073789928&r.l2=1073859194&r.s=sc

Check this link to Business Link - As a business you can claim tax allowances (called Capital Allowances) on certain purchases or investments - you can then deduct a proportion of these costs from your taxable profits, and so pay less tax. Capital Allowances are available on plant and machinery etc. The link tells you far more than I ever could!

 

[rusty69bus]

mig-welding.co.uk professional fees (internet access)

 

[Drains]

Here Paul, you mithering, swithering thing you. Can you earn enough in your own shop to cover your overheads and keep Mrs P in the manner to which she's accustomed (I assume she works, so you don't need to worry too much about her).

If the answer is yes... well, you know what i'm going to say, don't you?


Edit. I assume you're still on the fence. Maybe you're not, and you are taking the plunge and looking for the old last minute heads-up. Can't help you there - I've not been on PAYE for 18 years and have no idea what warnings to give... i'm as much freelance as self-employed, and don't feel like I run myself as a business...

But it's much more fun this way, and if you don't have driving ambition and have to work all the time, what you find is that life is better. Just, better. You work hard for yourself, not for a boss. You don't get overtime, but you do get fat profits on a good deal. It's so much more satisfying, really.

If you do have driving ambition, well hopefully you'll be able to retire earlier, and sell a good business (then work at your leisure).

Mind you, some people go self employed and get lazy - they are the type who only work well with a boss looking over their shoulder. Somehow, I don't think you fall into that category.

 

[rtbcomp]

http://www.businesslink.gov.uk/bdot...RCES&itemId=1073789928&r.l2=1073859194&r.s=sc

Check this link to Business Link - As a business you can claim tax allowances (called Capital Allowances) on certain purchases or investments - you can then deduct a proportion of these costs from your taxable profits, and so pay less tax. Capital Allowances are available on plant and machinery etc. The link tells you far more than I ever could!

That's a different word for depreciation

 

[rusty69bus]

Microsoft has an impressive cache of pre-made invoices, legal docs, forms, etc., that are free for the taking.

Here's the URL:

http://office.microsoft.com/en-us/templates/FX100595491033.aspx?pid=CL100632981033

cut and pasted from the miller site

 

[Welderpaul]

That's a different word for depreciation

Gotcha!

 

[Welderpaul]

Here Paul, you mithering, swithering thing you. Can you earn enough in your own shop to cover your overheads and keep Mrs P in the manner to which she's accustomed (I assume she works, so you don't need to worry too much about her).

If the answer is yes... well, you know what i'm going to say, don't you?

Yes. That's why i'm doing it.