Self Employed advice please?

[cadders75]

Evening all,

I am considering going self employed as a general builder/Maintanace man (not as a woodworker, i'm nowhere near that good).

What i'm after is a few pointers regarding the dreaded tax man and any other pitfalls that i should be aware of? i've worked as a ground worker before so i've got a bit of an idea.

I'll be generally be working on decorating, landscaping and kitchen fitting, possibly making a few conservatorys ( Glorified lean too's ).

What are other peoples experiences of starting up on their own.

Thanks.

Richie

 

[JFC]

Get the most corrupt accountant you can and enjoy the money :lol:

 

[ProShop]

Hi Richie,

I've been self employed for over 25 years, the last 3 years as MD of my own Ltd company.

In 2002 Gordon Brown made changes to the employment act which covers everyone who works for a living. From 2002 anyone starting a new business are legally bound to inform the Inland Revenue when starting a new business/venture, failure to inform the Inland Revenue before you start or at startup invokes an automatic fine which I believe is currently £100.

So my bit of advice is obvious, inform the Revenue and they will send you a form to fill in (welcome to the world of goverment REd Tape Department )
Even if you don't actually start your new venture or find it's not really for you after a short while, fill in the form before you start and save £100 ish from your cash flow. Not only that, you might also escape from being on the Revenue investigation team list for......... well. an early investigation on your bookeeping.

My only other advice is when pricing a job, think of a figure then double it and NEVER explain to ANYONE how you arrived at the total amount.

Good Luck, and all the very best on your new venture.

 

[PowerTool]

My only other advice is when pricing a job, think of a figure then double it and NEVER explain to anyone how you arrived at the total amount.

Where I work,office policy is similar - but never use a round number!
i.e. instead of saying £1,600,it would be £1,598 so it sounds like you actually worked it out... :lol:

Andrew

 

[RogerS]

Cash payment wherever possible.

If you think your turnover is going to be high enough...then VAT register. Open a trade account with your favourite builders merchant.
Use a simple software accounting program like Sage.
Get customers to pay a good deposit..enough to cover your materials at least. Don't be frightened of alienating customers by doing this...you know you're good at what you do...word will get around...so if the customer doesn;t want to play ball then ask yourself why.

Try (very hard, I know, especially when starting up) not to take on more work than you can comfortably handle.

 

[frank]

cadders never do an itemised estimate keep your b/keeping simple enjoy working 8 days a week but you must get an accoutant one the tax man trusts he will save you his fee from your tax .

frank who never paid the tax man more than he should 8)

 

[JFC]

Good point on the money up front ! Ive noticed even jo public now think they can pay you when they want . Used to be just builders . Good tip although they do keep you waiting for money but give you work all year round is get at least one builder under your belt , they soon become a pain but will always have work .

 

[tim]

All the above is true. Get public liability insurance - Norwich Union are good for this. If you need to get equipment/ machinery then consider a loan - don't try to take it out of cash flow, it will knacker you.

Roger is right re deposits - but it must cover some labour as well. Be prepared for bad debts. Forget work/ life balance and don't expect to make much money in the first couple of years.

Also its not unusual to be very busy right at the beginnning which can tail off (and be depressing) but it will pick up again and I doubt you'll regret it.

enjoy working 8 days a week

Frank - you slacker :twisted:

All the best

Cheers

Tim

(who wishes Christmas was next April!)

 

[JFC]

And the cherry on the top is ...... When someone says you should have been here at 8am you can say , why what happened ? And cant get sacked :lol:
You can do your books and tax return yourself , but a VERY good book keeper and accountant will work with your receipts and work wonders , and its all legal and above board . I steer clear of VAT just because they will come down heavy if you dont pay them !

 

[RogerS]

Oh, nearly forgot. IMHO if you do register for VAT then opt for cash accounting. That means that you claim VAT back when you pay for the goods (which means like 'now') so you get money coming in. And you only have to pay the VAT when the customer pays you...ie NOT when you raise your invoice.

 

[ByronBlack]

I've been self-employed now for the last 4 years, so i'm not as experienced as others here and i'm in a totally different industry (web development), but they are both service industries, so some of my advice might be useful.

No.1 Do a business and marketing plan - this is the most important. With it you can work out a 2 year projection of your finances, this will determine what your outgoings will be including: marketing, insurance, travel, bills and of course your wages! Once you work that out you can then add a figure of how much money you realistically would like to earn. Add that figure to your outgoings and divide by a number of jobs you expect to do, this will give you an indication of what you need to charge for each job.

The other way to do that is work out how many hours you'll be working and divide the figure by the hours, this is your hourly rate.

No.2 Get an accountant, and a good filling system, you can do the tax-returns yourself, but each time i've got my accountant to do it for me he has saved me more money than what he charges, for instance one year he saved me £2000, and his charge for that was just £350.

No.3 Get decent business cards, flyers and maybe even a website (and at the very least an email address), make it as professional as you can, when you complete a job, ask the customer for a testimonial - you can then use this on any marketing literature.

No.4 Do not haggle on price - ever! Customers who are too cheap to pay the going price often and nearly always become nightmares and these are the customers who usually fail to pay.

No.5 Have a very clear payment policy and maybe even have a lawyer to draught one for you so that you can give this to the customer - this is both professional on your part, and protects both yourself and the customer, so everyone is clear on how the payment is to be made and within what specified time.

Save 30% of every job as a 'quiet' fund for when things slow down - and that will happen at some stage.

Save 25% for your end of year tax, it's a real pain when you come to pay your tax and you havn't put enough away, stick it in an ISA or high interest account and earn some interest on your tax money ;-)

I could go on and on, but I think my most important tip is: Don't work too much, don't be afraid to turn down a job to spend some time relaxing, with the family etc.. If you work too much you'll lose passion and end up in a black tunnel, i did this in my first couple of years, and was totally unessary and depressing.

Good Luck, hope this wasn't too long and boring.

 

[Steve Maskery]

The other way to do that is work out how many hours you'll be working and divide the figure by the hours, this is your hourly rate.

A useful rule of thumb here is to assume that there are 1000 billable hours a year. (365-weekends-holidays-sickdays-days with no work)*8*0.6).

You will, of course, work weekends, work a lot more than 8 hours a day, not take sick-leave, and have no holidays for years. But a large part of your time will be spent doing work for which you cannot bill anyone (hence the 0.6). It works out at about 1000.

So decide your wages and that is your hourly rate in pounds for your labour. On top of that you have to add all your overheads and expenses, and profit for the business (your wages are NOT profit).

So lets say your overheads are 10K (rent, rates, insurance, PHL, accountancy fees, marketing, transport - I could go on), then your total price is 30K pa or £30 per hour plus materials, just to break even.

You should also consider your capital investment. If you have a 50K workshop, and that is very easy to reach, what return would you expect on that? You could get 5% just by sticking it in an online account (2,500) with virtually no risk, so you should expect to get more from your risky investment.

In my experience, very few people are prepared to pay that economic price. But whe it is going well, being S/E is great. ANd when it isn't...

Very best of luck.

Cheers
Steve Maskery MBA.
PS I hope my maths has improved since my last embarrassing contribution

 

[woodshavings]

The only thing I can add to good advice already given is to look after your cash flow.

Even though you have made strict rules about terms of payment, make sure you have sufficient cash to cover late or disputed payments, maybe enough to cover 1 month of delayed payments.

Insufficient working capital is a big cause of start up companies running into difficulty.

Good luck with you business

John

 

[cadders75]

Thank you all for your advice, it's all a great help when you are thinking of setting up on your own.

I've been talking to our local business link people about what i need to cover before getting things off the ground.

I'm quite lucky that i will have minimal overheads to start the company up, i already have almost all of the tools and equipment i need to carry out the type of work i envisage taking on. The greatest cost will be buying a van and having a bit in the bank to cover the cost of any advertising and quiet periods.

What sort of advertising would you reccomend to give things an inital kick start, i've always been a bit wary of employing anyone who sticks a flyer through my letter box. Maybe a decent ad in the local rag might be a better idea.

If any of you guys are thinking of charging for you consultancy, you'll have to wait for a check from my first years profit to get paid.

Many Thanks

Richie.

 

[Argee]

Richie,

There are several on-line sites that maybe worth a click - this one is an example. Don't forget that many local authorities and others have free or very cheap courses that you can attend to get you started. There are often quite a few tax breaks that are otherwise unknown, so have a dig around.

The most important thing is that you stay on the safe side of all the regs, especially the Inland revenue - that bites if you get it wrong!

Good luck with your new venture!

Ray.

 

[tim]

Richie

I'd question whether you really need a van. Its a big overhead to have sitting on the drive doing nothing when you aren't busy. Talk to local hire people about preferential rates etc. I rent a van whenever I need (and I rarely use the same size each time ie SWB transit for smaller items through to 7.5ton tail lift for kitchens). Definitely works out cheaper for me.

Cheers

Tim

 

[ByronBlack]

I wouldn't dismiss flyers, you will be surprised how many people do read these and do employ people from them. If its done nicely and professionaly there is no reason why it is any worse than an ad in a local rag.

Bearing in mind there is no skill or major investment in putting in a ad, but with a flyer there is a degree of thought and design that goes into it, you are also guarenteed to have more people see the flyer than an ad in a paper, unless that ad is big.

Personaly if I were you, I would do both for atleast a month, the rates for distributing flyers is getting cheaper and cheaper these days, and usually you can have these put into the newspaper, so you get a double whammy.

It is said that it can take up to 4 exposures before someone is likely to hire you, so you can get two out of the way with an ad and flyer, you could then capitilise on that with a cold-call (not the easiest thing to do mind) and perhaps a personally dropped information sheet about a particular subject you could help with, like wooden flooring for example.

I would definitly get an email address sorted out and a clear and simple professional website - avoid templating systems, these look awful, instead hire a local designer to create a 2 page site for you, shouldn't cost you that much more than the flyers or an ad.