Setting up my own business... Advice?

[DejaVu]

I am going through the motions at the moment of losing my job (bad times!)

But I have been thinking about starting up my own business for the past couple of years and have now decided this is the swift kick up the arse I need.

I have NEVER been self employed or had anything to do with the Tax man other than PAYE.

My main area is computer repair, configure, virus removal, blah blah blah (ain't we all!?)

I am currently A+ Certified and plan on getting back to study to get ANY further qualifications that will help and would like to, in the meantime, earn some money to help keep my family afloat.

I've been looking up on some of this stuff and people I know who are already running there businesses explain it's easy and I shouldn't have a problem. Although I have cold feet on the matter. Reading up on this stuff is intense! What are the key things I should consider?

Looking around I found that Business Link is a good place to start, but I was wondering if anyone has any ideas for me that would help...

IE -
What do I charge for repairs? Flat-Rate or Hourly (I think Flat rate is the way to go?)
Great places to start advertising to help fill loads of time I now have on my hands?
Any other advice I could do with before I start?

[bazilden]

ive been self employed for a good few years now, on the building/joinery side tho best advice i can really give mate is get a good accountint at 1st if your not too sure, save ALL your receipts even for the odd item of new clothing/shoes you buy (workware) tools etc.. in an old shoe box or summut, go into your local tax office theres loads of good info and advice, as long as you keep the tax man happy, and bussness is good then really your nice
good luck
baz

[TwoPlAnKs]

Great places to start advertising to help fill loads of time I now have on my hands?

I was amazed at how many local shops will let you put up a commercial advert on their notice boards. Most decent small stores and supermarkets have a noticeboard now, and only one out of dozens that i went into had a policy not to take blatant business advertising. Spending a few hours driving round every supermarket and convenience store within the area that you plan on working in with an A4 poster would be time well spent, for free apart from petrol and printing.

If you really want to avoid trouble with the tax man you could go down the sole trader route. This means you can start trading right now as long as you tell the taxman within 3 months, which you can do online.

You just keep all the receipts for the money you spend, and record all the money you earn (you can buy receipt books in stationery shops which will make two copies, one for you and one for customer). At the end of the year, money you made - money you spent = taxable income and you just send off the money as calculated by the tax return form. You'll get a NI bill every quarter automatically which you can just pay by any of the usual methods. Piece of piss, and no money spent on accountants. Just be careful to keep every receipt and don't take the piss too much with claiming things as business expenses.

That method does have some big disadvantages too. It means that if you take out a loan or credit for business stuff and then it all goes tits up and you can't pay it back, it's your personal loan and you personally will be liable. Also a lot of big companies won't deal with a sole trader. And it can be simpler if you have a separate business bank account too, for auditing purposes. The solution to this is to register a limited company, a Ltd. There are online law companies that will do it for you for about £15 or something, you just choose the name and they set it up then you can use the company you registered to get a business bank account from any high-street bank (they vary in quality a lot so shop around) and then you need to submit a full set of accounts every year. These accounts can be done by a normal person but I think it's such a pain in the arse that most people prefer to use an accountant.

With the sole trader route you avoid so much kerfuffle, you just spend whatever spare money you have on yourself and don't need to worry about paying yourself a salary or anything. The limited company means you need to take the money out as dividends or PAYE salary (do a mixture of both with a clever accountant to avoid uber tax) which is obviously more hassle, but it can be a lot less hassle in the long run and I know people who earn £100,000+ and pay 22% tax overall because it's all through Ltds.

The Ltd company also exists on it's own, so if it fails and you can't pay back debts you have a choice between either putting your own money in to save the business, or letting it crumble at which point you aren't personally liable. However... if you are a director of a company that has gone bankrupt, you are still pretty much fucked AFAIK and you aren't allowed to run another company or anything for a while afterwards. It's still marginally better than being a bankrupt sole trader though, because it's not your money just yet.

With an Ltd., if you start it you effectively own 100% of it and you can choose to sell shares in it to other people. They can't just turn up at the stock exchange and buy them, they can only have them if you choose to sell them. You can become a Plc. when your business grows, which effectively opens the shares to the open market so anybody can buy them at the stock exchange.

[TheThingIs]

get paid in cash as much as possible and then you can decide what amount of tax you'll pay

take 25% out of everything you earn and keep hold of it safe. that way no worries paying the bill at the end of the year and if you plan it properly there should be enough left for a nice little holiday

bear in mind that the tax man expects you to make a loss or earn very little for the 1st 3 years so plenty of scope

be aware that as self employed you will be at work ALL the time, you can never switch off. work 9-5 and you wont make it work

[BIG-TED]

sick days are a thing of the past too, you not at work your not earning. The first couple of years are hardest, when you have a good customer base, then the word of mouth thing occours and you'll start to fluorish.
Ted

[d3xt0r]

I was thinking of starting a business aswell but the thing that scares me is if i make no money the odd week here and there i have nothing to fall back on and cant claim benefits IIRC

d3xt0r

[scullion]

I was kindof thinking of this too when I graduate. Not necessarily in the same field as my degree. Coming up with ideas etc at the minute but not much time for it.
I would rather earn my own money than make some other cnut money, although it would be less hassle, stress etc.

[TheThingIs]

you can sign on the dole anytime m8 just as long as you arent activly working or trying to make money ie going out pricing for jobs, if work comes in after you've signed on then that's fine, just sign off again

like most self employed, jan-feb are the worst months for me and I often have weeks without work. You just have to plan for those and put aside for it. Biggest part of being self employed is having self control and saving during the good times to cover the bad

[Copex]

make a appointment to see a Business Link adviser. 3 years of support to get you on your way.#

advertise in the local free paper for domestic computer repairs fixed rate, no fix no free, free av installation ect.

temporary contracts bring in some cash while you are building up your own business.

become a VISP so you can white label sell ADSL, domains, web hosting, everything is done by the isp they just pay you a ongoing %

word of mouth is your best advert.

Good look.

[ant3b]

Im currentley setting my own business up. Well raking the first steps soon. Im using business link adviser to see what is possible etc.

[DejaVu]

Thanks for all the advice. Got myself an appointment with Business Link Friday Week.

Hopefully will get my head round it all. Definitely gonna start advertising in the local stores/shops!

[Markymoo]

Dont go to the tax office to register they only register you for self assesment which is not self employed!

Click here to register online, to register over the phone ring 0845 915 4515 it will take 5 to 10 mins, there open 7 days a week Mon - Fri 8am - 8pm, Sat & Sun 8am - 4pm.

They will do everything for you if it's the soletrader route you want to do. You just need to provide them with:-

name
address
National Insurance number
date of birth
contact telephone number
the date your self-employment commenced
the nature of your business

National insurance as self employed is Class 2 (£2.40 per week) you'll have an option to pay that on a monthly direct debit (taken the 2nd friday of the month) or a qauterly bill (Jan, April, July and Oct). If your earnings are below £5075 you have an option of opting out of paying NI (SEE (Small earnings excemption)) witch is form CF10. This would have an effect on your pension and benefits such as ESA, bereavement benefit and maternity for woman if you choose to opt out.

Your tax is done at the end of the financial year on your self assesment which is about 22%. you will have a personal tax allowance as well which i believe is £6475 for this year.

HMRC run workshops on variety of subjects at locations throughout the country. Services are free of charge and are designed for everyone in business, especially new businesses or new employers. There really good for anyone starting out. See here to book.

hope this helps

[Over Carl]

I pretty much tried to do exactly this about 5 years ago - my thing fell flat on it's face although I will offer some of my observations - whether you choose to listen to someone who failed is your choice.

I thought we had to look the part so got a small shop on a busy route and got a volvo 850 for picking/dropping the pc's, we even got smart looking t-shirts printed with company logo and everything. Shop was a waste of time as all I ever did there was set up phone/fax/etc, make it look like a workshop, set up 4 x desks with monitor,keyboard,mouse,power, ready to work on pc's, and for storage. We never properly manned the shop so for us that was a waste of time, although we possibly could have made a lot more out of that.

The work we got was all word of mouth/flyer drops, mainly the latter. Me and my partner spent a good couple of weeks arguing over leaflet design. In the end we paid someone to do it and his design that cost us bugger all made our attempts look extremely shite to be honest. We got iirc 10k leaflets printed 1/3 of a4 both sides full colour. The leaflets were distributed via two main methods - we just used to go to busy shops and ask if we could leave a few of our leaflets on their counter/stuck in a window or something - shops were never rude to these requests and the ones who did co-operate didn't ask for any money or anything. However, most of the leaflets were dropped by hand to houses in areas we were targeting. I personally dropped them all myself as from previous experience I couldn't trust any other fucker to do it, not even my business partner. Would be immensely satisfying when we would get calls from a road I knew I had just recently leafleted - really felt like I grafted for my cash, and was satisfying to actually see results.

One thing I reckon we cocked up on was the pricing model. We thought we would have to eventually move towards a per hour pricing model, but no one would want to pay an unknown high sounding price to an unknown business so we thought we would do an introductory offer of £20 for windows rebuilds (was the most common work). Problem is the easyjet syndrome - by putting yourself at the bottom of the market, you only get the worst customers - i.e. the kind of people who will kill their pc again within a week by doing all the things you told them not to do. These people will only bad mouth your business - and word of mouth is not something to be underestimated. However we found ourselve in a catch 22 - either keep fixing everyone's pc for free or accept we're gonna get a bad rep for doing a top job. Sorry I'm not quite sure what the solution is and this was a big part of us giving up.

One thing I have since thought about this would be to take images of all pc's. Tell people xxx amount for a rebuild, a bit more for say a year's insurance - any rebuilds during the insured period would be foc as you're just restoring an image, provided customer drops pc back to you then collects.

Also stock is a tricky one. You will be finding certain items will be replaced more frequently but think very carefully about buying in stock to get discounts in quantity - will you be moving them quick enough to still be profitable when selling the last ones left in the box? However, having to disappear for a part doesn't look as professional as pulling one out of the car/van. You may find a reasonable computer shop who may be willing to open you a 28 day account with discount so you don't have to personally fund the parts and can still make a tiny shaving.

Also start stocking up on every oem windows cd/dvd you can possibly find. Sometimes you'll get to a customer's house, find coa on a pc but they haven't got a clue about where the media is. Also you may want to clearly think about and define your policy on reinstalling software - are you happy to reinstall anything that was on the pc from your pile of every bit of software ever? Are you only going to install what the customer can provide media for with coa's? Not telling you which kind of path you should take as both have major advantages/disadvantages - was just something I wasn't totally prepared for.

Sorry it's been a good few years so I've forgotten loads - I reckon it's not an impossible market to crack, but not the easiest. Be prepared to view the business as a black hole for cash for a while, and be prepared to have to find money elsewhere for you to actually survive. I'm being totally deadly serious here - someone was talking to me about making sandwiches and approaching businesses and stuff and to be honest if I did try dabbling at business again, that would probably be more tempting to me, despite being a total waste of my skills.

[Twincharge]

Over Carl raises some points here not to be taken lightly, I do agree though that the lower pricing will attract the more difficult customer.

I have to admit, in my years of experience, that it is always the customer you did a good deal with (to get the sale) that will come back constantly and bug you.

I have been an Limited IT company now for the last 15 years, never advertise but do very well as I have been doing this a while, do my job well and fairly, completely from word of mouth. Mid you, I do everything, networks, builds, bespoke software, web services, exchange server...you name it. We are the only ones in this area that do electronic repairs at component level.

This does mean however that alot of my free time is taken up reading about new technologies, learning etc, this is to stay ahead of the competitors. This is something you need to take into consideration seriously. Failing that will mean that schoolboy next door to you will be more knowledgeable in IT than you in a couple of years.

You can do really well in this field, but you need to put the dedication in.

[Realist]

I too agree with Carls comments and I to did the very same thing and lost £25k in tole and still paying a CCJ off from the ltd company, well it should of gone to the company but they slapped me with it, lifes a bitch.

Anyway, Rented a shop at a cost of £7500 a year in lease, paid £3000 for roller doors and sorted the shop out as well and before I even opened the doors I needed to take £300 a day to break even. Well it was working but the biggest mistake I did was purchase to much stock and when one month the lease was due I decided fuck it Im off and closed the doors for good due to no cash flow.

Start small, work from home and get feelers out for the business and if things pick up the move to something bigger.

But again the other problem I had was people wanted specific stock and not holding said stock they just buggered off to the nearest main city and paid over the top or the other killer was the internet, low overheads and a bigger customer base.

Keep smiling and I wish you well.

[WRATH OF BOD]

i have worked in I.T for 18 years.tbh at this time setting up a business is going to be tuff.i have seen 4 pc repair shops go down in the last 6 months just in the town i live.its good for me cos we getting a bit more trade.But still at least 6 more shops in our town.we all finding it difficult.
we have gone from 2 branches with 3million turnover 16 staff now down to 3 staff 1 branch & alot less turnover.recession hit us hard so its hold on hope for the best & be the best you can at what you do.
word of mouth helps us too.
if you are going to work from home rather than open a shop at least you will keep overheads down.
we pay over 800 quid in electricity a quarter alone.plus rates , wages, it aint cheap.
as someone els says cash all the way & remember to keep some aside for the taxman
good luck mate

[DejaVu]

I've started doing this moreso in my spare time ATM. But I've hit a snag.

I have so far, been doing the odd job 'cash in hand' for people through word of mouth. So far, everyone has paid either by cash or cheque. Fine, no problems. I have been keeping most the money in my second account and so far haven't needed to spend anything.

Being completely new to this, I dont really know the in's and out's legally. As it stands, I am not VAT registered and up to now everythings been done with a 'gentlemen's handshake'.

People I have done work for asked me to get some cards made up with my number on, which I got very cheap! 1 of these said people have handed the card to their brother who's daughter's laptop (Vista loaded) is crashing loads and has asked me to restore it.

I agreed to go and have a look at it 2moro... But he asked if there is the possibility of a receipt so he can get his firm to pay for it (I know he shouldnt, but I figure that's his business, not mine).

What do I do?

a) Explain I can only do the job cash and cant do receipts as I'm only a Freelance Technician starting out.
b) Give him a hand written receipt so he can attempt to get it paid back by his firm.
c) Walk away.

More to the point, if I was to give him a receipt, mainly for my time and knowledge. What is the worst case scenario if something should go wrong?
I will obviously take full responsibility for the work I do, but I just need to know where I stand with the Taxman.

I still havent a clue about this and think I should take a trip to the CAB to get the right advice. I dont want any surprises about legal issues.

What is the situation regarding Tax when your starting out and can I issue receipts for work done? These clearly wont have VAT on them as I'm not VAT reg'd, so clients cant claim anything from my services, can they?

[Over Carl]

If am to be totally honest, I didn't give a flying fuck about the taxman - my idea was let my idea settle into a viable business, then I was going to worry about getting above board with tax. In the end I got a set of accounts produced that showed a big fat loss with pretty much zero income which wasn't that far off the truth. With hindsight, I'm lucky things didn't pick up otherwise I could have been shafted stupidly.

In your case, I would take option a) or c). If he really wants option b) fill it in so it can't be tracked back to you - no name/address.

[hoponbaby]

Legal answer is you must register within 3 months of starting to trade or there would be a £100 fine. Whether at the moment you could justify this just being a hobby, for which people are covering your costs is another story. Once you start giving out invoices then has it crossed the line in to being commercial??!

If you are working as well then registering may not be such a bad idea, you could well actually make a loss on paper which you can then offset against your schd e (employed) income and claim a tax refund.

[Miraine]

As hopon says, register within 3 months of making some money (well, whatever you're declaring anyway, lol). Completely free to do as a sole trader, but make sure you fill out the "Small Earnings Exception" if your income from it will be low http://www.hmrc.gov.uk/forms/cf10.pdf else they'll request a couple of quid from you per month for NI contributions.

Not much to lose in registering tbh, since then you can offset a few "start up costs" (computer equipment for example) against income anyway, and if the cash transactions are just vanishing anyway, then I suppose you can just carry on with that. This just opens up your options for doing work for people who'll need proper receipts.

Couple of things you can tax offset: 40p per mile for any mileage you do in the name of your self employment. A proportion of your heat, light, and water bills if you set up a desk at home as your office (e.g. if 5 rooms besides kitchen and bathroom in the house, 1/5th of the bill can be offset). Basically, there's a lot of ways to not actually manage to make money on paper...

Plus, if you're unemployed, it keeps the jobcentre people off your case a bit