Forum | Non-QPR - Setting up as a sole trader starting a business by OakR

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Non-QPR - Setting up as a sole trader starting a business 11:35 - Oct 12 with 2877 views

Afternoon.

Short-version - took redundancy from last job and have started retraining aiming to become a gardener. Am studying a one year course 1 day per week, and also doing an online course.

I've recently been asked to look after a small communal garden - it won't be much, £40 a week for now for a couple of hours work. Mentioned this to my neighbour who said she might like me to do some work for her, so maybe I will end up with a few more gardens over the next months.

Anyway, I've always been PAYE - for the next 9 months I'm unlikely to be bringing much money in but hope after that to start doing this full-time.

So for someone just starting out on their own how would you set-up as a business? Over time I will need to get more tools and a van, for now jobs are walking distance and mostly hand tools. I don't think it will be worth being VAT registered now, and I'm not sure what benefit a setting up as a Ltd company would give me right now with hardly any money coming in. I know I'll need to think about insurance.

This came up before I was expecting it so appreciate any advice - I know I have lots of reading and research to do.

Thanks

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Non-QPR - Setting up as a sole trader starting a business on 12:08 - Oct 12 with 2797 views

ted_hendrix

I'd suggest at a minimum you'd need to get Professional indemnity insurance, might sound a bit daft (not sure of the cost).
I had my whole back garden landscaped last year, I asked for the contractor to supply me with their PI Insurance before they started.
Good luck with your venture.

My Father had a profound influence on me, he was a lunatic.

Non-QPR - Setting up as a sole trader starting a business on 12:30 - Oct 12 with 2759 views

Mick_S

Can someone explain this to me? Self employed person brings, for example, £100.00 of VAT rated supplies, incurring the 20% = £20.00. These supplies are then sold on for £500.00 = VAT bill of £100.00. If you are VAT registered, you are £80.00 worse off. I really, really don't get why (assuming business person is under the threshold) anyone should register. Having said that, I tried it and binned it off after a couple of years as it is grief and incurs further accountancy fees.

Good luck Oak - the best advice I could give is find a thouroughly decent accountant; hen's teeth, and all that. Don't ever assume and always ask questions.

Did I ever mention that I was in Minder?

Non-QPR - Setting up as a sole trader starting a business on 12:45 - Oct 12 with 2721 views

ted_hendrix

Correct me if I'm wrong but once you earn over £X PA you have to by law register for VAT.
That's how it was Years ago anyhow.

My Father had a profound influence on me, he was a lunatic.

Non-QPR - Setting up as a sole trader starting a business on 12:46 - Oct 12 with 2719 views

terryb

I would go along with Mick's advice about an accountant even if you do all the book keeping yourself. Many of the one man accountant's will reduce their fee accordingly if you present them with acconts that they just need to sign off.

You could save that money & register the accounts yourself, but the chances are that you won't be claiming all of the permissable expenditure against the income. Also many of them (with permission) inform their other clients of who is available when requested. eg, I needed a tree Surgeon & so my accountant advised me of a fellow client who fitted me in asap & reduced his fee (I admit I only had his word for this!)

If possible don't open a business bank account as you will attract buisness charges & just use your personal account. This will, of course, need the agreement of your partner if it is a joint account. Also, make sure you put by enough capital to cover your tax bill. Receiving the demand & not being able to pay it is very stressful. Put aside too much rather than not enough!

[Post edited 12 Oct 2020 13:10]

Non-QPR - Setting up as a sole trader starting a business on 12:46 - Oct 12 with 2719 views

pastieR

Non-QPR - Setting up as a sole trader starting a business on 12:30 - Oct 12 by Mick_S

Vat Threshold is £85k. So I personally wouldn't register until sales hit that level.
And others will be able to advise for this case.
But if you are working for other businesses who are Vat registered. Then they may still agree to pay you your base rate irrespective on whether VAT is added or not, as they will be able to claim back any VAT paid. Then you may end up in a better position as any VAT you have to pay will be swallowed by your customers and then you can claim on purchases you make.

Non-QPR - Setting up as a sole trader starting a business on 12:53 - Oct 12 with 2702 views

onlyrinmoray

Hi Oak I started a gardening business when I retired at 60 Before I started I went to my local start up business shop and went on one of their one day new business courses which was very helpful Agree with suggestions of insurance and accountant Accountant can be expensive but worthwhile as it saves you time which you can use working shop around

I don’t think gardening on its own will make you a living think you will need to do landscaping Gardening is a summer thing you’ll need work in the winter I did the business for 5years till my wife retired and sold it for a quiet life

Non-QPR - Setting up as a sole trader starting a business on 13:01 - Oct 12 with 2680 views

WatfordR

Non-QPR - Setting up as a sole trader starting a business on 12:46 - Oct 12 by terryb

[Post edited 12 Oct 2020 13:10]

Agree with all of this. Whatever an accountant costs you, you should make back and more from the accountant's knowledge and expertise of what to claim for, things you'll never know. Also the fact you are using a chartered accountant gives reassurance to HMRC that you're not taking the p1ss. Make sure any corres with HMRC is done by your accountant on your behalf.

Non-QPR - Setting up as a sole trader starting a business on 13:08 - Oct 12 with 2659 views

stevec

Non-QPR - Setting up as a sole trader starting a business on 12:30 - Oct 12 by Mick_S

You're not worse off by £80 if you're VAT registered. You collect the £100 VAT, pay out the £20 VAT and send the balance you hold of £80 to HMRC. That said, you end up working your nuts off to give £80 to HMRC whilst all they do is sit on their backsides waiting for Mick to hand it over, so get where you're coming from.

In OakR's case, don't bother getting VAT registered, you'll be 20% out of pocket on things you buy in but for items you need job to job (soil,flowers whatever) you should be able to pass the VAT onto the customer anyway.

First thing I'd advise, get a lever arch folder and keep every single bill you pay out. Now you're self employed, that includes your PG tips, you're entitled to a cuppa, soap for washing your hands, basically anything that is relevant to your working day, it all mounts up. Tell the wife to keep the day to day bills and scour what you might have used but keep it sensible.

As for an accountant, a good one makes sense but they cost. If you or someone in the family can handle an excel spreadsheet or has access to Sage, Quickbooks or it's equivalents, these programs do your accounting for you. Accountants are useful if you get into trouble but by and large these days their hands are so tied by government policy all they can do for the average small business is act as a book keeper and little else.

Tax on profits is the biggest thing to keep your finger on. Check out your free pay code from your last job, probably something like 1250L, add a zero and that's how much profit you can make before you need to pay tax, in that case about £12,500. Check it monthly and if you're making more than a grand a month make sure you put money aside to pay the tax. That's the thing that brings most new businesses down.

Good luck with your venture, hope it's a success.

Non-QPR - Setting up as a sole trader starting a business on 13:53 - Oct 12 with 2578 views

OakR

Thanks everyone.

Ted am looking into Public Liability Insurance, trying to work out potential upper coverage limits and legal cover as those vary the price significantly. At the moment it's really going to be mowing the lawn, weeding etc so am hoping liability will be low (well it can always be high but risk will be low). I'll need to change it if I took on any landscaping jobs but not ready to do those yet.

Mick,Terry and Watford - thanks for all the advice re getting an accountant - sounds like the way to go, but I think I'll hold off for now until close to having to submit accounts and or I get more than one client. At the moment I can just keep track of stuff on excel but going to have a look at some accounts packages for single users and cost.

Steve advice on keeping receipts is great - thank you it's obvious when you say it but I would not have thought of it. I'm pretty sure this year I won't hit that revenue let alone profit so will be under (but you never know I suppose).

Onlyrinmoray thanks - I'm doing a Hard Landscpaing course now so hope to do some of that also, not ready yet. I'd love to just do maintenance gardening but others have said Landscaping will pay more of the bills.

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Non-QPR - Setting up as a sole trader starting a business on 14:23 - Oct 12 with 2548 views

RamseyR

Was PAYE for 32 years before redundancy.
Been self employed for the last seven years as sole trader/partnership and now LTD company so have experienced the full spectrum.
Being the first self employed people in our families, meant we had to learn everything from scratch. Google is your friend but cross reference anything you read, and try and use official sources first. HMRC websites are really good, and they give good advice on the phone. Don't try and pretend you know it all with them...ask them every stupid question you have.

Some good advice on here. Here's my two penneth worth

- Keep business money and personal money 100% separate. That way you will know how much you are really making.
- Ask questions of anyone who can help in how to run a business ...friends ...family ...accountants and HMRC (They're actually really helpful)
- LTD company benefits not what they used to be, but can still be advantageous based on your circumstances. For you starting out, I'd recommend starting as a sole trader. If you're doing well in a few years time, you will understand a lot more about business finance and a potential move to LTD will not be so scary.
- Plan to stay under the VAT threshold for the first few years. If you need to buy expensive supplies, you can always ask the customer to pay for them. Should you need to be VAT registered in the future there is a "half way house" scheme called the flat rate scheme, which has in theory, simpler admin, but based on a % of your turnover based on your business category.
- Depending upon your lifestyle/expectation you will need to earn minimum of £150 a day to make it remotely worthwhile, £200 a day to really cover costs...and as much as you can/need above that depending upon what you want/need to live on.
- Don't neglect the admin or underestimate how much time this will eat up initially, but if you're already enrolled on a gardening course, I suspect you'll embrace this...Successful businesses are those that are as good at this, as they are at whatever service they provide.
- Constantly put away for tax. It's not your money...it never was.
- Have a slightly different mindset to when you were PAYE. You will have no paid holiday, sick pay, pension etc, but I would advise you to always be available 24/7. The flipside is that when you need to time off for anything you can have it, so you can still have a work/life balance.

Gardening specific advice
- Don't underestimate how much good gardening equipment costs, so make sure your invoices are adequate to cover not just your time, but the purchase/repairs/replacement of equipment. It all adds up, petrol tools, petrol to run them, chainsaw oil, access equipment etc all add up.
- You may need a waste carrier licence to get rid of waste...and a trailer maybe?
- Jobs will find you - take them all on to build a reputation, customer base and experience...work six days a week if necessary to begin with. When you get too busy, keep the better ones and most importantly the best people
- Jobs slow down in winter - so consider landscaping, fencing etc

Good luck.

[Post edited 12 Oct 2020 14:28]

Non-QPR - Setting up as a sole trader starting a business on 17:03 - Oct 12 with 2442 views

essextaxiboy

I have just wound up.my self employment after 20 years . Find yourself a one man band accountant by recommendation if possible . He will know what expenses he can claim and percentages of some household bills you can include and get your accounts done in good time so there are no surprises last minute Mine charged me 250 pa and saved me literally thousands. To kick off all you need to do is phone the revenue that you are going self employed and they send you a pack..
My general advice on self employment would be when its going well dont ease up , get in front for when its not so good . Dont enter into any long term finance .Sweat that old van and tools until you have been going a while . I thought I was billy big bollocks and bought a brand new taxi and a used one for Mrs Taxiboy to do a school contract . I never really recovered after pilingon the mileage and blowing the value out of them . Good luck after working for some right tossers I loved just relying on me...

Non-QPR - Setting up as a sole trader starting a business on 19:18 - Oct 12 with 2347 views

nix

Register asa sole trader with the tax office. It doesn't cost anything but you can start claiming against your tax for anything tax deductible from that point if you do invest in tools etc.

Non-QPR - Setting up as a sole trader starting a business on 22:52 - Oct 12 with 2245 views

OakR

Thanks Ramsey - that's a great post, really helpful.

Essex also, good point on spending too much on tools etc.

Thank you Nix, have been on the Gov site to look at.

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