Business Start Up

[armyash]

Hi everyone, Hope this thread is ok being posted in here instead of another section.

I have a plan in place and it is as follows,

While I am working weekends to gain experience, I am thinking I should get myself GSR, get my 3 services and 1 install completed to get signed off as competent by the inspector. Next start advertising myself and doing jobs in my spare time, only jobs I know I could do though. If a customer asks me to do a job that I know is beyond me I can say I'm fully booked but recommend the guy who is teaching me on weekends and pass on his details. That way I come across as professional and look as though I'm doing ok if I'm busy lol. I still plan on spending my weekends getting experience with the bloke who takes me out now for as long as he's happy to do so but I need to plan for my own future too and anything could happen where he needs to tell me he can't take me anymore so I may as well make a steady start on my own while I have the chance.

Before I commit to anything I could do with a step by step guide of the business side of things, I don't expect anyone to sit and type everything out for me but any pointers would be appreciated and if anyone knows where to find the correct information if you know the links for them, it would be very helpful.

I will probably have my company name as my initials followed by "plumbing services" or "plumbing and heating" that sort of thing. I know it doesn't exactly grab you but it is simple enough and is self explanatory, I don't think I will be trying to be too clever with a company name just yet.

I don't want to ramble on with another long post so if it's ok I'll stick to bullet points of things I need to know information on and hope that I can be pointed in the right direction. If I'm missing anything that I need to do please feel free to point this out too. 🙂

• Do I need to register my company? (sole trader) If I do how do I do so?
• What do I do about registering to pay my own tax and insurance as self employed? (I believe I only have to pay tax after earning a certain amount?)
• Do I need to set up a business bank account?
• I need to get public liability insurance 2 million is what I have been recommended, does that sound right?, will that cover my plumbing, gas and electrical work?

I'm trying to think of things that I have to do to be fully legally self employed and ready to start work, I don't mean things like advertising etc and to be honest I can't really think of what else needs to be done.

Thanks for reading.

 

[PlumbBobBob]

ash first port of call should be businesslink.gov.uk masses of info on there. hmrc to register for tax and ni. you don't really need a business bank account but they are handy you get a business advisor etc. 2 mil is what i have for my insurance.

 

[Guest123]

By law you must register with HMRC from 3 months of starting your business. If you're a sole trader informing them will be sufficient to register your business. If you're a Limited Company you must also register with Comapnies House and have a good accountant for your annual returns.
Tax threshold is about 10k I think but is changing again this year.
You don't need a business bank account but it's better to have an account in the name of your business. More important for a Limited Company.
That amount sound fine, but check the details of your insurance policy, many don't cover hot work (soldering), gas work or central heating and working at heights is a no, no.
Remember insurance for your work vehicle too.

 

[villa_tom]

Just register with hmrc that you are self employed and get you national insurance sorted, mine goes out DD every month, it's only just over a tenner.

as far as tax goes, I just put mine aside in a separate account, and then give my accounts to the accountant and he ten sorts it and tells me what I owe.

I don't have a business bank account, I just use my normal account. I'm not paying the bank 12 quid a month for the privelidge of having a business account.

your PLI amount is up to you, mines 5mil but I occasionally work in some big big house, and you have to remember if something serious goes wrong, your insurance will have to cover other properties that may be damaged. Obviously this is worst case scenario, but if you plan for the worst, things can only turn out good.

 

[armyash]

Ok great, thanks.

If operating as a sole trader, how do I pay my tax? Will I need an accountant or will HMRC 'bill' me monthly when I am earning enough? What's the difference between a sole trader and a limited company?

I will check through Business Link over the weekend and see what other info I can find.

 

[southcoastboile]

as a sole trader You don't have to register your name, unless you are a limited company (earn over 72k per year i think ) thaen you would have to register with company house.
You have to notify HMRC online about tax, simple form to fill in , they will then send you a letter telling you what else to do.
A business bank acount is not compulsary but usefull for when you work out your finances, it will make life dificult if your income from work is mixed with your personal income. For you and your acountant. Also looks more professional if you can get cheques paid to a company name.
2 mill should be fine, for small domestic work, bigger contracts require more.
Other things to consider are your van, tools, advertising. It all quickly adds up, keep reciepts for everything, you only have to pay tax on what profit you have made at the end of the year as far as I am aware, if I am wrong someone will correct me. So if you make 2k on jobs but spent out 1k on parts and 1k on advertising as an example, you will pay no tax, a good idea is to put 25% off all money made on jobs into a seperate high intrest acount for tax and NI, NI is more expensive as a sole trader than it is when you are employed. That way you know you will have enough to pay HMRC at the end of the year.

 

[armyash]

Thanks for the info villa_tom, I was in the middle of writing my post when you posted!

That 5 million PLI might be a wise choice while i'm getting started lol

 

[southcoastboile]

Everyone beet me to it by the time I had finished posting ^^^^

 

[armyash]

Everyone beet me to it by the time I had finished posting ^^^^

Your post is just as helpful, thanks. It's good for me to pick different peoples brains and get different opinions and advice. It makes it easier to decide what's best for me.

Where you say filling in a form to notify HMRC, once that's done i'm pretty much registered and ready to go as a sole trader? (once I have insurance etc)

 

[Guest123]

Where you say filling in a form to notify HMRC, once that's done i'm pretty much registered and ready to go as a sole trader? (once I have insurance etc)

Yes.
As a sole trader, you are the business and you are liable personally fot it's debts if it should fail. A Limited Company is a separate entity from you and you are a employee of a Limited Company even though technically it's your business. Should the company go bust, then you only have limited liability hence the name LIMITED Company. That's why companies can go bust and practically start up the same week in the same premises under a different company name and be practically debt free.

You'll need to open trade accounts for your supplies. Start with a small credit limit to build up confidence with your suppliers, then increase it as you get more established.

 

[southcoastboile]

Yeah and obv register with gas safe before doing gas work. The form will take you 5 mins to fill in and then 6 weeks later they will send you a letter telling you what to do next

 

[armyash]

If I register with Gas Safe, can I do gas work straight away once I have paid or do I have to wait until they get in touch after 6 weeks?

 

[armyash]

Will it cost me more to be a limited company? If being a limited company and you could start up again after going bust quite easily, that must appeal to quite a few people, what are the disadvantages?

 

[Mike Jackson]

When I registered with Gas safe last year I registered on the Friday night and my details were live on the gas safe website by Monday lunchtime. This may have been because my details were registered with them as an employee.

It's worth talking to an accountant about things like going limited. There's not the same protection now as there used to be. The main advantage is in the amount of tax you pay.

 

[cr0ft]

Hi armyash.

How to setup really depends on your current circumstances. If you are planning on working full time while starting up your business then there are real tax advantages to setting up as a Limited Company (costs about £30 to do). The downside of this is you have to do an extra tax return each year plus pay £14 a year to submit an annual return to companies house. The big advantage is if your business fails (not being negative, a lot do) then you aren't liable for any of its debts.

Your Public Liability insurance will be quite expensive for the first couple of years so I would do what I can to keep it down, maybe £1m if Gas Safe will let you get away with this.

Think really carefully about the name. I recently qualified as an electrician as well but because my company name is Dripbusters Ltd I'm having a hard time getting through to people that I do rewires as well as plumbing. I never had any plans to do anything other than plumbing when I started out so the name seemed fine. To change it now would be a major hassle but it's working against me now.

A couple of other things I learnt very quickly. Make sure you are charging a markup on everything you buy in. Around 30% on most fittings will cover the costs of your time and fuel to get them. Also don't forget the hidden costs, the biggest one being van depreciation. This eats into your profits very quickly but it's easy to forget about it.

Hope some of this helps.

 

[armyash]

Thanks for that reply cr0ft, some good things for me to think about there!

That's unlucky about your company name, I will give this some serious thought. I'm still in full time work until the end of the year so it takes the pressure of a bit to get myself up and running!

 

[Guest123]

That's why I called mine System3, so that I can add 3 main types of works that I do after my name!
Drinking, womanising and partying should just about cover it.

 

[armyash]

That's why I called mine System3, so that I can add 3 main types of works that I do after my name!
Drinking, womanising and partying should just about cover it.

That's impressive!