Business rates

Nothing to do with the budget but my (and other small businesses) business rates for this year have been halved. It's not often that governments come up with something that is straightforward and meaningful for us. An initiative of the deputy PM apparently.

 

What do you mean by business rates exactly? I thought cooperation tax was staying the same? Is it somthing else?

 

business rates = council tax for business premises

ie if you don't run a business from home, if you do run a business from home you can end up paying both

insert pedant witicism here:
don't give the tax man ideas, I don't think they have thought of a tax on cooperation yet, corporations on the other hand...

 

Lol yep bad mix up of the words there. I assume this only applies if you're limited company? Is it a fixed rate or is it variable depending on the turnover/profit?

I am 99% certain my parents don't have to pay it but they work from home and their company is not limited or incorperated in anyway.They already pay a lot in tax so if they had to pay this it would be hardly worth bothering my dad going out to work.

When I leave university and start planning my business I am going to have to read up on this stuff, as I intend to run my company 100% above board. I've not gone to university for three years to become a delboy.

 

Bloody hell

Business rates are local not central government so this might be just your area, it certainly isnt the case round here, my rates have just gone up to £5400 a year, I applied for a rate review two years ago coz our neighbours are paying less per sq.ft, theyre doing the review on the 18th May! The stupid thing is, we've put in new toilets, a canteen, a staff area, easier access for the public and improved the appearance buy a massive amount, all these things only increase the rates on your property, madness.

Regarding the budget Ive just got wind of the first tax rise, the tax on waste is going up by £3 a ton when taken in total thats put 10% on the cost of 4 skips which are emptied each weeks so thats an extra £30 plus the increase in our environmental license.

 

It applies to any commercial property based on the sq. area. The property is given a ratable value working on a set criteria (think tax band for houses) and your taxed accordingly.

 

Small Business Rate Relief:
"available at 50% for ratepayers occupying single properties with a rateable value up to £5,000, with relief declining in percentage terms on a sliding scale until it is 0% at £10,000"

T-Bone I'm guessing your premises are a bit bigger than that.

amazingtrade - business rates- like T-Bone said business premises have a rateable value just like houses do and has nothing to do with the status of the business (ltd co. etc). If you run a business from home, say from a shed in the garden, and the shed is only used for that business then in theory it is liable for business rates but should come off of the council tax valuation. If you also use the shed for garden tools then it's not exclusively for the use of the business so business rates don't apply. Some people choose to designate part of their home as business premises so that they can pay themselves rent, claim expenses and so on, but it does complicate things and if you are running your own business you want to keep it simple.
Tax on profits is paid differently if you are self employed/a partnership/a ltd company. Basically companies pay corporation tax, individuals pay income tax.

 

We have 6500 sq.ft. with a car park and a large entrance which doesnt help with lower the rates. I wonder if we could split the unit up into smaller units and rent them to ourselves???? hmmmmmmmm.......nah cant see that happening!

If you are mad enough to set-up in business get yourself a very good accountant, thats my advice.

 

I guess I am doomed but its now or never with me, I come from an indian family, in the sense that I have loads of uncles and cousins who run businesses, in my family its the norm rather than the unsual thing for some reason. I will be setting up as LTD company, and the the first two months I will act as a free consultant director so I don't have to pay myself wages (it would be ironic if my own wage broke the minimum wage laws). I don't want to give away what I intend to to yet for obvious reasons in the high-tech inudstries but a large part of it will involve me developing an e-commerce site. For this reason I can work from home for the first month before official trading begins.

I don't think I will be able to afford any accountants until I start trading, but I can get free advice from here

http://www.careers.salford.ac.uk/best/

I was told there were lots of schemes giving people cheap office space in poorer areas but they seem to keep them very quiet.

My mum does all the accounts for my dads business and when we had a random tax inspecption they were very impressed with the order of the books, so I am sure she will be able to accounts, I will just to get them checked by an accountant and ask what is the best way about doing things.

VAT shouldn't be a problem, it seems fairly simple, I think its PAYE/corperation tax/other taxes that will be the problem. I've also done a lot of basic accounting for A level.

I am very much going to use the huerstic stragety of starting off small and growing slowly as I very time I have seen a small company try to pull of massive expansion it always seem to collapse as quickly as it went up, my uncle did this, went from 10 -30 shops in about 3 years, then went from 30 to 3 shops within the next year.

The bank took a lot of the blame for this though. My dads been trading for 8 years now, and my parents have a very old fashioned view of don't change what works. The only problem is during quite months when there they make about £5 profit they still won't change anything!

 

You'll have to start off self-employed I think, Im pretty certain one person cant be a Ltd company (you need at least two directors and a company secretary, I think). Alot of people assume that being Ltd takes all the risk away, which is far from true. For the first five years you are usually required to give personal guarantee's on lendings or borrow against fixed assets you own (usually only buildings though). However it is a sliding scale after two years, we dont have to give any at all these days although the company was a partnership for 10 yrs before incorporation. Also keep in mind that the law is coming down very heavily on directors who abuse their position these days. Im sure with your family you'll be ok.

 

Secretary can also be director, so only two people required (I think), also directorship needn't take up much time so for example a relative can do it even if they have no direct input to the business. We were ltd from the outset, in fact the bank insisted on it before lending.

 

Its just in this industry without that LTD after your name its hard to get any respect, so its kind of a status thing. I shouldn't need to borrow much money at first, I haven't got any security anyway, so in that sense the only thing I will have to secure against is any business assests.

I know when my uncles business was in trouble he lost about £200,000 of his personal money, I will need to speak to my cousin as well, he runs a sweet shop and thats a Ltd company, he is 20.

I just really don't want to fall into the drap of becoming a delboy trading from my bedroom, although if that did happen I would have to do a masters or somthing or get a normal job becuase I would go mad otherwise (Maslow's social motivation needs).

The website would normaly cost £1000's to setup up, but I am doing this myself so its only about one month solid labour to produce, and hosting will be cheap at first, in this sense it probably would be a good idea to trade as a sole trader to test the order, then if orders come in incorperate the company.

I am hoping to try and set the whole thing up with £1000, with about £500 set aside for advertising, I am very resourceful at working with limited budgets. At first I will use a get stock when orders come in model which will eat into my profit margins but is a way of getting established, then I can start ordering in bulk and I guess this is where the risk comes in.

My parents have credit accounts with companies and they are not secured against anything but of course they are personaly liable for that debt. I am in a position of not needing to pay myself in the first few months so although I will poor, it gives the business a chance to grow.

I know its very difficult but I need a challange if it all goes wrong at least I tried and I have qualifications which means I should be able to get a job.

You are right about the Ltd company thing though, its a catch 22 situation. The directors thing is not a problem, I already have my mum lined up for the company secretary is she is willing to take on that legal responsability. There are also free courses I can go run by the university for people who want to setup their own business.

I know the risks are huge, but I have no job I a walking out on so I will unemployed as soon as I graudate, so I have nothing to loose other than a bit of money and my own time.