Start a business, nurture it from obscurity, reward yourself for the 110 hrs a week you worked, then stand back and observe  the Crown divorce you from your profit. Sound familiar, then stop! Incorporate quickly, pay yourself through a company pay scheme £612 pcm; pay no income tax, just a supson of National Insurance, claim generous expenses and allowances (bequithed by ‘Boy George’),  take  dividends from the company profits and settle your (recently reduced) corporation tax promptly. Well that’s the plan and trust me it works. Taxes down to 12 to 15% of gross income for an SME with a single director/ shareholder. The cost? £55 for set up and as little as £7 a week to administer. Does this sound like an advert? it wasn’t meant to, choose your path wisely, select your advisor wisely and administer your affairs with care and keep your money in your pockets.

Here are a few notes surrounding the issue, am I self employed? HMRC’s criteria regarding who is  and who is not self employed can be complex, but is narrowed down, to two very important points: Are you responsible for losses incurred by your engagement, can you send a substitute in place of yourself to complete your contractual engagement? Driving, (Taxi or LGV) through an agent or ‘base’ has difficulties in complying with these clauses, meaning you are in contravention of HMRC’s IR35, which states that attending the same place of work continuously and submitting invoices to one single agent/contractor defines you as employed and subject to tax at source,  national insurance will be at class 1. Accountant’s say ‘there is no such thing as a self employed driver’ this is a  fact, not an opinion! However there is a solution, operating through a limited company allows the director to gain income from whatever source they may choose (in line with the general business activities of the company). I do not favour the use of ’service companies’ which by using the company as an umbrella, they distribute agreed expenses to directors  arriving at a reduced tax commitment for the participants, minus a fee, of up to £80.00 per month. HMRC will close this loophole shortly, harming those wishing to comply for the benefit of  their client’s.

An explanation appeared today in conversation, the subject being “why on earth did he not tell me the effect of our policy to buy, rather than lease”. The truth of which is that accountants are very fine historians, transferring the effects of actions made during the trading year into columns of numbers. This is not a criticism of accounting, rather a general overview of the perceived role of the accountant, to change this we need to introduce a revised role; that of expectation and perception (not soothsayer nor chancer) but a clear view of a policy and its effect on future finances. An accountant can predict that, someone who had been guillotined,  would afterwards have a serious hearing impediment! What is required in today’s marketplace is the optimism and vision to enable  businesses to grasp opportunity the very moment it arises. I should like to hear what you think on this topic, feel free to post. We may witness the birth of a new breed of accountants.

Time for a change, if you employ only for financial reward, please don’t ring me, if your service or product could cause harm to the community, health or environment, please don’t ring me. Should you be interested in a share incentive schemes for your employees, the correct disposal of your waste and the conscientious use of utilities and services I would love to hear from you. There I have nailed my colours to the mast,  more seriously it is ‘Time for a Change’. Money is held in banks  far affield,  Barclays is propped up by a Quatar Consortium, many banks are in disarray. Be aware that ethical banks continue to service customers from internal funding and mutual societies prosper, year on year to assist their membership, so take a positive step with your business and revue accounting policies, lessen your impact on the environment and increase your profile with humanity, I promise  you will profit from these measures in more than monetary terms.

From my humble position as ‘hired bean counter’ it never ceases to amaze me how many people don’t look outside the box! Some years ago I had the good fortune to stumble on a cheap deal to visit  New Orleans for the Jazz Heritage Festival. This in itself (although whistle stop) was a fantastic experience (jazz buffs would understand). However I brought back, to implement in my own business a truely remarkable ethic, that of  ‘service‘ which the Americans had, for the most part monopolised. Be proud of what you do, be pleased to be of service, forget the ingrained social stigma attached to certain areas of work and above all re-invent yourself each and every morning. Take the long view, visualise how you want to look and who you want to be. If you clean windows be the best darn window-cleaner any area has seen! harness the social graces with  please and thank you, have a nice day does really mean that.

Hilary Devey is to take a probing look into small businesses inability to keep records, as much to record failure as success.Success will bring cash, which will mask failings, you may want to identify just how much you are losing before you run out of cash. Remember KPB’s moto control the cash and you control the business. A footnote to this is that the HMRC has sponsored the show to the tune of £370,000 hoping to secure the correct messages are given, this is HMRC’s attempt at ’social networking’ not given to twitter (much) just throw our money into indipendant broadcasting. The bottom line may be increased revenue for the tax office on January 31st 2010, don’t hold your breath guy’s.

After scouring the Direct. gov, Jobseekers and Department of Work and Pensions websites and several strange phone calls with people who assured me that they knew a colleague who would know all about this. I can conclude that a payment does exist for people, of any age to receive an allowance for 13 weeks, who are starting a small business using projected figures which indicate a low initial income. The criteria for the allowance is that you are claiming job seekers allowance at the time of application or that you have been registered unemployed for more than 13 weeks. Now at the outset you may conclude that any budding entrepreneur would have finance in place and a model business plan to execute; Wrong! most businesses are started from a position of frustration, having exhausted all possibilities of securing an income they decide to go it alone, with  little knowledge and even less support. It’s easier to remain within a comfort zone (job seekers allowance) than to brave self employment with an unknown income. Having trumpeted the benefits, let me say that the launch was on the 22nd February and I can’t find anyone able to tell me how it will be administered, however let us give praise where it is due and say that this is a good effort on behalf of all small start -ups.

Debunking the myth; a charming lady in a shoe cupboard continues to enforce the myth that an entrepreneur, sole trader, or start up has until the 31st of January to file online! Let’s reverse engineer this statement, allowing  24hrs for snagging you would file, say 30th January, you will require a unique ‘Self Assessment’ code to do this, which will take 72hrs to activate, bringing you to 27th January. The code must be sent to your address (registered with HMRC) they allow 7 days for this, which brings us back to 20th January. Now if you have moved and omited to tell HMRC and their records are not updated, the effect is to arrest the process, as the security requires that the ‘SA’ eight figure code must be sent to the postcode registered with HMRC (to prove authenticity); Final date for commencement of filing is at best 20th January at worst 15th January. This information is not given freely and may only become apparent on the morning of the 30th as you sit to file your Self Assessment, you will incur a penalty of £100.00  without redress. You may wish to visit the lady in the shoe cupboard and raise these issues, but sadly she will not appear again until next January! to perpetuate the myth.

With an increasing amount of people supplementing their main income with a second job or (lucrative pastime) HMRC once aware of such, will ask you for D schedule NI payments on top of your PAYE.  You can, go red and roll around their floor but they will not rescind; they class you as equally disposed between ‘Tax at source’ and ‘Self Assesment’ and as such require self employed NI contributions in addition to Class 4, paid at source via PAYE. Belt and Braces comes to mind either way they will have their pound of flesh!