How do you employers stay on the right side of the tax man?

[Paul Jenks]

A business is a way of making money to pay your mortgage support your family and feed your children. If enough people treat business as a hobby everyone will need to have new equipment work 100 hrs a week and live on the bread line. I understand when starting business if you are young you can fast track it to better success by taking less out for 3 years. But I see a few people owning businesses now in their forties still working 70 hrs a week and they are skint. Why ?

 

A business or company, (the terms are not always synonomous), can be a vehicle to financing living expenses.

Most are set up for the above reason or for the perception of freedom.

 

In reality running a business/company is very demanding at a number of levels and that is why many fail and many more stumble along with no real goals other than to put food on the table. Few set an objective and realistic set of long term goals, one of which may be for the owner to have the capacity to step back and draw an income or sell a fully functioning and self sustaining business. Many small business owners delude themselves into thinking they have value in their business that can be realised by selling and so again delude themselves that all the long hours of toil and stress will be worth it when they do sell up.

Unless a business is self-sustaining without the owner it has very little value. It takes a good deal of work to get a business to this place both with systems and personnel. (It's no good buying a business if the key personnel, not the owner, are not going to stay.) I work to extracate myself from operational, administrative and management roles and develop my people to own these roles.

The next phase is to train managers to think and act strategically, thus removing some more of my stress and responsibility.

To drag this back to the thread, staying within the tax regulations by knowing what is legal and what isn't and what is moral and what is immoral is the right way to run a company. It can be tough when others operate in the same arena and blatantly outside the regs. That's life. Operate with integrity and you should sleep better. The path of truth is not the path of ease.

[Hodge]

After reading all the posts to my thread I'm thinking of changing the way I operate, as Paul has said unless a buisness can sustain itself then there is no point in trying to go forward. I have spoken to my accountant and in the eyes of HMRC I should be employing my groundy, to do this will mean I don't have to worry about getting I'm bother off the HMRC I'm doing so it will push me over the VAT limit so I have been doing some figures and going VAT reg may not be as daunting as first thought. Thanks for all your input.

[likeitorlumpit]

After reading all the posts to my thread I'm thinking of changing the way I operate, as Paul has said unless a buisness can sustain itself then there is no point in trying to go forward. I have spoken to my accountant and in the eyes of HMRC I should be employing my groundy, to do this will mean I don't have to worry about getting I'm bother off the HMRC I'm doing so it will push me over the VAT limit so I have been doing some figures and going VAT reg may not be as daunting as first thought. Thanks for all your input.

 

It's highly likely you will lose a lot of your existing customers although there are ways round this:wink: It was not the way I did it. I guess I became VAT registered quite quickly and it just seemed necessary.

You will though need to work harder at getting commercial customers or even just customers who don't mind paying VAT. Charging VAT shouldn't put up your prices by 20% as you will be able to claim back input tax. You will see it as a tax on your labour which in essence is what it is. Further down the line maybe you go limited and the tax tables are turned as you legally have a way of saving tax.

The system is set up this way to encourage businesses to grow.

Lets face it our existing customers don't want their tree surgeon to change, they like the personal touch But it's not their business and they don't necessarily help you when you are down. It will be a pain and seem just too much hassle at times but if you persevere it should come good a little down the line.

In my opinion keeping under the VAT threshold is a recipe for keeping small. Some think this is all they want but then when they are 50 and maybe suffer some ill health the business fails to deliver and the stress mounts.........

Not saying my view is right for everyone but thats how I have found it.

[Rick2517]

I fought against the VAT fresh hold for a wile and one day it hit me that I was actually holding my business back and stoping it reaching its full potential because I was scared to become VAT registered as I thought I would loose all of my work. So I just put my head down and went for it and told myself that I would never me scared of doing whatever it takes to grow. that was 18 months ago and since then my business has tripled its work load and 90% of it is domestic running Ive just found that by being honest and providing a great service (and working like a dog) pays off.

My advice is see going VAT registered as a celebration at it means you are going in the right direction.

good luck mate

[Hodge]

I fought against the VAT fresh hold for a wile and one day it hit me that I was actually holding my business back and stoping it reaching its full potential because I was scared to become VAT registered as I thought I would loose all of my work. So I just put my head down and went for it and told myself that I would never me scared of doing whatever it takes to grow. that was 18 months ago and since then my business has tripled its work load and 90% of it is domestic running Ive just found that by being honest and providing a great service (and working like a dog) pays off.

My advice is see going VAT registered as a celebration at it means you are going in the right direction.

good luck mate

 

Thanks Rick, I think it's the way forward.

[Ian C]

I fought against the VAT fresh hold for a wile and one day it hit me that I was actually holding my business back and stoping it reaching its full potential because I was scared to become VAT registered as I thought I would loose all of my work. So I just put my head down and went for it and told myself that I would never me scared of doing whatever it takes to grow. that was 18 months ago and since then my business has tripled its work load and 90% of it is domestic running Ive just found that by being honest and providing a great service (and working like a dog) pays off.

My advice is see going VAT registered as a celebration at it means you are going in the right direction.

good luck mate

 

[Ian C]

Thanks Rick, I think it's the way forward.

 

you will be ok hodge, see it as the next challange and go for it.

[Hodge]

you will be ok hodge, see it as the next challange and go for it.

 

Cheers, the more I have looked into it and gone through my books its the only option. I will be employing my groundy as I want to be above board with everything.. Thanks for your input. I had a look at your website, which one are you?

[Highland Forestry]

But I see a few people owning businesses now in their forties still working 70 hrs a week and they are skint. Why ?

 

Because they work in Forestry/Arb

[nefirewood&TFs]

I have supplied my UTR number and NI number to customers I have contracted to, and they have deducted 20% tax from my invoice total, which prevents my accountant having to deal with this, also saving me on my accounts annual bill.