What do I need to do to get my own business going?

[Jez]

Surely it wouldn't really be that more expensive? I mean the actual goods would cost the same (as they would include VAT from where he got them from) it would only be on the service side of the business?

Phates turnover will be almost all service...

 

[Jonnycoupe]

It would though, becuase he'd have to pay 17.5% of his service charge to the treasury.

Only if VAT registered, and less than that if on a flat rate scheme which looks like its 11% for IT repairs. Would simplify calculations.

But yes the customer would have to pay a higher price, not sure how that would work when you are buying significant things subject to VAT and then also have a VAT consideration for the service aspect. Probably worth doing some calculations if you get that far to chose the best route. For most repairs I imagine components will be a small part of the invoice.

 

[[TW]Fox]

Exactly - what he's proposing is more or less a pure service business model. Which is why I am confused everyone is banging on about getting VAT registered, Limited Liability and £1k startup capital.

You need a bit of advertising, a screwdriver, half a brain and some public liability insurance. This doesn't take a grand or a 4 page thread on Overclockers to work out. Hence where my opinion comes from, if you think it DOES take a grand and a 4 page thread on Overclockers its probably not your ideal small business.

 

[Jambo]

I'm a lazy, hypocritical annoying armchair critic. But that doesn't mean that some of what I say isnt right - before you can expect others to help you you must help yourself, some of the questions he's asked are those which anyone who'd have a half decent chance would have already answered for themselves.

I'd love to be proved wrong, becuase if I'm proved wrong he'll have made a go and suceeded and there is nothing better than somebody elses success proving an opinionated moron like myself wrong

I disagree. I think Phate's questions are perfectly reasonable. You should see some of the ones that come up on business forums.

Asking people who might be doing the same thing as he is planning, is as good a starting point as any.

 

[Jonnycoupe]

Exactly - what he's proposing is more or less a pure service business model. Which is why I am confused everyone is banging on about getting VAT registered, Limited Liability and £1k startup capital..

I have a pure service model.

I make about £400 a quarter in pure VAT benefit after corp tax on the VAT flat rate scheme. Its probably useful for him to be aware of this?

FWIW it cost me £45 to setup registration with companys house and VAT registration is free. No wonder your getting confused really.

 

[[TW]Fox]

Fair enough. Still, my negative ramblings are at least useful. If you have an idea, you post about it and somebody like me blasts you with loads of negative vibes and you read them and think 'So what?' you are one step closer to doing it.

 

[Phate]

That grand would be to buy what I need. A 2nd desk, testing machines, tools, few other bits and pieces etc.

 

[[TW]Fox]

I have a pure service model.

I make about £400 a quarter in pure VAT benefit after corp tax on the VAT flat rate scheme. Its probably useful for him to be aware of this?

I guess that depends on the scale you operate though - he's looking at fitting in the odd PC repair between his usual jobs. I gather you spend rather more time and have a noticeably larger turnover?

 

[[TW]Fox]

That grand would be to buy what I need. A 2nd desk, testing machines, tools, few other bits and pieces etc.

You don't need a grands worth of stuff. Seriously dude - if you want to do it, start small.

Buy the insurance, stick some adverts up, get a screwdriver and a spare HDD or something. Then see how it goes. It flops, give up. If it begins to gather pace, THEN think about moving up the world.

Kitting yourself out with testing stations and a new desk just seems very un-neccessary at this early stage. Use your current desk. I doubt you'll be swamped with machines - plus many people will expect on-site work so you wont be taking THAT much back with you to work on.

 

[Phate]

You don't need a grands worth of stuff. Seriously dude - if you want to do it, start small.

Seriously, I used to do all this I know what I need. And I HATE being cramped for space, So I'll get a 2nd desk. Mines packed enough as it is!

I do see what your saying, but to be honest I get enough work just by word of mouth, when I start avertising it'll come in pretty quickly.

Kitting yourself out with testing stations and a new desk just seems very un-neccessary at this early stage. Use your current desk. I doubt you'll be swamped with machines - plus many people will expect on-site work so you wont be taking THAT much back with you to work on.

Everyone will expect on-site work. I'll always try bringing it back though so I don't have em bloody shoulder surfing

"what are you doing?"
"editing the registry"
"ah, is that good then?"
"yes, yes it is"

If it flops, ah well...I tried, I'll just sell the gear on - not hard

 

[Jambo]

I agree with Fox on this one. Don't buy anything until you need it.

If your target market is consumers rather than VAT registered companies don't register for VAT until you need to. Don't start a Limited Company until an accountant has told you to. Start as a self employed individual/sole trader.

It's really simple and you have 3 months to register as self employed. You could get insurance and start tomorrow if you wanted.

 

[Jonnycoupe]

Yeah I'd just start on the sly as such, no one needs to know much about it. I used to do engine swap etc all the time for cash at the weekends etc. Its no different really to all the people selling stuff on ebay, my partner for example does baby name pictures on ebay, although she doesn't work and doesnt go near her tax code.

 

[[TW]Fox]

Seriously, I used to do all this I know what I need.

So why does this thread exist?

And I HATE being cramped for space, So I'll get a 2nd desk.

With borrowed money? Honestly, I really think the way you plan to go about this is a bit daft..

I do see what your saying, but to be honest I get enough work just by word of mouth, when I start avertising it'll come in pretty quickly.

So you want to run a business but think buying a second desk is more important than advertising?

If it flops, ah well...I tried, I'll just sell the gear on - not hard

Ladies and gentlemen - this idea is going NOWHERE.

 

[Phate]

So why does this thread exist?

If you have read my other posts you'll see I repaired PC"s for 18 months but worked for someone else whilst doing it. This thread exists to find out about working for myself, not how to fix machines.

With borrowed money? Honestly, I really think the way you plan to go about this is a bit daft..

You borrowed money off your folks for the BMW where you could've smashed it up on the way home to be perfectly honest. Then you would've been paying them back without a car to show for it.

So you want to run a business but think buying a second desk is more important than advertising?

Why advertise if I haven't got the equipment to do the job I'm advertising to do?

Ladies and gentlemen - this idea is going NOWHERE.

You think? We'll see.

 

[[TW]Fox]

Why advertise if I haven't got the equipment to do the job I'm advertising to do?

You don't NEED equipment to do house calls fixing computers.

 

[Phate]

You don't NEED equipment to do house calls fixing computers.

If the computer cannot be fixed on site and needs to brought back then yes you do!

 

[[TW]Fox]

If the computer cannot be fixed on site and needs to brought back then yes you do!

What equipment do you need? I've built and repaired countless machines with no more equipment than an empty space on my floor and a screwdriver.

Blowing a grand and it isn't even going on advertising, utterly pointless.

 

[dodgem]

Official blurb.

http://www.hmrc.gov.uk/vat/account-flat.htm

If you think you need to be turning over £50k your misinformed or have a crap accountant

I was giving a round figure from memory the actual current figure is £61k.... if you turnover more than £61k then you HAVE to be VAT registered, other wise you do not need to be VAT registered.

I wouldn't say it is worth getting VAT registered for Phate - as has been pointed out, he would have to charge his customers more.

eg. without being VAT reg, he charges £100 for a repair. It costs the customer £100 and Phate gets £100 of which he has to pay 22% or whatever it is atm in income tax so he actually gets £78.

being VAT reg, he charges £94.90+vat = £111.50 for a repair. It costs the customer £111.50 and Phate pays the VAT man £11.50 so he now has £100 of which he keeps £78 after income tax.

Phate is now more expensive than before but no better off himself. Yes he can claim VAT back on the goods he purchases for his business... yes ALL 3 OF HIS SCREWDRIVERS!!! Sure and other bits and bobs, but he is in service and so doesn't buy much...

(figues might be a bit out cos it's late)

 

[Mickey]

If you're not buying a great deal of stock, supplies or materials and simply offering a more service based 'product', ie a IT contractor, then you charge your client your price, whether its an hourly or daily rate + VAT of 17.5%.

When you do your quarterly VAT return you pay HMRC if you are flat rate VAT registered you pay back less than you charged your client. IT contracting is around 12.5% I think, hairdressing is something like 9.5%. So you instantly make an extra 5% on your rate, this VAT benefit is subject to corporation tax, but it is a nice benefit. In your first year of registration you also get a 1% discount. Im in engineering so my rate is 12.5% but as its my first year registered with my ltd company i pay 11.5% to HMRC.

It sounds like you've been slightly misinformed (or you haven't taken it in). The flat rate looks much better than it actually is. You're not actually paying 11.5% as you think (65% of the VAT you've charged), you're paying 11.5% of the gross figure, e.g. if you do £100k of business + VAT, comes to £117,500, you pay 11.5% of that, so £13,512.50 is paid, that's 13.5%ish (77% of the VAT you charged). When it goes up to 12.5%, you'll actually be paying 14.7% (84% of the VAT you charged).

It can still be a good little earner in some situations though

 

[Peño]

Good luck but it sounds like an awful lot of hassle maintaining a full-time job, weekend job and part-time week-evening business. Perhaps ditch the weekend job if you want to run your business seriously. You may be optimistic now, but I'm pretty sure doing all three consecutively will burn you out. It's better to invest in two really good projects rather than three average projects.