Money in and money out

• Start-up costs
• Running expenses
• Getting money in
• Expansion

What do you really need to start up a business?

There is sometimes an expectation that to start you have to have everything you might possibly need that is not the case. Instead of buying expensive equipment it could be leased or for short jobs of 1-2 weeks or days hired.

http://www.calumetphoto.com

Equipment hire guide

How long will the money take to come in?

• Cash sales - straight away thankfully and it is a nice feeling!
• Invoices - longer may be up to 6 months
• and everything in between
• Debt collectors/Small Claims Court are the last resort.

What is the invoice?

The invoice is the legal document that requests payment. It must contain all the necessary information realted to the work you have undertaken for you to be paid.

• Terms are usually 30 Days Net
• Should be paid 30 days from the date of invoice
• Often paid 30 days after the end of the month in which the invoice is submitted
• Some companies especially larger ones raise their own internal invoice to your invoice which delays the process further.
• Big companies pay slower, supermarkets up to 6 months in arrears.
• Health Authorities 3/4 months
• Solicitors 3/6 months

Rules

1. You won't be paid by a large company without an Order Number
2. Always cross-reference that Order number / or record of who ordered on your invoice
3. Might have to use an internal job sheet to progress the work in your business.
4. Large companies require a delivery note which is signed and goes through the company's system to meet up with the order and your invoice.
5. Don't argue, if you want the work organise the paperwork around them so you get work and get paid. Some firms won't use you unless you are registered for VAT

Factoring

Can get a percentage of money from your invoices by using a factoring service they take 10% cut (or more depending on the risk) and give you the rest. This may be useful in a tight spot but you may lose customers if the factoring company uses stronger tactics than you to get the money in.

GOLDEN RULE - Administration v's Selling v's Production

You can't be producing at the same time as selling at the same time as administration so you have to manage your time carefully or get help!!

Pricing your services or product has to allow for all the costs plus profit for you!

Where can you get money to start?

Sources of finance

http://www.shoutout.info

• Banks
• Government Guaranteed Loans
• Local Authority Loans
• Grant e.g. Prince's Trust

NB Loans have to be paid back!

Money out

Costs / Expenses to be considered

• Premises, rent, mortgage
  • Rent weekly or monthly agreement
  • Lease 3 years/ 10 years etc
  • Danger - Full repairing lease
• Wages/Salary
• Loans repayment for capital equipment
• Telephone
• Tax/National Insurance
• Insurance
• Advertising/marketing
• Travel expenses, car, bicycle etc.
• Health and Safety e.g. fire extinguisher and its upkeep
• Repair costs
• Stationery, printing costs
• Entertainment, tea, coffee
• Purchase of stock consumables
• Storage of paperwork (Great expense for some companies e.g. solicitors)
• Electricity, Gas
• Water
• Rates, Council tax
• Internet connection charges/ Web site
• Hire of equipment or lease
• Uniforms or other specialised clothing
• Professional fees
  • Accountants
  • Bank manager
  • Solicitor
• Personal professional subscriptions
• Postage and delivery costs (daily, weekly or automatic franking)
• Cleaning
• Bank charges, overdraft fees and interest

• Sole trader (Self-employed)
• Partnership
Limited company (Private, Unlisted, listed, public)
• Co-operative

Category

• Retail
• Trade
• Service
• Manufacturing
• Franchise

How do you trade and how it affects your tax

Sole trader

Fill in tax form with summary of accounts if over a certain amount will need proper audited accounts. Before September 1st Inland Revenue will do the tax calculations for you after you have to do them. Pay by two installments 6 months apart. Can now fill out your tax returns online. http://www.hmrc.gov.uk/

Partnership

Partnership is a special written agreement drawn up by a solicitor between two or more parties and depending on the agreement all are severally liable. Responsible for their own tax individually or taxed as a company.

Limited company

You are employed as staff by the company. Pay As You Earn PAYE, National Insurance monthly, tax paid to Inland Revenue monthly. Company accounts are professionally audited, company profits taxed. Submitted to Companies House

Working from home

% of household expenses can be offset against tax depends on the number of rooms you use for the . Phone separate out costs + % of line rental business

Supplementing your income

The combination of stating your own business and working can be a good way to start in business as you can develop it as slow or fast as you like without losing your regular money. The disadvantages are that you won't always be available on some days or during the week for clients. Working one or two days a week, for example sessional lecturing, can help when you are running a small business to provide a regular income. They can also enable you become known as a specialist.

• Lectures/lecturing contracts £15-£25/hour
• Organising you own workshops/ lectures e.g. What web design can do for your businees
• Lecturing to an audience on your specialist subject for an honorarium (£50-£150)
• Writing articles with or without photographs (Also can be useful marketing / publicity)
• Book publishing, self-publishing. If publishing do need to remember the regulations relating to British Copyright Libraries
• Submitting work to slide libraries / video libraries for stock footage
• Exhibitions and commissions
• Competitions (Beware of losing copyright!!)

Types of insurance

Professional indemnity

For you making a mess of a job which affects someone else e.g. Doctor misdiagnosing. A wedding photographer who loses the images or don't come out liable to pay for parts of event to be re-run.

Public liability cover

Often minimum £1,000,000 these days. Protect and cover public coming onto your premises. This should be displayed in premises. Look at noticeboards in buildings/companies also fire insurance cover.

Employee liability

Insurance to cover anything happening to an employee of the company whilst working for you. This will also include you as an employee if you have formed a limited company

Insurance against theft, accidental loss,damage etc.

This will often have an excess £100 or in case of University £5000 which means you pay all of that before get any money.

Building and contents

Might need to use the landlord's insurers he pays and you pay him back.

Car insurance

Fully comprehensive. If you are carrying or transporting valuables e.g. Computer, cameras you will need to make your you have cover for these while they are in transit.

Key man insurance/ life insurance

Key man insurance allows the business to employ someone of the same calibre as you while you are ill or incapacitated (from your annual skiing trip in the alps) This means you still get paid and your business is still there when you get back on your feet.

WARNING If you have a full-repairing lease for a property you are liable for all the repairs to the building after you take on the lease, whatever state it is in, so you will need to get a survey before signing!

WARNING Can negate your home insurance if running a business from home without declaring it. Not allowed to trade from a council house without permission, similarly for other tenancy agreements.