Tips for a Startup (who is taking it slow)
Discussion
Hi All,
I’m aiming to start a one-man engineering consultancy business (LTD) in the coming weeks. I’ve got a load of questions I could do with some pointers on, each of which might justify their own thread, but I’ll lump them together as some topics are interlinked and it might provoke further ideas for some who might be kind enough to point out my ignorance on other issues! Apologies that it will make for a long post – I’ll give it subheadings so you can skip to bits of interest if wanted.
TLDR – what tips do you have for a startup which is going to be very part-time/near-dormant for a couple of years before ramping up to full-time?
Background:
What’s unusual about my business is that I am aiming to start very slowly/gently because I am currently a full-time carer to my young children, so will not be able to go full-time for a couple of years when they start school. I want to start now/soon though, partly to keep a trickle of income as well as my hand in the game, but also to help gauge the degree of success I can expect when I can commit to full-time (so that I can have contingency plans to go back to a PAYE life if needs be). Given that, I need to minimise my overheads (within reason) in the short-term, but hopefully without compromising the business for the long-term.
Accountant or DIY:
An example I’m considering is whether or not to engage an accountant at this stage. I would plan to do so when I go full-time, as I realise the tax and time savings should easily pay for the fees, but while I’m very part-time and income is low (and especially prior to any actual trading), the cost might be disproportionate. That said, I’m mindful that I’m very time-poor at the moment so need to focus my efforts effectively. Any hints for good online resources about DIYing the books and baking in tax efficiency from the off, if I do go that route? I’d like to understand things that are legit to claim as business expenses from day 1, e.g. a proportion of the energy bill to cover WFH, car expenses, IT, etc, which could presumably add to my ‘loss’ against a director's loan in the interim and be paid back tax-efficiently when income is higher down the line.
Liability Insurance:
I’m also wondering how to approach liability insurance, especially in these early days of little (but some) trading. I appreciate an LTD gives some protection and that’s part of why I’m going that route, but with a young family to support I need to be bullet-proof if things hit the fan, so am inclined to be insured against litigation if advice I give proves to be flawed. I expect some of my clients to be aerospace suppliers so the liability potential might be large. A quick browse online suggested insurance premiums are based on turnover, but how should you predict that for year 1? Any recommended brokers? What cost to expect?
Registered Address:
I’m planning to register with Companies House shortly, but am undecided about using my home address. I am already a director of a right-to-manage leasehold firm, so my personal address is already in the public domain associated with that. I’d rather have kept it private but it’s done now – I do plan to move house in a couple of years anyway, roughly aligned to when I’ll go full-time. There’s a local business park which is quite prestigious in my industry and they offer a ‘virtual office’ (i.e. use of their address for post) for £30pcm. I think that’d be worth it when I’m trading fully, but probably not while I’m paring the overheads to the bone in the interim. Any alternative options which are beer money?
Mortgages:
I am likely to need a mortgage for my next house in a couple of years. I will have a low/good LTV but realise self-employed mortgages are tricky, particularly if the income is sporadic. Are there any steps I can take now to mitigate the black mark of a couple of years of ‘poor performance’ from my business, especially given that poor performance is deliberate?
Phone:
Do businesses of this nature actually need a phone number in their advertising or are email and contact-us forms sufficient? I expect that much of my custom would be through my existing network who all have my personal mobile number anyway. I will probably get a dedicated business mobile/sim for one, but I do still quite like to see a geographic landline number associated with a business. About 15 years ago I was working abroad a lot and was an early adopter for VOIP phone services – back then Tesco Internet Phone gave a geographic number (including some good/’vanity’ numbers), either for free or very low cost. I’ve long since stopped using that and I can’t find reference to Tesco’s service online these days anyway – any good (and cheap!) modern alternatives?
URLs with hyphens:
businessname.co.uk is already registered (but unused), same for .com
business-name.co.uk is available (and Business Name LTD is available at Co’s House)
Any downsides with the hyphen? I guess folks are familiar enough with hyphens in email addresses that it shouldn’t be an issue, even though it’s a bit unusual in a URL. I could have businessnameltd.co.uk or businessnameengineering.co.uk or something but I feel they’re getting a bit long/convoluted, so think I prefer the hyphen unless there’s good reason against?
Thanks if you’ve made it this far! Any other tips would be most welcome.
I’m aiming to start a one-man engineering consultancy business (LTD) in the coming weeks. I’ve got a load of questions I could do with some pointers on, each of which might justify their own thread, but I’ll lump them together as some topics are interlinked and it might provoke further ideas for some who might be kind enough to point out my ignorance on other issues! Apologies that it will make for a long post – I’ll give it subheadings so you can skip to bits of interest if wanted.
TLDR – what tips do you have for a startup which is going to be very part-time/near-dormant for a couple of years before ramping up to full-time?
Background:
What’s unusual about my business is that I am aiming to start very slowly/gently because I am currently a full-time carer to my young children, so will not be able to go full-time for a couple of years when they start school. I want to start now/soon though, partly to keep a trickle of income as well as my hand in the game, but also to help gauge the degree of success I can expect when I can commit to full-time (so that I can have contingency plans to go back to a PAYE life if needs be). Given that, I need to minimise my overheads (within reason) in the short-term, but hopefully without compromising the business for the long-term.
Accountant or DIY:
An example I’m considering is whether or not to engage an accountant at this stage. I would plan to do so when I go full-time, as I realise the tax and time savings should easily pay for the fees, but while I’m very part-time and income is low (and especially prior to any actual trading), the cost might be disproportionate. That said, I’m mindful that I’m very time-poor at the moment so need to focus my efforts effectively. Any hints for good online resources about DIYing the books and baking in tax efficiency from the off, if I do go that route? I’d like to understand things that are legit to claim as business expenses from day 1, e.g. a proportion of the energy bill to cover WFH, car expenses, IT, etc, which could presumably add to my ‘loss’ against a director's loan in the interim and be paid back tax-efficiently when income is higher down the line.
Liability Insurance:
I’m also wondering how to approach liability insurance, especially in these early days of little (but some) trading. I appreciate an LTD gives some protection and that’s part of why I’m going that route, but with a young family to support I need to be bullet-proof if things hit the fan, so am inclined to be insured against litigation if advice I give proves to be flawed. I expect some of my clients to be aerospace suppliers so the liability potential might be large. A quick browse online suggested insurance premiums are based on turnover, but how should you predict that for year 1? Any recommended brokers? What cost to expect?
Registered Address:
I’m planning to register with Companies House shortly, but am undecided about using my home address. I am already a director of a right-to-manage leasehold firm, so my personal address is already in the public domain associated with that. I’d rather have kept it private but it’s done now – I do plan to move house in a couple of years anyway, roughly aligned to when I’ll go full-time. There’s a local business park which is quite prestigious in my industry and they offer a ‘virtual office’ (i.e. use of their address for post) for £30pcm. I think that’d be worth it when I’m trading fully, but probably not while I’m paring the overheads to the bone in the interim. Any alternative options which are beer money?
Mortgages:
I am likely to need a mortgage for my next house in a couple of years. I will have a low/good LTV but realise self-employed mortgages are tricky, particularly if the income is sporadic. Are there any steps I can take now to mitigate the black mark of a couple of years of ‘poor performance’ from my business, especially given that poor performance is deliberate?
Phone:
Do businesses of this nature actually need a phone number in their advertising or are email and contact-us forms sufficient? I expect that much of my custom would be through my existing network who all have my personal mobile number anyway. I will probably get a dedicated business mobile/sim for one, but I do still quite like to see a geographic landline number associated with a business. About 15 years ago I was working abroad a lot and was an early adopter for VOIP phone services – back then Tesco Internet Phone gave a geographic number (including some good/’vanity’ numbers), either for free or very low cost. I’ve long since stopped using that and I can’t find reference to Tesco’s service online these days anyway – any good (and cheap!) modern alternatives?
URLs with hyphens:
businessname.co.uk is already registered (but unused), same for .com
business-name.co.uk is available (and Business Name LTD is available at Co’s House)
Any downsides with the hyphen? I guess folks are familiar enough with hyphens in email addresses that it shouldn’t be an issue, even though it’s a bit unusual in a URL. I could have businessnameltd.co.uk or businessnameengineering.co.uk or something but I feel they’re getting a bit long/convoluted, so think I prefer the hyphen unless there’s good reason against?
Thanks if you’ve made it this far! Any other tips would be most welcome.
Congrats OP on starting the business. Here’s my thoughts…
Accountant or DIY: DIY
Just keep good your receipts and invoices, and record everything on Excel or a free piece of software. Professional services businesses are very simple, no need for an accountant. Advice on any specifics can be gained online and through forums like this one.
Liability Insurance: Not sure
Engineering is not my speciality, but in management consulting the big clients ask for it and set the level they require it.
Registered Address: Home
No decent client is going to make a buying decision based on business location. Especially these days - you work from home, hardly surprising.
There’s a wider point here about brand: don’t try and pretend to be something you’re not, capitalise on what you are. You’re not a big business, you’re a solo expert. Some of the most expensive advisors in the world are solo. Don’t be embarrassed you’re not some company with offices. Many are full of mediocre people. Sell you. Great brands are authentic.
Mortgages: Long Fix
I have done both employed and freelance roles and it is very disappointing how the mortgage underwriters treat you so differently. My approach is to take a long (5-10 year) fixed mortgage so I don’t need to remortgage without a steady income. Whether it is worth an Early Redemption Penalty will depend on your situation.
Phone:
A professional services firm does not need a phone number in advertising. Everyone uses email these days, and you reply with a mobile number. My company has actually just got rid of its landline entirely recently as it just wasn’t being used, everything goes to email and personal mobiles.
URLs with hyphens:
It doesn’t matter a jot. You won’t make £1 more income with or without. This sort of thing matters in high volume, especially commodity consumer goods and services but not in low volume professional services. Keep it simple because it makes life easier but don’t spend on it.
Overall
My general point is that at this stage you should only spend on activity that will directly win you work. Do not spend much time or money on anything that might be considered “brand”.
People always waste a lot on it in their first business. I think this is because marketing is more fun and easier for most people than sales. Also, psychologically it feels like progress, but it really isn’t worth it.
You’re basically selling your own skills and ability. So don’t pretend to be anything different, and just find ways to get yourself out in front of potential buyers and talk to them.
Finally, a book recommendation: David Maister’s classic “Trusted Advisor”. It’’s a relatively old book now but full of wisdom, and was a big help to me in forming the right mindset when I first went freelance.
Accountant or DIY: DIY
Just keep good your receipts and invoices, and record everything on Excel or a free piece of software. Professional services businesses are very simple, no need for an accountant. Advice on any specifics can be gained online and through forums like this one.
Liability Insurance: Not sure
Engineering is not my speciality, but in management consulting the big clients ask for it and set the level they require it.
Registered Address: Home
No decent client is going to make a buying decision based on business location. Especially these days - you work from home, hardly surprising.
There’s a wider point here about brand: don’t try and pretend to be something you’re not, capitalise on what you are. You’re not a big business, you’re a solo expert. Some of the most expensive advisors in the world are solo. Don’t be embarrassed you’re not some company with offices. Many are full of mediocre people. Sell you. Great brands are authentic.
Mortgages: Long Fix
I have done both employed and freelance roles and it is very disappointing how the mortgage underwriters treat you so differently. My approach is to take a long (5-10 year) fixed mortgage so I don’t need to remortgage without a steady income. Whether it is worth an Early Redemption Penalty will depend on your situation.
Phone:
A professional services firm does not need a phone number in advertising. Everyone uses email these days, and you reply with a mobile number. My company has actually just got rid of its landline entirely recently as it just wasn’t being used, everything goes to email and personal mobiles.
URLs with hyphens:
It doesn’t matter a jot. You won’t make £1 more income with or without. This sort of thing matters in high volume, especially commodity consumer goods and services but not in low volume professional services. Keep it simple because it makes life easier but don’t spend on it.
Overall
My general point is that at this stage you should only spend on activity that will directly win you work. Do not spend much time or money on anything that might be considered “brand”.
People always waste a lot on it in their first business. I think this is because marketing is more fun and easier for most people than sales. Also, psychologically it feels like progress, but it really isn’t worth it.
You’re basically selling your own skills and ability. So don’t pretend to be anything different, and just find ways to get yourself out in front of potential buyers and talk to them.
Finally, a book recommendation: David Maister’s classic “Trusted Advisor”. It’’s a relatively old book now but full of wisdom, and was a big help to me in forming the right mindset when I first went freelance.
I think I disagree with every answer!
An accountant is essential for a Ltd. Though you could wait until you are seeing profit before starting the Ltd.
Avoid hyphens in domains, it looks scammy. It costs the same to register a hyphen less domain.
You don’t want clients street viewing your house. Use a forwarding service. If you move changing everything can be a nightmare. Addresses on companies house etc get syndicated all over the place.
It’s not about pretending you are something you are not. It’s about showing you are more smooth and organised than a hobby dog walker. You can be upfront about being solo and still do the basics. Especially if it doesn’t cost much extra.
An accountant is essential for a Ltd. Though you could wait until you are seeing profit before starting the Ltd.
Avoid hyphens in domains, it looks scammy. It costs the same to register a hyphen less domain.
You don’t want clients street viewing your house. Use a forwarding service. If you move changing everything can be a nightmare. Addresses on companies house etc get syndicated all over the place.
It’s not about pretending you are something you are not. It’s about showing you are more smooth and organised than a hobby dog walker. You can be upfront about being solo and still do the basics. Especially if it doesn’t cost much extra.
Edited by lizardbrain on Saturday 18th February 09:41
lizardbrain said:
I think I disagree with every answer!
An accountant is essential for a Ltd. Though you could wait until you are seeing profit before starting the Ltd.
Avoid hyphens in domains, it looks scammy. It costs the same to register a hyphen less domain.
You don’t want clients street viewing your house. Use a forwarding service. If you move changing everything can be a nightmare. Addresses on companies house etc get syndicated all over the place.
It’s not about pretending you are something you are not. It’s about showing you are more smooth and organised than a hobby dog walker. You can be upfront about being solo and still do the basics. Especially if it doesn’t cost much extra.
Well, there you go, OP - a range of views! Actually we may not be so so far apart as I totally agree with Lizardbrain’s last sentence. An accountant is essential for a Ltd. Though you could wait until you are seeing profit before starting the Ltd.
Avoid hyphens in domains, it looks scammy. It costs the same to register a hyphen less domain.
You don’t want clients street viewing your house. Use a forwarding service. If you move changing everything can be a nightmare. Addresses on companies house etc get syndicated all over the place.
It’s not about pretending you are something you are not. It’s about showing you are more smooth and organised than a hobby dog walker. You can be upfront about being solo and still do the basics. Especially if it doesn’t cost much extra.
Edited by lizardbrain on Saturday 18th February 09:41
Where I may disagree is that I doubt you will win a penny more business through slightly more refined branding. If you can do it for nearly nothing, of course, look more professional, but just judge critically any spend in Year 1 by “will this really drive any actual business now”.
Edited by 67Dino on Saturday 18th February 12:29
lizardbrain said:
An accountant is essential for a Ltd. Though you could wait until you are seeing profit before starting the Ltd.
This. Edited by lizardbrain on Saturday 18th February 09:41
As an accountant, I have seen many people DIY a startup LTD. Now I'm sure there are people here who will say it worked for them, but I'm yet to meet one. Get an accountant and run through your queries with them.
MaxFromage said:
lizardbrain said:
An accountant is essential for a Ltd. Though you could wait until you are seeing profit before starting the Ltd.
This. Edited by lizardbrain on Saturday 18th February 09:41
As an accountant, I have seen many people DIY a startup LTD. Now I'm sure there are people here who will say it worked for them, but I'm yet to meet one. Get an accountant and run through your queries with them.
Shnozz said:
Just make sure you use a proactive accountant who will advise you rather than just act as a bookkeeper. I ended up with the latter and so paid the costs of an accountant from day one with no benefit other than forming the company and then filing tax and VAT returns. Most of my advice on tax minimisation and proactive measures was given by my mate who is another PHer and fed down information he had been given by his accountant.
Indeed.We use a virtual contact number through ereceptionist and that can work like a PBX and divert to your mobile.
As said above use a mailbox address or similar otherwise your house will get bombarded with spam and its no issue to change homes.
My biggest top tip I was ever given over 30 years ago was never give a personal guarantee! Anything can happen and thats the main reason for having a limited company. Good luck
As said above use a mailbox address or similar otherwise your house will get bombarded with spam and its no issue to change homes.
My biggest top tip I was ever given over 30 years ago was never give a personal guarantee! Anything can happen and thats the main reason for having a limited company. Good luck
You’re describing pretty much what I do – albeit in a different sector.
So the first bit of advice is to just crack on and do it. You’ll find a way to make it work. The sooner you do, the sooner you’ll be able to deal with things like the mortgage you mentioned.
Keep in mind that when operating as a solo consultant, you don’t so much own a business as own a job the security of which is based upon your reputation. That reputation can be affected by trying to hold down two ‘jobs’ at the same time.
As I say, it’s easy for me to say and I realise there’s a host of factors that may prevent that. A happy medium is to consider a trigger point at which you make the switch – and keep to it. This might be the buffer of a few months salary squirreled away.
Owning a Ltd company is potentially a highly tax-efficient way to earn a living - but you need to do things in the right way. And if you knew all the right ways, chances are you'd be an accountant yourself.
For reference, I pay my accountant £92 a month. That comes with a QuickBooks subscription that links to my bank account which makes record keeping a doddle.
A good Accountant is also a source of good contacts. They'll have clients of many types and will always be able to recommend a good solicitor, insurance broker... maybe even throw a few clients your way.
Given you're working in the aerospace field, I would imagine the requirements will differ from other types of businesses in terms of the cover you need. You would do well to research this and is likely that there will be specialist brokers that can advise you.
You will win work on the basis of your capability, capacity and probably price. Any client that turns you down on the basis of your address is not a client you want to have. So, seriously, don’t bother with this.
My business is marketing communication / creative services yet my logo and website were appalling for the first six months I was trading. Embarrassingly so. The reason was that I did what 67Dino suggests and went out and hoovered up work. Once I’d amassed some cash I then got my web guy to sort the site and logo for me.
Build a network of professional buddies; cohorts, collaborators and the like. People exactly like you, doing what you do. You then have the capacity to sub-out work, cover yourself if you’re laid low or fancy a few day’s R&R. I work with a bunch of people who are like me but specialist in complimentary fields. We’ve created a separate business that allows us to bid for much bigger work which gets divvied out to the relevant consultants. The separate company bills the client, we bill the separate company 15% below our normal rates which provides sufficient revenue for that company to administrate itself. Works a treat!
Budget for monthly IT support. Easy to overlook when you go solo but you need your tools working 100%, 100% of the time. Clients do not respond well to a late report or something similar because you've got to take the PC to Curry's to get fixed. You need someone regularly maintaining everything and on hand should something break.
Think about the end game early on. Consultancy is a very difficult business to exit from because for a company to amass any value, the principal people within it have to be unimportant to the business. That’s not possible when you are the business. Not every business has to be constantly ‘fattened up’ for market. There’s nothing wrong with earning a good living from doing something you like on your terms until you no longer want to do it any more. If you did want to build and exit, then you need to develop a framework plan early on so that you can build the business accordingly.
As for winning work..... Don’t simply rest on the laurels of your skills. Become an ‘Expert’. Write articles for journals, speak at conferences, be active in any trade association that applies to your profession. Attend the exhibitions, functions, award ceremonies and the like. Be visible in your professions. You actually need to develop a bit of an ego – don’t be shy in articulating your skills and achievements on LinkedIn and other sales channels. And whilst you must never lie about any of that, it helps to learn the art of embellishment.
HTH and good luck!
Jamp said:
what tips do you have for a startup which is going to be very part-time/near-dormant for a couple of years before ramping up to full-time?
This is, I know, very easy for me to say but.... either do it or don’t. Whether you start now or in a couple of years, there will be a period of time at the beginning when money will be tight, worry will be off the chart and your time will 100% focused on the consultancy. It’s almost impossible to avoid that by starting slow and building up from the comfort of paid employment. I spent 20 years doing exactly that and were it not for the extraneous forces of Covid and other things, I’d still be saying.... “this year”. So the first bit of advice is to just crack on and do it. You’ll find a way to make it work. The sooner you do, the sooner you’ll be able to deal with things like the mortgage you mentioned.
Keep in mind that when operating as a solo consultant, you don’t so much own a business as own a job the security of which is based upon your reputation. That reputation can be affected by trying to hold down two ‘jobs’ at the same time.
As I say, it’s easy for me to say and I realise there’s a host of factors that may prevent that. A happy medium is to consider a trigger point at which you make the switch – and keep to it. This might be the buffer of a few months salary squirreled away.
Jamp said:
Accountant or DIY
Whatever you do, you at least need to speak to an Account early on. Whether you engage them or not is another matter but only a professional Accountant is able to advise on what’s right for given your full set of circumstances. Regardless of what others have said, don’t DIY the accounts.Owning a Ltd company is potentially a highly tax-efficient way to earn a living - but you need to do things in the right way. And if you knew all the right ways, chances are you'd be an accountant yourself.
For reference, I pay my accountant £92 a month. That comes with a QuickBooks subscription that links to my bank account which makes record keeping a doddle.
A good Accountant is also a source of good contacts. They'll have clients of many types and will always be able to recommend a good solicitor, insurance broker... maybe even throw a few clients your way.
Jamp said:
Liability Insurance:
The Limited status affords you protection should the company go bust owing money. When it comes to professional negligence, the directors can be personally liable. Insurance is critical and you’ll not win work without out. It needs to be in place ahead of when you start going out to pitch for work.Given you're working in the aerospace field, I would imagine the requirements will differ from other types of businesses in terms of the cover you need. You would do well to research this and is likely that there will be specialist brokers that can advise you.
Jamp said:
Registered Address:
When I set up, I used my home address (which is where I work from) and just my mobile number. I had intended to buy a London service address and phone number but never got round to it. I’m glad I didn’t because it would not have made one jot of difference to the business. I’ve managed to secure some pretty impressive clients (World Bank, UN, etc) without having to revert to the façade of a fancy address. You will win work on the basis of your capability, capacity and probably price. Any client that turns you down on the basis of your address is not a client you want to have. So, seriously, don’t bother with this.
Jamp said:
Phone:
Just use your mobile. Anything else is an unnecessary expense.Jamp said:
URLs with hyphens:
Avoid if you can but don’t sweat it. You will not win or loose business on the basis of whether your domain name has a hyphen or not. 67Dino said:
My general point is that at this stage you should only spend on activity that will directly win you work. Do not spend much time or money on anything that might be considered “brand”.
People always waste a lot on it in their first business. I think this is because marketing is more fun and easier for most people than sales. Also, psychologically it feels like progress, but it really isn’t worth it.
You’re basically selling your own skills and ability. So don’t pretend to be anything different, and just find ways to get yourself out in front of potential buyers and talk to them.
This is excellent advice. People always waste a lot on it in their first business. I think this is because marketing is more fun and easier for most people than sales. Also, psychologically it feels like progress, but it really isn’t worth it.
You’re basically selling your own skills and ability. So don’t pretend to be anything different, and just find ways to get yourself out in front of potential buyers and talk to them.
My business is marketing communication / creative services yet my logo and website were appalling for the first six months I was trading. Embarrassingly so. The reason was that I did what 67Dino suggests and went out and hoovered up work. Once I’d amassed some cash I then got my web guy to sort the site and logo for me.
67Dino said:
Thanks if you’ve made it this far! Any other tips would be most welcome.
Specific to consultancy...... Build a network of professional buddies; cohorts, collaborators and the like. People exactly like you, doing what you do. You then have the capacity to sub-out work, cover yourself if you’re laid low or fancy a few day’s R&R. I work with a bunch of people who are like me but specialist in complimentary fields. We’ve created a separate business that allows us to bid for much bigger work which gets divvied out to the relevant consultants. The separate company bills the client, we bill the separate company 15% below our normal rates which provides sufficient revenue for that company to administrate itself. Works a treat!
Budget for monthly IT support. Easy to overlook when you go solo but you need your tools working 100%, 100% of the time. Clients do not respond well to a late report or something similar because you've got to take the PC to Curry's to get fixed. You need someone regularly maintaining everything and on hand should something break.
Think about the end game early on. Consultancy is a very difficult business to exit from because for a company to amass any value, the principal people within it have to be unimportant to the business. That’s not possible when you are the business. Not every business has to be constantly ‘fattened up’ for market. There’s nothing wrong with earning a good living from doing something you like on your terms until you no longer want to do it any more. If you did want to build and exit, then you need to develop a framework plan early on so that you can build the business accordingly.
As for winning work..... Don’t simply rest on the laurels of your skills. Become an ‘Expert’. Write articles for journals, speak at conferences, be active in any trade association that applies to your profession. Attend the exhibitions, functions, award ceremonies and the like. Be visible in your professions. You actually need to develop a bit of an ego – don’t be shy in articulating your skills and achievements on LinkedIn and other sales channels. And whilst you must never lie about any of that, it helps to learn the art of embellishment.
HTH and good luck!
Edited by StevieBee on Sunday 19th February 11:07
Jamp said:
Hi All,
Mortgages:
I am likely to need a mortgage for my next house in a couple of years. I will have a low/good LTV but realise self-employed mortgages are tricky, particularly if the income is sporadic. Are there any steps I can take now to mitigate the black mark of a couple of years of ‘poor performance’ from my business, especially given that poor performance is deliberate?
You've received great advice to think about above. Mortgages:
I am likely to need a mortgage for my next house in a couple of years. I will have a low/good LTV but realise self-employed mortgages are tricky, particularly if the income is sporadic. Are there any steps I can take now to mitigate the black mark of a couple of years of ‘poor performance’ from my business, especially given that poor performance is deliberate?
I've had a limited company for 30 years trading as a consultant, which is my main source of income. But I have also had significant employed income on occasion in addition.
Mortgages have become a problem in recent years with multiple sources of income. Mortgage cos have a real problem understanding how you can be both employed and self employed. I am not talking dividends and salary, which I have, but properly separate sources of employed and self employed income. Effectively 2 jobs, which it sounds like the situation you are getting into.
If you can, get your mortgage whilst you are employed and based on your employed income only. Leave the self-employed aspect out of it. You'll access a much wider mortgage choice than self employed and avoid the endless banal interrogation about how you can possibly do two jobs !!
I think a lot of the issues I've had, and this is for a low 40% LTV mortgage, are related to the more stringent lending regulations that have increasingly come into force in recent years.
Mark-r0xn8 said:
You've received great advice to think about above.
I've had a limited company for 30 years trading as a consultant, which is my main source of income. But I have also had significant employed income on occasion in addition.
Mortgages have become a problem in recent years with multiple sources of income. Mortgage cos have a real problem understanding how you can be both employed and self employed. I am not talking dividends and salary, which I have, but properly separate sources of employed and self employed income. Effectively 2 jobs, which it sounds like the situation you are getting into.
If you can, get your mortgage whilst you are employed and based on your employed income only. Leave the self-employed aspect out of it. You'll access a much wider mortgage choice than self employed and avoid the endless banal interrogation about how you can possibly do two jobs !!
I think a lot of the issues I've had, and this is for a low 40% LTV mortgage, are related to the more stringent lending regulations that have increasingly come into force in recent years.
I assume you needed to rely on dividends/salary from your s/e position for the mortgage? Otherwise, why tell them of the second income at all and just reference the employed job.I've had a limited company for 30 years trading as a consultant, which is my main source of income. But I have also had significant employed income on occasion in addition.
Mortgages have become a problem in recent years with multiple sources of income. Mortgage cos have a real problem understanding how you can be both employed and self employed. I am not talking dividends and salary, which I have, but properly separate sources of employed and self employed income. Effectively 2 jobs, which it sounds like the situation you are getting into.
If you can, get your mortgage whilst you are employed and based on your employed income only. Leave the self-employed aspect out of it. You'll access a much wider mortgage choice than self employed and avoid the endless banal interrogation about how you can possibly do two jobs !!
I think a lot of the issues I've had, and this is for a low 40% LTV mortgage, are related to the more stringent lending regulations that have increasingly come into force in recent years.
As an insurance broker I'll advise you on that.
Legally you don't need any.
Contractually you need to pay very careful attention to your contractual liability.
My advice here is to purchase public liability if you will visit client sites and could cause injury or damage whilst you are there.
Buy what you can afford unless your clients request certain limits.
Professional Indemnity covers you for negligent advice that causes your clients a financial loss. Again buy what you can afford unless contractualy bound.
Revenue declaration - have a good guess.
Any decent broker can help, you don't need a specialist.
Insurancejon on here can help.
Legally you don't need any.
Contractually you need to pay very careful attention to your contractual liability.
My advice here is to purchase public liability if you will visit client sites and could cause injury or damage whilst you are there.
Buy what you can afford unless your clients request certain limits.
Professional Indemnity covers you for negligent advice that causes your clients a financial loss. Again buy what you can afford unless contractualy bound.
Revenue declaration - have a good guess.
Any decent broker can help, you don't need a specialist.
Insurancejon on here can help.
One note on the phone thing - have a look at AirLandline it’s £10 a month; will give you a local landline number which when called can be forwarded where you want, so personal mobile or home phone etc.
You can set it up to not ring out of office hours, and they have a proper voicemail, rather than the ‘Giffgaf etc.’ voicemail which for any business wouldn’t sound overly professional.
We started using it 18 months ago as I wanted my landline to ring multiple mobiles at the same time and it’s been faultless - there’s other paid options like an answering service etc. but the basic system works great for us. Free Business WhatsApp too.
Good luck getting started - completely different field to you, but I’m 3 years in and wouldn’t go back!
You can set it up to not ring out of office hours, and they have a proper voicemail, rather than the ‘Giffgaf etc.’ voicemail which for any business wouldn’t sound overly professional.
We started using it 18 months ago as I wanted my landline to ring multiple mobiles at the same time and it’s been faultless - there’s other paid options like an answering service etc. but the basic system works great for us. Free Business WhatsApp too.
Good luck getting started - completely different field to you, but I’m 3 years in and wouldn’t go back!
Mark-r0xn8 said:
Jamp said:
Hi All,
Mortgages:
I am likely to need a mortgage for my next house in a couple of years. I will have a low/good LTV but realise self-employed mortgages are tricky, particularly if the income is sporadic. Are there any steps I can take now to mitigate the black mark of a couple of years of ‘poor performance’ from my business, especially given that poor performance is deliberate?
You've received great advice to think about above. Mortgages:
I am likely to need a mortgage for my next house in a couple of years. I will have a low/good LTV but realise self-employed mortgages are tricky, particularly if the income is sporadic. Are there any steps I can take now to mitigate the black mark of a couple of years of ‘poor performance’ from my business, especially given that poor performance is deliberate?
I've had a limited company for 30 years trading as a consultant, which is my main source of income. But I have also had significant employed income on occasion in addition.
Mortgages have become a problem in recent years with multiple sources of income. Mortgage cos have a real problem understanding how you can be both employed and self employed. I am not talking dividends and salary, which I have, but properly separate sources of employed and self employed income. Effectively 2 jobs, which it sounds like the situation you are getting into.
If you can, get your mortgage whilst you are employed and based on your employed income only. Leave the self-employed aspect out of it. You'll access a much wider mortgage choice than self employed and avoid the endless banal interrogation about how you can possibly do two jobs !!
I think a lot of the issues I've had, and this is for a low 40% LTV mortgage, are related to the more stringent lending regulations that have increasingly come into force in recent years.
This is why I think you would do well to start sooner than you are planning. If you're thinking that you might need to move house in say four or five year's time, by then, you company would (hopefully) have had four or five years trading history and you able to show consistent income over that period of time.
If that's not possible then the suggestion of securing a mortgage from your current employment position prior to setting up on your own is the right way to go.
Eric Mc said:
Why do you feel you need to operate through a limited company?
Eric's question is spot-on.Using an Ltd at this stage feels premature, and gives you 100x the overhead/work, when you could be focusing on finding profitable work instead. Trying to do a light-touch Ltd with tax/minimal payroll/etc. without an accountant is HARD. Unless you have accounting experience, pay a professional. If that feels "expensive" then it might be too early to start up the Ltd.
biggiles said:
Eric Mc said:
Why do you feel you need to operate through a limited company?
Eric's question is spot-on.Using an Ltd at this stage feels premature, and gives you 100x the overhead/work, when you could be focusing on finding profitable work instead. Trying to do a light-touch Ltd with tax/minimal payroll/etc. without an accountant is HARD. Unless you have accounting experience, pay a professional. If that feels "expensive" then it might be too early to start up the Ltd.
However, it is a question the OP does need to consider.
One the one hand, some sectors and clients will only work with Ltd companies.
If he does start subbing out work, then he's exposing himself to what could end up being quite a high level of liability and risk. And if exit is part of the plan, selling a Ltd company is easier. And don't forget the more favourable tax options when it comes to dividends.
The other advantage of a Ltd company may also relate to his mortgage situation later on for the reasons stated by others.
But if none of those things are an issue, then perhaps a Ltd company isn't needed.
In the current climate of increasing Corporation Tax rates and the higher taxation of dividends, the tax advantages of smaller limited compnaies are now almost non-existent.
I can assure you that most people who try to submit limited company accounts that are fully compliant with Company Law, Corporation Tax regulations and the various accounting reporting standards fail miserably.
However, they "get away" with submitting sub-standard and non compliant accounts because the government agencies responsible for checking the quality and accuracy of what is submitted no longer function.
When a non qulaified accountant makes a statement such as "Well, I've had no problems submitting my own accounts" it's not because they have done them correctly, it's because their poor quality submissions have not been picked up on by those who should be doing the checking.
And don't forget the sheer mess that IR35 now creates.
Has the OP thought about IR35 at all?
I can assure you that most people who try to submit limited company accounts that are fully compliant with Company Law, Corporation Tax regulations and the various accounting reporting standards fail miserably.
However, they "get away" with submitting sub-standard and non compliant accounts because the government agencies responsible for checking the quality and accuracy of what is submitted no longer function.
When a non qulaified accountant makes a statement such as "Well, I've had no problems submitting my own accounts" it's not because they have done them correctly, it's because their poor quality submissions have not been picked up on by those who should be doing the checking.
And don't forget the sheer mess that IR35 now creates.
Has the OP thought about IR35 at all?
Edited by Eric Mc on Monday 20th February 12:58
We are home based - onsite training and product sales
use ttnc.co.uk for a virtual land line forward to my mobile, has a 0121 no. - £2+vat a month - been rung about twice!
Domain has a single "dash" - separates name from what we do eg "www.smith-solicitors.co.uk" agree lots of dashes looks aftermarket
We have sales product liability and it was a mare to get cover (niche so expensive too) - think we also ticked liability as we are onsite sometimes. Def will look at renewal
I dont like having our home address on companies house, invoices, website mainly as we deal 1:1 with individual clients - its just a 3 bed semi no palace! Most of our post is crappy speculative credit/services letters. Banks, invoices etc are all online now. Quick google, a virtual address looks like £50+vat pm. Seems expensive for just a forwarder? Plus they charge for postage/envelopes forwarding the crap
use ttnc.co.uk for a virtual land line forward to my mobile, has a 0121 no. - £2+vat a month - been rung about twice!
Domain has a single "dash" - separates name from what we do eg "www.smith-solicitors.co.uk" agree lots of dashes looks aftermarket
We have sales product liability and it was a mare to get cover (niche so expensive too) - think we also ticked liability as we are onsite sometimes. Def will look at renewal
I dont like having our home address on companies house, invoices, website mainly as we deal 1:1 with individual clients - its just a 3 bed semi no palace! Most of our post is crappy speculative credit/services letters. Banks, invoices etc are all online now. Quick google, a virtual address looks like £50+vat pm. Seems expensive for just a forwarder? Plus they charge for postage/envelopes forwarding the crap
OP here - many thanks for all the considered replies which have given me much to think about.
In other news, I had a meeting with my first client today - a nice milestone! He's a friend and former colleague who has a successful consultancy firm of his own and is now subcon'ing to a band of like-minded peers, one of which is now planned to be me, so that feels like a good starting point given my wider situation.
Understood on the 'do it or don't do it' feedback, especially with regards to the future mortgage, but unfortunately that's the limitation of my wider situation. I have infant triplets at home and they demand 80%+ of my waking (and many of my sleeping!) hours at present. That will ramp down over time, but not enough to allow full-time work until they go to school. I have already left my PAYE job so that scuppers that idea for the new mortgage sadly, but I don't need a new mortgage for the current house, just the (larger) one I plan to buy in a couple of years, so I guess I'll just have to cross that bridge when I get to it.
My main aim for the business in this interim period is to set myself up for success when I ramp it up in future - i.e. getting the logistics in order, building my network as well as some reputation and experience in operating in this way, but immediate income is secondary (although welcome!)
I'll respond in more detail on the various themes tomorrow, but wanted to say something in the interim as thanks for all your input and to let you know I'm still here reading and thinking!
In other news, I had a meeting with my first client today - a nice milestone! He's a friend and former colleague who has a successful consultancy firm of his own and is now subcon'ing to a band of like-minded peers, one of which is now planned to be me, so that feels like a good starting point given my wider situation.
Understood on the 'do it or don't do it' feedback, especially with regards to the future mortgage, but unfortunately that's the limitation of my wider situation. I have infant triplets at home and they demand 80%+ of my waking (and many of my sleeping!) hours at present. That will ramp down over time, but not enough to allow full-time work until they go to school. I have already left my PAYE job so that scuppers that idea for the new mortgage sadly, but I don't need a new mortgage for the current house, just the (larger) one I plan to buy in a couple of years, so I guess I'll just have to cross that bridge when I get to it.
My main aim for the business in this interim period is to set myself up for success when I ramp it up in future - i.e. getting the logistics in order, building my network as well as some reputation and experience in operating in this way, but immediate income is secondary (although welcome!)
I'll respond in more detail on the various themes tomorrow, but wanted to say something in the interim as thanks for all your input and to let you know I'm still here reading and thinking!
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