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Starting a Bookkeeping business with £25K salary

Starting a Bookkeeping business with £25K salary

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I have worked as a FC for over 11 years now with the same company and my MD has offered me reduntancy instead of being furloughed with others (61 employees) as he needs me to do some work during this period doing duties like payroll, admin duties, managing cash flow etc. Our business is likely to be closed for longer as we supply school products so if school remain closed there is no business until Sept 2020 when the schools open again for the new year and our head office will move from London.

My MD has offered to hire me back for 2 days as Ltd company working from home/my office for £2K a month for a period of 12 months and I have also a small client base doing mainly bookkeeping, management accounts & payroll for  different accounting firms earning some  good money alongside my permanent job for 3 years now. I have also been doing some work for friends for free but will start charging them from April 2020 and I now want to use this as a opportunity to start my own business working from my home initially and then rent an office within 2 months and my anticipated budget is as follows;

Sales revenue £60K (£24K will be from one client)

Director sal    -£25K

Staff Sal (wife) -£9.5K

Other expenses  -£10K (includes office rent £3K)

I really wants to know your opinion with regards to taking this offer from my current employer, also giving myself a salary of £25K a year and offering my wife a salary of £9.5K who will work as a part-time administrator as she is a full time student for the next 3 years? I have decided to give myself a high salary as a result of this coronavirus crisis. All issues like practice certificate and having the experience to do the job are all sorted now as I have prepared myself for 3 years now. Has anyone done it before like getting work from current employer (IR35 not an issue) and is there anything else you think I need to do?

 

 

 

 

 

 

 

 

Replies (7)

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A Putey FACA
By Arthur Putey
27th Mar 2020 11:14

The way you've described it your employer has got things the wrong way round, he can offer employees furlough as an alternative to a redundancy he is already considering, and its up to them whether to accept.

You don't mention your current salary or notice period so I assume you'd get a decent payoff, in which case it sounds like a good opportunity in the current climate. You seem to have thought through the basics, but don't forget PI.

One thing I will throw in is, in the light of the Chancellor's statement yesterday might it be better to set up as a sole practitioner rather than through a Ltd Co? You could still put your wife on the payroll, and register for VAT, etc.

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Replying to Arthur Putey:
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By FRAS
27th Mar 2020 11:44

Thank you Arthur, initially my employer wanted me to work whilst I am classified as a furloughed and I have told the MD that it is not allowed. My salary has been £44K a year but I reduced full-time 4 days last year so my 2019/20 was actually £39K to allow me to do to other things.I made a proposal to my employer and he agreed unless if he changes his mind thus why I want him to sign a contract for 12 months even 6 months. Thank you for reminding me about the PI I will

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By paul.benny
27th Mar 2020 11:42

You seem to have thought it through and if you already have the clients to make up the £60k turnover, then go for it.

A couple of caveats
- your existing client base may dry up over the next few months because they shrink/go out of business, etc
- be a little cautious in the relationship your old employer. It would be easy -on both sides- to fall into doing the old job rather than the narrower new relationship.

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Replying to paul.benny:
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By FRAS
27th Mar 2020 12:12

I will try to safeguard myself from being loaded with same work from current employer so I will make sure I sign for 2 days only plus maybe phone support for no more 12 months for a start and If existing clients stops I will struggle. I want to have a strong relationship with Accountancy practice who wants to outsource their bookkeeping/payroll and I just hope I will have more work after the coronavirus crises as I want to have a team based abroad working online supporting my business here. Thank you for your response.

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Stuart Walker Yellow Tomato Copy
By winton50
27th Mar 2020 12:01

I'd caution you on this one.

In the next few months you'll start to see the full impact on the employment market.

There will be a lot of interims that can't get a contract and full-time employees that get laid off.

You'll find that the world and his wife will have a great idea and decide to open up a practice.

Make sure you have good solid clients that can cover your costs and market like a mad thing, especially when you are busy.

Whatever you do don't rely on the few clients you have as any one of them (or more) could go POP! at a moments notice.

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Replying to winton50:
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By FRAS
27th Mar 2020 12:21

Thank you, the situation is very uncertain at the moment you are right.

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By [email protected]
30th Mar 2020 18:46

If you need any advice, regarding eligibility into a membership + practising certificate, I can help!
I appreciate that it can be very confusing on who to join etc If you know what direction you want to take over the next 5yrs, then I am happy to speak with you to explain it all, where I will try my best to be impartial and of course there is no obligation and no charge. Obviously, I do work for the IFA, but dependant on what you are looking to do, I will advise the one most suited for you and not just IFA.
You are welcome to contact me directly on 07444 570 783.

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