This week I have a Guest Blog by Helen Steel of Streamlion Consulting Ltd, giving great advice on obtaining funding for your business.  Contact Helen for more advice or assistance.  (https://www.streamlionconsulting.com)

“I heard on the radio this morning that this is the time in January when most employees sit back and reevaluate their jobs. The excesses of Christmas and New Year are behind them. Any New Year’s resolutions are in full force or have already been binned! Thoughts they had over Xmas of “my job’s not that bad” or “I can stick this out for another year” have proved to be just as undoable as the New Years resolutions! Why not make a change! If you’ve always dreamed of running your own business and have a good idea, why not go for it? What is holding your back?

Well, if it’s money, there are some excellent start-up loan schemes that offer unsecured funding to entrepreneurs who meet certain qualifying criteria. These loans are just what you need to get up and running and the scheme has been created to give you the cash needed to sort out the first few months of your business trading. I am a business advisor for Transmit Start-Ups (https://transmitstartups.co.uk), now the number one provider of start-up loans in the country and I can honestly say that they have your back. This is a government scheme so there are certain processes to follow but I have had loans approved amazingly quickly for entrepreneurs eager to get out there to start making money! With interest rates of 6% and max lending of £25,000 per eligible director, it’s a great place to start.

There are other lending routes available if your business has been trading for more than 2 years or you just need a larger loan. Some of the banks offer unsecured lending themselves or through the EFG scheme. Knowyourmoney (https://www.knowyourmoney.co.uk/business-loans) has a great list of approachable lenders, some of whom will lend up to £1.2 million per year. I’ve recently been working with NatWest who have been very supportive of local entrepreneurs.

Another lending route is via “Angel” investment. Over the last few years, I have put together a portfolio of go-to private investors who will invest for an equity stake in a fast growing new venture. This is a bit like “Dragons Den” and I love working with the entrepreneurs to develop slick and professional business plans and investors deck to attract the best investor for their business. Investors can bring money and mentoring advice if wanted. Again, loan amounts vary but seed capital can be raised from either one investor or a number of smaller contributors.

Lastly there are traditional lending routes via your bank. These loans tend to be secured and you will need at least one year of company financial statements, possibly two. Interest rates tend to be slightly higher (around 9.3%) but there are always many options to chose from.

So, if you are having those “it’s now or never” or “I’ve got to give it a go” thoughts, act on your impulses and start your own business. I have yet to come across an entrepreneur who regrets making the break, but I have chatted to many who wished they had done it sooner!”

Helen Steel, MD for Streamlion Consulting Ltd (https://www.streamlionconsulting.com)

One of the most common questions I get from sole traders is about allocating a cost to the business for working from home, especially this year when so many of us have spent a lot of time working from home.

If you are in a panic trying to get your tax return done before the end of January, you might forget to include a cost for this in your accounts, but this would result in you paying more tax than necessary – so take 5 minutes and think about what you might be able to claim.

If you are self-employed and work at least partly from home then you are entitled to include part of the running costs of your home in your accounts.  But how much is a reasonable amount?

You have 2 options as to how to work out how much you can claim.

1  Flat Rate Method

If your sales are under the VAT threshold (currently £85,000) and you are self-employed then you can use this method. You simply work out how many hours a month you spend on average running your business from home and then include a fixed amount in your accounts, as follows:

25-50 hours: £10 per month

51-100 hours: £18 per month

101 hours or more: £26 per month

The flat rate covers the running costs of your home; you can also claim a proportion of the fixed costs and your phone/broadband as per option 2.

2  Actual Costs

 This method requires a little more effort, but it may give you a higher figure and therefore save you more tax.  Under this method, you need to apportion the running costs of your home on a “fair and reasonable” basis between those that are personal and those that relate to the business.

This is usually done by reference to the number of rooms you have in your house and the amount of time you use them for business.  There is no laid out formula though and therefore how you allocate costs will vary from business to business.  Keep any workings you have done so you can back up your figures to HMRC if necessary.

The costs you can actually claim can be spilt into fixed costs, running costs and phone/broadband.

Fixed Costs

• Mortgage interest (not capital) or rent
• Council tax
• Insurance
• Water rates

Running costs

• Electricity
• Gas
• Repairs and maintenance
• Cleaning

For example, assume you work from your sitting room 8 hours per day 4 days per week.  Your total fixed costs are £6,600 per year and your running costs £1,500.  You have 6 rooms in your house. A reasonable allocation of the fixed costs would be £6600 x 1/6 x 4/7 x 8/24 = £210.

An allocation of the running costs could be £1500 x 1/6 x 4/7 x 8/12 (as gas etc not used during the night) = £96

The phone and broadband is claimed on a usage basis only, so if you use your internet 50% business, 50% private you can claim 50% of the cost, including line rental.

If a property repair works solely to the area that you use for business, you can include the full cost in your accounts – for example, your office roof needs repairing.  If the repair is to the whole house – then claim in proportion as above.

So claiming costs of working from home is not as simple as it sounds.  The flat rate method will give you a quick answer, but the actual costs option may give you a higher figure.  If you need any further help then please contact Rosie Forsyth at Wilkins & Co.

Note – these rules only apply to the self-employed and not to owners of limited companies.