Hi
I'd avoid claiming benefits and get some part-time work to supplement my income whilst building the new business. The phrase "benefits-based solution" will raise the hackles of a lot of our peers who are paying stiff taxes on their hard-earned.
"Gotta pay your dues if you wanna sing the blues" - Ringo Starr "It Don't Come Easy" (1971) - a classic!
Sorry, but that's how I see it.

Stephen

www.orangecrushdesign.co.uk
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New Business Websites - http://www.new-business-websites.co.uk

I see your point and agree with it totally.

The problem I have at the moment is that most of the money that comes into the business is taken straight out again to pay my way. I'm after a little help from the government for a few months so that I can keep more money within the business to spend on marketing, leading to more clients and higher turnover. That will then enable to me to come off benefits again, pay myself enough but also perform the necessary marketing all on company money.

It shouldn't take more than two or three months. Unfortunately, because the government doesn't seem to provide any kind of financial support to new businesses this is the only way I can see of doing it. All the other grants and loans that I seem to be able to find are for those living in deprived areas or for the disadvantaged (e.g. ex-offenders, disabled).

Plus, by going unemployed I can go to places like the Princes Trust for a start-up loan as well. The way I see it is in exchange for a few months of benefits, I will be operating a company paying all the relevant taxes and national insurance whilst also creating jobs in the area so in the end I'll be giving much more back.

I came cross this thread by mistake via google but i am glad i found it because i found Startups. I am currently in the same boat as Philip was back in may. And i have a similar dilema...

I am in the process of starting up a business from home & would appreciate ANY advice. I would just like to put you in the picture to give you a greater understanding of my situation. Some of you may have had a similar experience or maybe you are currently in the same boat as me and would find this input helpful to you:

Since graduating from University back in 2000 I was unemployed but feeling positive due to being fresh from leaving the 'bubble of security' that University has and all the brainwashing bullshit that your mentors feed you (Like getting your 1st job of a starting salary of £20,000!!) instead of telling me straight from the start that it will be tough out there in the real world and it would have to take a few crap jobs and several months/years to land my ideal job. So Like many graduates, I couldn't get the job i spent 4 years studying for & dispite being 100% commited to land it & trying hard, it got to the point where i needed to pay the bills & keep my head above water as i was a mature graduate owning a house (that was also a very difficult experience in my student years) I ended up taking alterative jobs & ended up down completely a different career path (with a lack of forfillment because my heart wasn't in it) that came to a dead end.
I was recently made redundant & i am currently unemployed. I
chose/accepted this last job strategicaly in order to build/ finance my business. I thought that a full-time job with no stress & minimum responsibility that finished at 2.00pm would be ideal because i wouldn't be 'bringing the job home' & i would have the rest of the day/eve to develop the business. The problem was the brain numbing repetitiveness tasks & long tiring shifts i worked which resulted in a lack of energy & motivation. Many of my co-workers were miserable & synical social outcasts that had worked there since the beginning of time, which started to rub off onto me & i too started to develop a negative outlook & loose my self-esteem. The other problem was due to the summertime, there were always domestic outdoor chores to do. I live alone so i had to do all the cleaning cooking & ironing too! Then during the warm evenings my mates would be ringing me to do stuff. I am a seasonal biker so couldn't refuse a group blast out somewhere. The weekends i spent with my girlfriend at her place or weekends away together or going out to Barb-e-ques & endless weddings. So the business ended up taking the least of my time & was put on the back burner. So i learned that starting business in summer was a bad idea - there are way too many distractions.

Redundancy came as a shock but i looked at my situation laterally - that it was a twist of fate and an opportunity to get started. I now have the time, but it is the funding which is the problem, as I cannot afford to buy materials, software etc in order to make progress. I am currently on the development side of my business, learning the skills so I am not taking income from it. I am on contribution based Jobseekers allowance and I am actively looking for part-time work.
I feel like i am contradicting myself, and have come full-circle doing all the things i set out NOT to do: Updating & ammending my C.V, making new C.V's and listing details on job websites, searching for jobs, applying for jobs, joining recruitment agencies. This has took so much of my time day & night. The Irony is that it is a full-time job finding a part-time job!
Plus I have loads of of other things i have to do now i have the time:

-The decorating to finish (which has been put on hold for months)
-Clutter to sort out & take to the tip
-Stuff to sell in order to generate income
-Re-build & sell my motorbike thats been in the garage for years.

Being unemployed & trying to start a business is a double edged sword.
In my situation, maybe i am my own worst enemy. Even though I am trying to plan ahead, prioritise & be organised now, It is my poor time management & planning in the past which has caught up with me. I am a victim of my own destructive cycle. As I am writing this, i am starting to realise that maybe it just isn't the right time to start a business. The business guides i have read so far haven't mentioned tying up loose ends first and starting with a clean slate ,but everyone hs loose ends don't they? Isn't that life? Many people have clutter to sort and painting to finish and a general list of 'Get round to its' don't they?
Due to my circumstances i was forced to make a decision - and that was taking the opportunity to work for myself. Maybe I shouldn't have made this so soon. I hate the thought of doing another crap job but the time just isn't right. My redundancy was an ideal opportunity but it came too soon. I just wasn't ready to take it as I am not in a position to set up a business just yet.
Have I dove in without checking the depth of the water first?

I started this thread with the intention of a helpful reponse to a business related question but i have ended up writing an entry in the life of the unemployed, entrepreneur wannbe!

Please let me know your thoughts.

Regards,

Dan.

You sound like you're in the ideal position to benefit from the huge and great help and support offered by The Prince's Trust.

Go to the web site, fill out the form - or just ring them up - and they'll shower you with help and advice and you could well end up with a grant or loan to get you started.

I wish I'd have done that!
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Philip John; Internet Consultancy
www.philipjohn.co.uk
0844 884 5419

If you are paying yourself a wage you could claim working tax credits to top up your income while your income is low. I believe it is calculated of last year’s income however.

Also council tax benefits and housing benefits could also boost your income. I would say that the application process is likely to be complex because you run your own business. I would recommend if possible not claiming but if its for a short term it could allow you to spend full time on your business. Just don’t expect to be rich on benefits
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Matthew Adams
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Thanks Matthew, I will definitely look into that.

Yep, I'm not looking to 'get rich off benefits' just use them to give me a helping hand in the first stages of my business. The end result is that I'll give much more back when I grow the business and start paying a lot more corporation tax!

Phil
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Philip John; Internet Consultancy
www.philipjohn.co.uk
0844 884 5419

Sounds like you could get Tax Credits and those would be around £50/week + you could get Housing and Council Tax benefits; as far as I know when you starting and becoming Self-Employed it is a formality to get Tax credits; all you need to provide projections of your business progression for the first 3 month ... that would get you started and then you need to provide your accounts on a regular basis and as long you prove that you dont earn anything and/or earn less than minimum (which happens to most start-ups) you should be elligible for a Tax Credits;

P.S.: I totaly disagree with StephenC ... you are right everyone have to pay your dues but in this economic climate I support people who do more than just look for job (there simply aren't any); Look at it form other angle: if government would support such startups and pay benefits to young enterpreneurs those would much quicker get off benefits and also possibly create few jobs for others; Thats a chain effect which would be beneficial to Tax Payer;

Max

This is an interesting point and one that I am currently exploring.

I was unemployed and started my business. It was active but could not afford to pay me a salary.

As a result of not drawing a salary I was unable to claim tax credits.

JobCentre plus decided that as the company was active (ie making some billings, but not actually in profit) that they would stop my benefits.

I have carried on signing on and am in the process of challenging their decision.

Whilst I would never claim that this has been a pleasant exercise it has opened up a series of loopholes that I believe exist in the system.

The system currently is not designed to ‘help' or ‘assist’ people back into work. It exists to pay benefits to those that match criteria and to apply stringent criteria wherever possible. I have inferred this understanding by exploring the system. It isn't written policy of course and no-one will ever admit to it but I hold it to be true. For this reason the simpler a claim is, the more likely it is to be dealt with efficiently. In the case of the benefits system, simple equates to someone who has never worked, will never work, and has no compulsion to work. These people are rewarded. If anyone seeks to change their circumstances by starting their own business, this complicates things. Be prepared to spend days talking to the central office and make sure you have all your paperwork to hand. My appeal has taken nearly three months to process.

There is a dichotomy here in the way that anyone who attempts to better themselves is treated and how those who are content to remain unemployed are treated. They (those seeking to set up a business) are cut off immediately from any kind of benefit support. This left me with the option of either strangling the company at birth and returning to benefits or struggling on with nothing. I decided to do the latter but would not recommend it as a course of action to anyone else. I have made the kind of sacrifices that will take years to put right and that is if the company is a success. If it fails I am not quite sure what I will do. If on the other hand I had just decided that everything was too much of a struggle and wound the company up, then I would have completely wasted my time

I do not know what the result of my appeal will be yet, but will post my experience here when I do know. In the meantime I can only wish other people luck.

I'm pretty sure its not legal but if you decide to do it you should be actively seeking employment at the same time.
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Correct. Of course it's legal.

The only illegality would be non-declaring of income or lack of Public Liability insurance in certain instances.

Cheers

Nigel
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Startups Awards finalist 2005.  

I'm pretty sure that if you are signing on, then you can get help starting up a business. I think that there is an option to claim a payment of aprox £50 per week for 16 weeks, or take a lump sum of £300. I think that this is for those on Jobseekers - I know someone who's just done it; is starting up a business and has taken the £300. I'm seeing him tomorrow - I'll check out the details. Its a government initiative, and quite legal!

Hi,

Jobseekers allowance is exactly what it says on the tin. If you are jobseeking you get an allowance. To qualify to be jobseeking you need to be spending your time looking for jobs. If you work more than 16 hours per week on your business, it is said you are not actively job seeking and your supposed to let them know.

You will receive housing benefit. This will be adjusted according to how much you earn and how many hours you work per week.

I was in the same situation for a week a few years ago so I asked a lot of questions to ensure I could run my business. It's a terrible situation, especially when the government are supposed to be supporting small businesses.

If your confident about your business I wouldn't look at investment, its likely investors would take a huge chunk for little money at this stage.

Look into cutting costs before looking to get more money, look at working more hours to make this poor period shorter.

And, why do you need to spend money on marketing? There are many things that can be done for free, just be creative.

Kind Regards

Jamie
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Free Business Directory - http://www.projectword.co.uk

Hi, what a mixture of views but there are a lot of common factors, on starting your business
and being on job seekers, you are allowed to work a set number of hours part time, as long as you declare them. I see no problem in you trying to start your business as long as you dont start taking out profit for yourself. The benefits side is a bit of a trap as you get secure knowing your main two bills are paid. Have you tried your local small business centre or business link. They can help you fill out the correct forms to go self employed whilst still claiming benefits? You never know you could meet someone similar to yourself and join ideas.Nothing is worse than knowing you have a business idea/venture and no matter what you do, you just cant get it off the ground.A couple of the threads feel like I am writing about myself and thats why I am glad I found this forum/site, as I can see it is full of real life and not goverment funded courses that waste peoples time and effort to get mostly nothing out of it in the end. So never give up as you can change your life overnight with the right idea.
tigeress

Since I first commented on this I have found out a few more things.

The important thing is to be honest and declare everything when you are signing on. During setup there is no effect upon your benefits whatsoever as long as you do this. Similarly there is a very good argument that whilst you are searching for work for your new company you are also looking for work which fits in with your obligations as a seeker of work, available to work..

The situation will change when your company generates sales (irrespective of whether you draw a salary or if profit and loss equates to zero). You are no longer available for work; neither are you a job seeker.

Instead you should be applying for Working Tax Credits, which will plug the gap left when you sign off. In reality this is much better as the actual amount will not change much and you will also not be required to sign on any more, which in turn frees you up to look for and undertake more paid work.

Keep declaring what your company makes and what you are earning and as your wages go up so your tax credits benefit will go down until the point where you are completely supporting yourself and also have a business up and running.

You may also qualify for startup loans from organisations such as ACBBA, and when you sign off there is an argument that you have placed yourself and so also qualify for a employment credit from the jobcentre. Similarly if you go on to employ an unemployed person you may qualify for a further grant.

BusinessLink will be able to help you with all of these things so contact them.

Best of luck

Another one I failed to look at the start date of, please take these old threads off as help is needed now for most of us. Madness

tigeress