5 laws that can help protect your UK start up

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5 laws that can help protect your start up

When you’re starting up a new business, it’s vital that you understand business law in the UK, as it’s your responsibility to ensure you do everything possible to limit risks. Read on to learn about five laws that will help protect your start up and make sure your business runs smoothly. It’s worth noting that The law can be a potential minefield for the inexperienced and it’s best to seek legal advice from a specialist small business website like Lawbite.

1. Be careful what you say

An important step is to avoid saying or doing anything that could leave you open to being sued for libelous statements against the opposition. If you’re advertising on your own website, or sending out mailing shots, you might be tempted to criticize the opposition in an attempt to draw more business your way. However, under the Defamation Act 2013, you could be sued for writing potentially damaging statements about business rivals  so it’s best to stick to positive publicity about your own services and make sure your own ethics are above reproach.

2. Make sure you understand UK tax laws

It’s probably a good idea to hire a competent accountant if you’re unfamiliar with running the financial side of your own business. The moment you start working for yourself, you’re already classed as self-employed, even if you haven’t informed HM Revenue and Customs. It’s also mandatory that you register for VAT if you’re expecting to make more than £82,000 a year. Understanding the Corporation Taxes Act 1988 will ensure you don’t fall foul of the tax man and end up in court owing money, with your business’s good name tarnished.

3. Ensure your goods and services are of a high quality

When you start up your own business, you are required by law to provide goods or services that are of a satisfactory quality. The Sale of Goods Act 1979 stipulates that the goods you sell must be as described. They must be of a satisfactory quality, matching your promises of performance. Similarly, the Supply of Goods and Services Act 1982 requires that you undertake any services that you offer with reasonable skill, care and time, at a reasonable cost. Failure to adhere to this could see you fined. The Consumer Protection Act 1987 holds you responsible if you supply a sub-standard product that causes damage or injury.

4. Insure yourself properly

By law, you’re required to have insurance for a small business. There are various types of business insurance, some compulsory and others advisable. You will require professional indemnity insurance and employers’ liability insurance – you can find more info on this in startups.co.uk. It’s useful to also insure yourself against liability if an act of nature, or some uncontrollable act, prevents you from fulfilling a contract. This could leave you open to legal action, so you need to stipulate that you’re not liable for unfinished work if it’s due to these factors.

5. Should you be a sole trader or a limited company?

The laws relating to how you should run your business can seem complicated, with various pros and cons to registering as a sole trader or a limited company. It seems attractive that as a sole trader, you retain complete control of your company, but less inviting that you’re also responsible for debts. A limited company offers more financial security and potential tax benefits, such as company shareholders being liable for a debt according to only the level of their own investment.

Thanks,

Chase

Is Auto Insurance Tax Deductible?

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Tax season FAQ: Is Auto Insurance Tax Deductible?

The world of taxes is one that most people avoid talking about. For roughly eleven months out of the year they may as well not exist – an evil we fear because we’re confused, or we’re confused because we fear. However, once spring rolls around and only a few weeks remain before the tax-filing deadline, people come out of the woodwork to investigate any and all ways to limit the size of their payment, or increase the amount of their refund. A few big questions that often comes to peoples’ minds are, when is auto insurance tax deductible, and in what scenario would it be beneficial to do a little more investigating?

Take a peak below for the tax season FAQ you’ve been looking for.

Personal Auto Use

If you are using your vehicle for personal reasons, including commuting to work, driving to the store, taking road trips, or even just keeping it parked in the garage, then your car is basically a luxury and not a necessity. It may help you with respect to making life easier, but that doesn’t mean it is tax deductible. In short, if your car isn’t being used in the course of operating a business or through donations of time with respect to volunteering then you don’t “have” to do it in the eyes of the IRS, and therefore you shouldn’t expect any sort of write off. Just remember that tax breaks come in the form of doing things to produce additional income, giving back, or necessity.

 

Small Business Vehicle

If you bought a truck for your contracting business, you primarily use the truck for business, and it has a nice company slogan and name right on the side of the vehicle, then this is a business vehicle. You may “technically” use the vehicle for personal use from time to time, but the primary use of the vehicle is for business purposes, meaning the operation and maintenance of the vehicle should be classified as a business expenses. The lines may become blurred slightly from time to time, for example if you work for a company during the day and have a side operation at night, or if you drive a small commuter vehicle as opposed to a huge contracting truck. That being said, if the vehicle is being used primarily for business use then you should have no problem with writing off the accompanying costs of keeping it going.

Specialty and/or Necessity Insurance

If you happen to be a delivery driver (or have some sort of job where driving is required), then you should be able to be reimbursed to some extent by the company you are doing work for. That being said, any time you are not reimbursed, or if you are a 1099 worker, you can always look to write off your expenses on maintaining that vehicle and paying costs including your car insurance premium. The specific deduction strategy will depend upon the type of work as well as the classification of your employment. The question “is auto insurance tax deductible?” is one that’s likely to continue getting asked, as according to insurance comparison and shopping company CoverHound, no definitive answer exists.

 

Sales and Support Roles

If you are in a sales role (which most small business owners are), then you’re already aware of all the conventions, business lunches, appointments, deliveries, and whatever else you have to do on a regular basis. As the IRS intention says, if you need to do the operation in the course of your business, then you are likely to be able to write it off. Because driving is a necessity of a small business owner (in most cases), you should have no problem writing off the majority (or however much you actually use the vehicle for business purposes) of your auto maintenance fees and insurance premium.

In summary, the most important thing to know when it comes time to determine whether or not your auto insurance and other car expenses can be written off is your classification and role. If you own your business and use your vehicle for that business, then there’s a good chance you can make some sizable deductions. If you don’t own your own business but you still frequently use your vehicle for work, then there’s still a chance you can write off those miles and related expenses. The most important thing is to keep records, so that you’ll be organized when the time comes to file.

Thanks,

Chase

How Debt Can Save You Money

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With a title like “How debt can save you money”, it sounds like I’m very confused, huh.  But read my story because it’s based my “real” life experience with a financial experiment that I’ve been living, for the past three years.  So this is not theory, this is my real story!

Back in December of 2012, I decided to give up my revered status of being “totally debt free” by going out and buying a car using an auto loan instead of buying the car outright.

toyota camry 2010

I didn’t need to do this, I had the money, but I preferred to invest the money into a stodgy (but what I considered “safe”) utility stock, which was obviously and luckily not a fossil fuel based company..

Well, I’m happy to report that on 1/28/2016, my investment vs “pay off the car outright” experiment has conquered a major milestone!  This huge milestone is that the value of my investment has now appreciated to double the cost that what I would have paid outright for the car!  This means that the capital appreciation in the stock is now greater than the initial cash outlay to buy the car outright, this includes the loan interest that I would have paid the bank that I took out the car loan. The feeling this instills beats the hell out of Christmas morning 2015!!

And the kicker is that I till have about 1 year left on the loan, so potentially the total gain could be even greater considering that the stock market has been less than stellar lately.

This was my first and most important milestone to cross, but there is a 2nd goal I have too.  While I consider my financial experiment a success to a huge degree, a secondary goal that I have is to develop a dividend income stream that could cover the monthly payments for upcoming future car purchases, especially the first car purchases for both of my kids.

This secondary goal is obtainable too with ideally, some smart planning but with some sacrifice and perhaps some small readjustments.

Current financial concerns spinning in my head:

  • The current dividend yield only would cover about a quarter of the yearly cost of a “used” but decent car for my 1st child.
  • I might need to reinvest my money into a new “still safe, but higher yielding” stock since my current stock investment doesn’t have enough of a dividend yield and there are some extremely attractive, higher yielding stocks in this currently down stock market.
  • For my kids, I might have to purchase cars of a good make and model that are older than five years old.  I’m thinking maybe a Honda Accord, or even that I’ll pass down my Toyota Camry.  Passing down the Camry is a post for another day though, but it is definitely a consideration.
  • There may be an overlap in my car purchases for the kids that I might have to financially alter my plans slightly.

I could go on listing concerns for a while, but doing so cheapens my win from this financial experiment, so I’m cutting it short.

The main takeaways from my multi-year financial experiment are the following…

  1. Three years and 1 month later from the start, the 10k loan I borrowed is now basically free.  It’s my break-even point also called the crossover point!
  2. Through some smart and lucky planning, my dividend-reinvesting stock investment has gained over 100% in capital appreciation.  In fact, on 1/28/2016, I was $333 dollars over my $10,000 “crossover” point, and as of 1/31/2016.  Yes, I got lucky with this experiment in that I recapped my investment so quickly, but even if it took longer, I think it was a good idea in the 2012-2013 stock market with such low borrowing rates.  If the market conditions was different back in 2012-2013, I might not have made the plunge though.
  3. Sometimes if the market is right, it makes more sense to invest you money instead of buying things outright with it.
  4. Another “sometimes” statement is that sometimes low-risk, reasonable debt can save you money if you have an equally compelling financial opportunity, as I had in this case.

So the past few days, I’ve been doing the happy dance…

I hope you enjoyed my “real life” example of how debt can save (or even make) you money!

Here is to a hopefully better “rest of the new year”!

Don

Am I Too Frugal, or Just Cheap

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First, for some great stories about real clever frugal tips, let me refer you to the site called Frugal Confessions that Amanda runs.  It’s a great resource for great frugal stories, and other smart, money-saving activities (which obviously I’m a fan of!).

I have a frugal confession to make:  I cancelled my cellular phone service over a year ago.  In fact, owning a smart phone is one way that I’ve saved money for years, ready my old article called “Frugal Confessions: I do not own a cell phone” back in 2011.

Motorola Defy XT Republic Wireless Phone

Am I insane?  Perhaps, but maybe not… let me explain…

When I was blogging more, the phone made sense because I used it daily for work.  Lately, I haven’t been up to snuff though and post sporadically at best, so I cancelled my service last year.

First, my job requires that I have a company issued smart phone.  The company smart phone is very restricted in usage and everything about it is monitored and logged.  I use to jokingly refer to it as an electronic lease, but lately, that analogy is pretty accurate!  Think Big Brother, but much, much worse since it also tracks my position via GPS coordinates.

Now I do still have my old smart phone, so I’m not totally flying blind since the apps on the phone work if I go through a wireless router (which is practically everywhere anymore except when on the road traveling).  So I do have apps like twitter, Facebook, etc that are still usable via my old smart phone…

But the real question is… Am I Too Frugal, or just Cheap?

I was frugal in the past because the cellular services were expensive, but these days I could get a decent and affordable cellular plan from a site like republic wireless and still receive a decent value for the money.  So these days, I think the too “Frugality vs Cheap” scale has tilted to the “Cheap” side a bit too much.  Especially considering you can get cellular plans that averages less than $20 at republic wireless.

I’ll probably take the leap… next year (maybe)…

Bests,

Don