What I can't understand is large firms and even one man bands saying they can't finish without going bankrupt, what happens if they finish through old age or illness or something nothing to do with covid, have they worked for years not making enough but to just survive, can't be much of a business if they havnt built up any reserves.
Hard times
- Thread starter Conal
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- Jun 29, 2015
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People and companies may have reserved but when they have many months without takings and yet the bills keep coming in it's not possible to plan for that.
- Jun 29, 2015
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I'm tempted, but as my money is in a pension the income tax would cripple me if I took it out in one go. So I'm stuffed all roundSo the 'spend now and let the future take care of itself' philosophy could be right?
What about the handouts and furlough, plus rates and tax holidays.
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What about those self employed that weren't entitled to any financial help?
Is that the same self employed not under the PAYE and NI cosh?
jessthedog
Free Member
Im afraid this was all predicted way back at the beginning of the year. People didnt want to believe It and there was a lot of positivity and talk of V shaped rebounds and not let us talk ourselves into a recession.
This virus will have an impact on our lives like a war!! We need to come to terms with it, but try and stay positive for the future.
This virus will have an impact on our lives like a war!! We need to come to terms with it, but try and stay positive for the future.
- Jun 29, 2015
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Only take them so far, if a business has rent to pay, that doesn't stop when the takings do. Most help to business is in the form of a loan, which some cannot repay
Possibly, but no. It was the likes of companies who hadn't been trading long enough to subbit the required amount of tax returns and freelancers like many of those in the arts and entertainment industry, not just the faces but all the crews that work behind the scenes.
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Are these freelancers on PAYE?
Many SMEs I came across in my work had bank borrowings that almost exactly matched the amount the owners paid themselves each year. They were always vulnerable to a sudden turndown in business and at risk of losing their houses under their personal guarantees to the bank. This happened to a friend who had a successful software company that at one time he was offered £8 million to sell. A few years later he lost everything and was declared bankrupt.
I couldn't understand this mindset that prioritises high living. If they had taken less money out of the business, soon the business could have been debt-free and started to build up cash reserves for a rainy day.
Snowbird
LIFE MEMBER
I dont see any downturn up here in Liverpool. Four of our tenants are involved in the fast food delivery business and all are busier than ever and working flat out. Three properties on our estate came on the market and were all sold within one week. Trying to get any tradesman involved in the building trade is almost impossible. The local Mercedes dealer has hardly any stock. A neighbour who works in the John Lewis store told me this morning she has never in 20 years seen it so busy. More new cars in our street than I have ever seen.
Ivory55
Free Member
I do think that the self employed loop holes have been exploited over the years, like companies having self employed drivers to avoid tax and responsibility etc, and make the bottom line look good. As also people going self employed as they want more money, but in reality it’s because they are getting less benefits.
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Let me explain what happened to me, I was entitled to the tax payer grant due to having at least 3 years tax returns in, that grant paid just under £6k, not to be sneezed at but, if I'd have been working as normal I would earned 4-5 times that amount during the lockdown. I still have the same overheads, yard rent, rates, insurances of all descriptions, vans to maintain even though the are seeing little use they need to be ready to go. So, even with tax payer help I have almost spent all my company money, I'll be into my personal savings if things don't change pretty soon.
Ivory55
Free Member
As zero hours I have not had anything either
I really think it's a case of "I'm alright Jack" with some people. If you are used to earning decent trademans wages £6k pales into insignificance over a 6 month lockdown.
Also things aren't like they used to be, I know a youngish lad that setup in the same trade as me at the beginning of the year he spent £45k setting his van up with all the equipment required. Now, I don't know many lads in their mid to late twenties who've got that sort of money laying about, so a lot of that £45k is a bank loan, he fortunate because he's been able to work right through, if he hadn't I dread to think what he would be doing now.
If you retire your business expenses stop, in lockdown you still have to pay rates, rent, lease payments they all carry on, and if you furlough staff still have to make a contribution to their wage with possibly no income.
Although while Covid has been disastrous for some its been a blessing for others.
Although while Covid has been disastrous for some its been a blessing for others.
I remember contracters working alongside me gloating over not paying much tax, tried every trick to not pay into the system. Now the sun has stopped shining they suddenly expect help from the system, using the money I paid in.
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They may well have done, that's why CIS was introduced, trades very rarely get on construction sites unless they are part of CIS, which basically means they are taxed 20% at source, no way of avoiding paying it. Also for jobbing tradesmen very few are being paid in cash now due to people not using cash as often since lockdown. You have to be pretty damn stupid to have the money paid into your bank by the client and not declare it. HMRC investigations aren't any fun if you are playing by the rules, I know, I had an investigation a few years back
Ivory55
Free Member
There you have it , used to earning. Should always remember nothing lasts for ever, and only gamble what you can afford to lose.
How many businesses do you know of who had a business plan that took into account a 6 month lockdown due to a worldwide pandemic?
Some business expenses stop, but not all. One thing that deterred me from setting up my own law shop a few years ago when I became virtually unemployable was the need to have professional indemnity insurance run-off cover for 6 years after you retire.
There are other businesses that have long tail liabilities. A claim by a former customer (or employee) can crawl out of the woodwork several years later. Even if you sell the business you can be stung under the warranties required by the buyer. This pandemic might open up a lot of cans of worms for professional advisers to sift through to find cold claims. Ambulance chasers ... on your marks ...
Ivory55
Free Member
That’s because most over do their estimate etc of how well they would do and have nothing in reserves. If it goes well it’s happy days all the way, if it goes wrong well that’s it. As for everyone thinking of themselves, yes you’re right because nobody is thinking of them.
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If these companies want finance they will have to show good workings to the lender which is usually, but not always their own bank, you can't just go over doing your forecasts when you are dealing with the bank your money gets paid into.
That grand is top of their ticket, put the tax money into a separate account, take off running costs like fuel and depression of equipment that grand is probably around £650 take home. Decent van that won't let you down, car for the wife to get the kids to school, mortgage, council tax, domestic bills. Put money away for a rainy day, private pension, the list is endless. These people are mortgaged upto the eyeballs, I'm afraid if you want to buy your first property around here you are going to need around £250k for a starter home.
All those things, everyone pays but they don't start at a grand a week.
Spoken to some of the lads that use to work for me when I had my construction firm and they are flat out no reduction in wages if anything there is better money around as a skills shortage is still a major problem in construction.
At the other end, went to get my hair cut yesterday and my barber is on his knees, he has lost over 30% of clients that never came back after the first lockdown and now another 4 weeks rent to pay with no income
Trouble is a lot of these firms just happily plod on making a reasonable living but with no way of making up lost income, I feel next year is going to be really bad for a lot of people.
Agree. Also work in large scale construction and we as an industry have been massively supported by the government so can have no complaints. We are expecting to see a repeat of the situation over the summer when large numbers of the EU workers we rely on not come back after their summer holidays. They found plenty of work closer to home. Same could happen over the Christmas period. With many jobs disappearing forever, I just hope the industry sees the opportunity to retrain and sort out the skills shortage once and for all.
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