For people over 50, self-employment or starting your own business may be a way of using your knowledge and skills to earn money or turn a hobby or passion into a way of life.
PRIME is an organisation to help people over 50 become self-employed or start a business.
The PRIME website provides information and ideas, including case studies of people who have set up businesses with PRIME’s help, and guidance such as how to deal with common business pitfalls. They also have a freephone number, 0800 783 1904, which you can call for further information.
They publish a practical guide to finding the right business or self-employment idea, Ideas for Business, which you can download from their website or you can call them to request a copy. You can also order a free 50+ business pack.
Another useful site for people considering self-employment is Startups.
One option for setting up a business is to start a social enterprise. This is a business with a social purpose. Its profits are reinvested in that social purpose rather than taken by the owner or shareholders.
They are a good option if your motivation is to put something back into the community. But social enterprises are businesses - they are not supported by grants.
A useful website to look at is Social Enterprise Coalition.
You may want to consider a business franchise. The advantage of a franchise is that the product has already proved itself and may be well known to people.
There may be disadvantages in the constraints of the legal agreement you make, and you need independent legal advice when considering a franchise.
Self-employment is one option under New Deal and other Jobcentre Plus programmes.
Jobcentre Plus usually contract out help and support for people considering self-employment, so you are likely to be referred to an enterprise agency paid by Jobcentre Plus to help you start your own business.
This agency will work with you to help you set up your business. Usually you will be given help to plan your business and then test trade for up to 26 weeks. While test trading you can continue to draw Jobseeker’s Allowance, but any profits you make are kept until you finish the test trading period. These profits are then given to you as a lump sum.
Unfortunately, test trading is no longer available for people on Incapacity Benefit. People on Incapacity Benefit, wishing to test trade under the New Deal are expected to move from Incapacity Benefit to Jobseeker’s allowance beforehand.
If you have been out of work for at least 6 months, you could be eligible for the 50 Plus element of Working Tax Credit for the first 52 weeks after you start your business, if your business’s profit forecast is below a minimum level.
Other parts of Working Tax Credit will continue to be paid if you are eligible, but any income from savings and investments will affect the amount you are paid.
Enterprise agencies provide free business support, training and advice to help you set up a business. Many offer a mentoring service after you have started your business.
Each enterprise agency has a slightly different process for helping you. Some may offer a 1-day or 2-day course followed by counselling and advice, others start with counselling or advice sessions. There may be optional training courses, and some will have areas where you can work on your business plan.
After you have been trading for a while they may begin to charge you for advice and information.
Business Link is the government brand of enterprise agency, which now falls under the responsibility of the Regional Development Agencies.
Other enterprise agencies are often contracted by a Business Link to provide a local business start-up support service.
You can also find the nearest Business Link or enterprise agency at the Business Link website or call 0845 600 9006 (lo-call rate).
PRIME is in partnership with many of the Business Links and enterprise agencies. See the PRIME website, or call theirs freephone helpline 0800 783 1904, and they will direct you to its nearest partner.
A business plan is essential. You can also get advice from PRIME or Business Link on how to make a business plan. Having a good business plan will be very important if you need to borrow money from a bank to get started.
The plan will include a careful estimate of anticipated income and expenditure over the first years of your business, based on your market research. You will be helped to think through what you need to know and find out, but you will have to do the research.
If you need to borrow money, the lender will look very carefully at your business plan to assess whether you are likely to be able to pay the money back.
Banks may not be willing to lend money if you have a poor or no credit rating, or you have no collateral (eg a house that could be re-mortgaged if things went wrong).
If you cannot access the money from a high street bank, you may be able to get a loan from a Community Development Finance Institution. These are regulated non-profit organisations that provide financial services to disadvantaged groups or to promote business in particular areas.
PRIME can provide a list of regulated organisations where funding may be available or visit Community Development Finance Association website.
You may be eligible for Working Tax Credit in the early stages of self-employment if your household income is below a certain level. This is a payment to top up your earnings that guarantees a minimum income for people who are working.
For the self-employed, Working Tax Credit is paid on the basis of your protected profits, any savings and your partner’s income or savings. As your circumstances change you will need to inform HM Revenue & Customs. You will also need to know about legal steps such as forming a company, tax and VAT issues. The Business Link or enterprise agency will give you advice.
HM Revenue & Customs now has special teams to help new businesses. They will also answer questions about tax and VAT.
PRIME produces a leaflet Working Tax Credit: a brief guide for self-employed people over the age of 50.
You will need to remember that at some point you will want to retire. You should think about how you will fund your retirement from the beginning, and consider including pension provision in your business plan. Again, PRIME can offer some help on this.
The Pensions Advisory Service (TPAS) can also advise on this. See the TPAS website or call 0845 601 2923 (lo-call rate) for more information.
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