Before starting the process of business start-up we need to think about money.

Firstly if you find your debts are getting out of control, thus affecting your credit rating and you would either like to seek help in managing them or find a route out of your problems via a debt-release programme, such as IVA (Individual Voluntary Arrangement), or a DRO (Debt Relief Order) then contact the Debt Helpline for free advice. It is wise to be on top of fiscal matters before you start a business.

Second if you find you are unemployed or are in work (either employed or self-employed) less than 16 hours a week you may find you can claim state benefits such as Job Seekers Allowance and Housing Benefit. You can be registered as self-employed and gain benefits. Obviously this is not an ideal situtation and you must declare to your Job Centre Advisor what you have earned and how. Note that the currently rules regarding benefits will soon change under the new government so if you require further advice its worth contacting either your local Citizens Advice Bureau or calling the UK Benefit Helpline Public Enquiries: 0800 882 200

If you are unemplyed, find out from your local Job Centre whether there are Enterprise Schemes worth joining in your area. You may need to have been unemployed and claiming benefits for six months before you are eligible for such schemes, but do ask even if you have only been claiming for a short time. These schemes are not targeted at creative practitioners and have a general approach to delivering information. Trainees on these schemes can earn money whilst claiming benefits, acting as a stepping stone from signing on to trading status.

It is advisable to fill in your 'skills gaps' (see Step 1: Research) by doing some part-time courses before signing up for an Enterprise Scheme; while setting up you will discover a few other things you need to learn.

Third, if you are struggling to pay bills and rent, it may be time to apply for work related benefits. At the time of writing we still have working and child tax credits, housing and council tax benefit. You can claim these benefits if you are self-employed, are in employment, or are self-employed and in employment.

Applying for working tax credits is quite straightforward. Working and child tax credits are benefits paid via HM Revenue and Customs (HMRC). HMRC are nothing to do your local council or job centre. (Please note at the time of writing tax credits are being reviewed and by 2013 may be scrapped or merged into the new universal benefit)

The rules for entitlement to tax credits are too complicated to sum up in a few lines. An illustrative example might be a 25 year-old single designer, self-employed, with no children and working in excess of 30 hours per week, with annual net profits under £13,100. That person would be entitled to Working Tax Credit. If net profits are about £10,000 per year, they would be entitled to payments of £25.54 per week, (£1,328 per year). (2010 -2011 figures)

You can claim if you are single or as a couple, as long as one of you is a UK or EU citizen. If you are from a country from outside the EU, you may still be eligible, contact the Tax Credit Help Line to find out more

Note, if you are currently claiming Housing Benefit, speak to your local Citizens Advice Bureau before contacting the Tax Credit Help line to make a tax credit claim.

Alison Branagan (© 2002)

• self employment
• tax
• business
• debt
• benefits
• money