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Working for yourself is less risky than working for your current boss

Are you at that point of deciding whether to launch into business yourself?

Maybe you're weighing up the risks versus the benefits, doing it all systematically.

Building your spreadsheet.

Developing a business plan.

Talking to your co-founders.

Poaching your first clients.

 

In which case, let me interject just two points for your consideration:-

  1. the capital tax regime in the UK (including 10% rate for capital gains for entrepreneurs) is highly favourable. If you think you can cover your requirements for income during the period you are building a business, it should be a no-brainer to go ahead and build it ... because if you manage to sell the business at the other end, the residual value (at maybe 5 to 7 * its annual profits) should be taxable at this low rate*  
     
  2. when you consider risk, consider the first sentence of an email my first ever business partner wrote: "Just letting you know I've removed myself from the risks of working for someone else and set up by myself." 

Any views?

'Phil

*Terms and Conditions apply. Tax rules and rates will change. And it's hard to sell a business. You need to build something of value to a third party and the sale process itself sucks ****.


Published: 01-05-14 by Phil Baxter

small business, start ups, tax, risk