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How Will My Business Affect My Benefits?

By: Sarah Knowles BA, MA - Updated: 10 Sep 2018 | comments*Discuss
 
Business Benefits Credits Grants Plan

Q.

I am a single mother on benefits and am looking to set up a soft play centre in the town where I live with a set of similar mums. I am aware of the financial obligations of setting up this business, and am looking to get funding.

While the business is in its infancy, where do I stand with benefits? While the first few months will generate turnover, this will not be a wage to me or the other people involved, so how will my benefits be affected?

I am currently putting together a business plan and doing market research and I am only in the first stages. Are you aware of any guidance or possible funding charities that may be of assistance?

(W.A, 8 April 2009)

A.

First, that's fantastic news that you are looking to set up your own business - and even taking the first step by writing a business plan. It sounds as if it will be quite a challenge, but the rewards are well worth it. It also seem as if you are going into a field which interests you and will, in the long-term, be fun as well as rewarding, with other like-minded people to work alongside you.

However, you are in a bit of a conundrum over what it will mean to your benefits if you start your own business, which is understandable. Most likely the benefits you receive now are made up of income support and child tax credit - while of course you also get child benefit, which will not be affected no matter how much you earn in your own business.

If you start working without generating any income you should still qualify for working tax credits as well as child tax credits, as well as housing benefit, if you get it now. Your best bet is to talk to your Status Officer at your Tax Office (HM Revenue & Customs) to determine whether – or when - you will have to register as self-employed, and what this will mean as far as benefits and National Insurance payments etc will mean. If you earn less than a specific amount, your other benefits should not be affected anyway.

You may qualify for specific grants, low-cost loans and other financial help, depending on your age and the type of business. The Prince's Trust, for example, can provide some incentives.

Another programme that could help could be the New Deal for Lone Parents, or NDLP. It can help provide you with necessary training, point you in the direction of business advice, and – perhaps more importantly – give you money/grants to help pay for childcare and transport.

The government website Business Link also can help with advice on getting grants, loans and other forms of financial assistance, as well as support. See www.businesslink.gov.uk for details, and see if you could qualify to receive loans under the Government's Small Firms Loan Guarantee Scheme. Borrowing from friends and family is also a way some people start up on their own, perhaps giving them a share in the business in return.

Finally, finish up your business plan. It sounds as though you could have a very interesting new career ahead of you!

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Hi, I work 30 hrs a week, but I want to leave my employment and work from home but get tax credit and housing benefit as my wage is low. What if I don’t earn enough to pay my rent will I get any help or I’d lose my accommodation.
Desperate - 10-Sep-18 @ 12:54 PM
Hi, i recently declared myself as self employed whilst claiming my benefits. Money coming in from work- can i reinvest that money in to my business? Im not earning money to live on yet. Not sure what the rules are.
Myles Elliott - 28-Aug-18 @ 11:48 AM
Zoe - Your Question:
I’m a single mum and completely estranged from my Childs father so have never received any financial support. I have various mental health conditions which have meant I can’t get a normal job but I’m desperate to use my brain and work so have started the foundations of a business from home. I’ve not launched anything officially and not received any money or sold a thing but really want to give it a go. I’m scared that my benefits will be affected and then my health will prevent me if I can’t cope or make any money then I’ll be left in a worse place and undo all the hard work I’ve put into my recovery. However I’m desperate to give it a go for nothing but confidence and passion in the field of promoting Single Mothers which is what my business is aimed at. Any advise would be gratefully appreciated.

Our Response:
The link here should help answer your question. Invariably, your benefits will be affected as the government will not allow you to earn money and keep your benefits. We wish you all the best if you decide to take the leap.
AWorkingMum - 30-Jul-18 @ 3:10 PM
I’m a single mum and completely estranged from my Childs father so have never received any financial support. I have various mental health conditions which have meant I can’t get a normal job but I’m desperate to use my brain and work so have started the foundations of a business from home. I’ve not launched anything officially and not received any money or sold a thing but really want to give it a go. I’m scared that my benefits will be affected and then my health will prevent me if I can’t cope or make any money then I’ll be left in a worse place and undo all the hard work I’ve put into my recovery. However I’m desperate to give it a go for nothing but confidence and passion in the field of promoting Single Mothers which is what my business is aimed at. Any advise would be gratefully appreciated.
Zoe - 29-Jul-18 @ 8:29 PM
Hi I'm 29, single parent of a 3 and 6 year old and receive housing benefit, income support and child tax credits I do sewing as a hobby and alot if people have shown interest Imy makes so I thought about starting selling then from home. How is income and hours worked calculated? If I don't earn enough what happens to my benefits I literally have no idea where to start Could I have some advice please on all the Bove
Stacey - 19-Jul-18 @ 12:00 PM
Mumofmia - Your Question:
Hi all I'm a single mum and have been on income support for near my 4.5 years! I used to work in Sainsbury's but due to domestic violence I had to give up everything and had the confidence knocked from me (liteally) my long life passion is baking and I've been baking homemade cakes for 12 years building up a great portfolio from friends and family I have my own secret personal Facebook group with hundreds pics and it's great! I'm currently getting income support (that stops in December when my girl turns 5 and I go to universal credit I'm stressing out so much but I don't want to go into any job just to see ends meet and that will make me miserable knowing I have this burning passion inside me I want to go bigger! I've wanted this for so so long but very VERY little support off my close family:( if anything I've always been told youbcant have your own business (not good enough then ) I have to beg for any praise !! Anyway back to the question I really want to start my own business only something small to start off with a really good coffee shop serving great cupcakes and maybe the odd cake on the side ? Then grow as the customers grow.I'm able to offer loads as in celebration cakes and cupcakes and home made fudge and truffles I can do all that but I don't want to take on too much! If I did go ahead with this will benifits be effected as I've been told I won't make no income for the first 3 or 4 years I'll be seeing ends meet which is fine for me as I won't be any better off than now haha But I'll be doing what I love I'm just wondering if I still get housing benifit and so forth Any advice would help Also I'm in South Wales

Our Response:
Unfortunately, the only option you have is via the gov.uk link here . There is help out there from the government, but it will always be minimal.
AWorkingMum - 13-Jul-18 @ 10:49 AM
Hi all I'm a single mum and have been on income support for near my 4.5 years! I used to work in Sainsbury's but due to domestic violence I had to give up everything and had the confidence knocked from me (liteally) my long life passion is baking and I've been baking homemade cakes for 12 years building up a great portfolio from friends and family I have my own secret personal Facebook group with hundreds pics and it's great! I'm currently getting income support (that stops in December when my girl turns 5 and I go to universal credit I'm stressing out so much but I don't want to go into any job just to see ends meet and that will make me miserable knowing I have this burning passion inside me I want to go bigger! I've wanted this for so so long but very VERY little support off my close family:( if anything I've always been told youbcant have your own business (not good enough then ) I have to beg for any praise !! Anyway back to the question I really want to start my own business only something small to start off with a really good coffee shop serving great cupcakes and maybe the odd cake on the side ? Then grow as the customers grow...I'm able to offer loads as in celebration cakes and cupcakes and home made fudge and truffles I can do all that but I don't want to take on too much! If I did go ahead with this will benifits be effected as I've been told I won't make no income for the first 3 or 4 years I'll be seeing ends meet which is fine for me as I won't be any better off than now haha But I'll be doing what I love I'm just wondering if I still get housing benifit and so forth Any advice would help Also I'm in South Wales
Mumofmia - 12-Jul-18 @ 10:28 AM
Hi I'm a single mum of one and was just wondering if I register my business will it affect my benefits? I get universal credit allowance and child benefits.
Cha - 28-Jun-18 @ 5:26 PM
MYSTIQUE - Your Question:
I am a single parent of one with and I have started up a small business.i Have no funds available even strugling to buy food and pay bills.I would like help in knowing what I am allowed to claim please as im only on month 3 I get tax credits and working tax credits is there andy funding I can get to help my buisness make more money as I have the clients coming in but still finding it hard

Our Response:
NEA could give you money and support to help you start your own business. You need to be receiving certain benefits and have a business idea that could work, please see link here . It is also worth speaking to your Jobcentre Plus who will help you with telling you what you can claim.
AWorkingMum - 19-Jun-18 @ 2:49 PM
I am a single parent of one with and i have started up a small business. i Have no funds available even strugling to buy food and pay bills. I would like help in knowing what i am allowed to claim please as im only on month 3 i get tax credits and working tax credits is there andy funding i can get to help my buisness make more money as i have the clients coming in but still finding it hard
MYSTIQUE - 18-Jun-18 @ 10:51 PM
Leah - Your Question:
Hi there, I am a single mother of two I work 10hrs per week and receive child tax credit and housing benefit. I am wanting to set up a handmade jewellery and artwork business. Will this affect my benefits? I have no idea of my sales or of the regularity of sales until I set up. But am not sure whether or not to take the leap as I might not earn enough to support my family

Our Response:
You may be able to get New Enterprise Allowance to help you start your own business, please see link here. However, this would affect your benefits - as it is designed to get people off benefits. Please also see link here , which will further explain all you need to know.
AWorkingMum - 26-Apr-18 @ 9:40 AM
Hi there, I am a single mother of two I work 10hrs per week and receive child tax credit and housing benefit. I am wanting to set up a handmade jewellery and artwork business. Will this affect my benefits? I have no idea of my sales or of the regularity of sales until I set up. But am not sure whether or not to take the leap as I might not earn enough to support my family
Leah - 25-Apr-18 @ 3:07 PM
Hi, I'm currently on maternity and get paid for 16 hours and I'm going back in summer. My partner works 40 hours a week and I also claim pip for mental health issues. We have 2 children. I am setting up a small business from home, with not much profit at all to begin with. But I wondered, am I still eligible for tax credits? Will they go up or down? I will only be making about £25 a week to begin with. Tia x
clare - 30-Mar-18 @ 2:37 AM
Hez - Your Question:
Hi I have been offered a small franchise delivering milk. my husband is disabled and we claim benefits at the minute. I have 4 children living at home with us. One works one goes to college and the other two in school. I need to know how this would affect us if I take the franchise on. It’s meanly my son college am worried for as I know I wouldn’t be able to afford this as well as full rent and other bills thanks hez

Our Response:
You would really have to speak to someone directly regarding this matter. If you take on a franchise and earn money, then invariably your benefits will be affected. You may be able to find out more via the Entitled To calculator here.
AWorkingMum - 8-Jan-18 @ 2:46 PM
Hi I have been offered a small franchise delivering milk. my husband is disabled and we claim benefits at the minute. I have 4 children living at home with us. One works one goes to college and the other two in school. I need to know how this would affect us if I take the franchise on. It’s meanly my son college am worried for as I know I wouldn’t be able to afford this as well as full rent and other bills thanks hez
Hez - 6-Jan-18 @ 10:19 PM
Hi. I am mom of three and currently on benefits. I am trying to start my own business. I ordered stuff from china. And have no clue how to handle custom clearance. (I contacted courier company ) they said I have to register my business on order to get it delivered without any issues with custom clearance) I am scared to register myself as a business because its funny I don't earn a single penny ATM. How is it going to effect my on my benefits.and i am scared for loosing the benefits because I have no help around with my daily expenses.
Sadd - 25-Sep-17 @ 2:33 PM
Livy- Your Question:
I'm a single mum with two children, I couldn't find the informations about this situation - if I Starting to join the small business, I will receive commission from the sales but very small to start with , and it is all depends on me and how well I do. the hours are vary, depends on you. average 10 hours per week to do the business. this business is a 5 years plan to be successful , and I will receive commission direct to your account and I will have commission invoice every month to show income. therefore the benefits should remain the same, til I earn the certain amount that went over the permitted to work scheme and it should be calculate for small cut. Wondering would my benefit will affect or it would be small cut? Appreciate to your response. Thanks

Our Response:
I think in cases such as this it is advisable to talk to a business adviser through the DWP, please see link here as you will be able to discuss these issues directly. It is important to be aware of the pitfalls as well as the benefits - as your benefits will be affected and we do not hold this information.
AWorkingMum - 4-Apr-17 @ 10:42 AM
I'm a single mum with two children, I couldn't find the informations about this situation - if I Starting to join the small business, I will receive commission from the sales but very small to start with , and it is all depends on me and how well I do.. the hours are vary, depends on you.. average 10 hours per week to do the business.. this business is a 5 years plan to be successful , andI will receive commission direct to your account andI will have commission invoice every month to show income .. therefore the benefits should remain the same, til I earn the certain amount that went over the permitted to work scheme and it should be calculate for small cut. Wondering would my benefit will affect or it would be small cut? Appreciate to your response. Thanks
Livy - 3-Apr-17 @ 2:29 PM
Hi Please can you advise me I currently work 16 hours and i am also s full time maturestudent. I have a little boy and I am single parent I have a house with a mortgage I get no help towards my house even though it's interest only. Th only benefit I get is working tax and child tax no free meals or school meals. Iv enquirer and I would be finismcisy better off if I was to give up work and claim income support sure this can not be correct I appreciate any help that you could offer
Leesa - 13-May-16 @ 11:45 AM
@Marie - If you earn extra money from this, then it may affect your benefits. It also depends whether you would have to register as a sole trader alongside your other job, as you would have to fill in a tax return which could affect your benefits when you come to file your earnings.
Oz - 10-Dec-15 @ 1:57 PM
Hi I am a mum of two little ones currently working 16hrs per week. I am interested in a business opportunity that has been presented to me! I receive tax credits and housing benefit. I really want to know how this will effect me if at all?
Marie - 9-Dec-15 @ 9:49 PM
ginge - Your Question:
Hello need more information for a single working mum , married but not living together. Are they entitled to a reduction in council tax or any other bills. She works as a teacher, but has not decided to return to work yet?thanks

Our Response:
You can try the Turn 2 Us website here which will tell you what benefits you may be eligible for. I hope this helps.
AWorkingMum - 26-Aug-15 @ 12:08 PM
Hello need more information for a single working mum , married but not living together. Are they entitled to a reduction in council tax or any other bills. She works as a teacher, but has not decided to return to work yet? thanks
ginge - 25-Aug-15 @ 3:15 PM
@Linds - I have included a link to Turn to Us here which should help answer your question.
AWorkingMum - 8-May-15 @ 11:40 AM
I am a single mum and have just finished work on Friday. I am looking for help to start my own business and I don't want to claim job seekers or income support. I wondered if I could still carry on claiming working tax credits as I am working all hours to try and set my business up. Unfortunately no money is coming in as I'm just at the starting phase. I wondered if I could get help with housing benefit and council tax whilst I'm doing this? If anyone could help I'd be extremely grateful. X
Linds - 7-May-15 @ 4:15 PM
@Mic - I have included a link to gov.uk Start Your Own Business via the link here. I hope this helps.
AWorkingMum - 31-Mar-15 @ 1:33 PM
Hi , i need more advise to start my own business . Thanks Mohsin
Mic - 29-Mar-15 @ 11:22 AM
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