Business Plan. What to look out for?

[Snoopy_inc]

Ok here is a sticky one for you...... how do i move away from the other company im employed with? Do i wait for the new venture to take off and make the money and then wait 6 months to move or do i move when i need to move.

The main problem im seeing is he wants my skills in his current business and if i move off to the new venture he is going to loose those skills either way.
I have been considering the possiblity of subcontracting. But i have no clue what legal implications or tax problems im going to have with that.

Something like i move off to the new venture as it starts and subcontract my services back to the company. This will be on paper but in effect wont be true. I will still be the same just legally it will be different.
Benefits include not having a boss and being able to move between the two ventures with ease.

Please can someone give some info on the subcontracting and if it is a viable option to look at or if im barking up the wrong tree.

[Chatmaster]

Snoopy_inc

Honestly? Do not even worry about that right now. When your business succeeds, and only then will you know how to handle the situation. Stay where you are if you need the income...

[Snoopy_inc]

Chat it makes a difference.

I would really like to find out about the subcontracting.
So if you know about it please let me know.

Thanks

[Dave A]

Subcontracting - as in he subcontracts work to you as a seperate business?

The very first hurdle that leaps to mind is that he can't be your only client.

[Snoopy_inc]

Ye i thought that to Dave.

Isnt it if i do more then 50% with 1 person its not subcontracting?

Any thoughts on how to work on this? or make it workable?

[duncan drennan]

Isnt it if i do more then 50% with 1 person its not subcontracting?

If the only thing offered is a service (i.e. no products sold) then SARS will consider you an employee (or personal service company) if more than 80% of your income comes from one client. One easy way around this is to actually sell products.

[Snoopy_inc]

Sell products to who?

Lets say the company sells products to others. And i subcontract to the current company im working for. Would that count? Because that is what i am wanting to do.

[duncan drennan]

Assuming that you are contracting through the new company (and not as an individual) the issue is whether SARS will consider you a personal service company (PSC). The problem (in the past) was that people created companies and then quit their jobs and essentially continued to work as employees but could deduct expenses. All that the company was doing was offering a personal service. SARS closed this loophole.

Go to SARS website and find interpretation note 35 which is all about PSC etc. (I have it but it is too big to attach here).

The main requirement is that no more than 80% of your income may come from a single source when the company only offers services. From what I've understood as soon as you are actually trading in some sort of stock you will not be considered as a PSC. Check this with your accountant.

[Snoopy_inc]

Ye this is going to be a problem as my income will come directly from the current job.

The only time this will change is when the new venture starts to make money.

[RKS Computer Solutions]

Snoopy, I found 2 more links which you might want to have a look through...

http://www.work.com/creating-a-great-business-plan-11/

http://www.work.com/resources-for-starting-a-business-817/

[Snoopy_inc]

Thanks R

Ill look into it. Still busy with the first phase and have just had a death in the Fam :/ So the creation of the new venture has taken a backseat for the next week or so.

[RKS Computer Solutions]

I'm sorry for your loss Snoopy, please let us know if we can do anything to help.

[Snoopy_inc]

Thanks but not much i can do about it and its part of life.

I will keep you guys informed as to what is going on with the venture

[Dave A]

Still busy with the first phase and have just had a death in the Fam :/

My sympathies to you and your family, Snoopy.

[Snoopy_inc]

IM BACK

Well hello again.

Just some information as to what has happened in the recent past.

I found out that the owner had no intention to actually make me a partner... Promise after promise has been made and nothing done about it. (the string along tactic)

I will be starting my own venture within the next month and am finally happy knowing that its a risky move but the right move to make.