My naivety knows no bounds. The very same day as I was hopping on a train to London, another social security bill dropped through the door* asking for an amount that made my knees buckle under me, and collapse, sobbing, to the floor.
Taking into account the bill from my accountant, health insurance, social security, income tax, pension, council tax and TV license – I am seeing some 45+% of my income fly out the door in the last 12 weeks of the year (while I’m preparing my accounts for next year).
Needless to say, much of that 45% has already been spent on boring things like rent and food, so I’m now facing the prospect of having to borrow money to pay the government.
Now, don’t get me wrong, I’m not complaining about the fact of having to pay – there has to be a bit of give and take when you’re on the receiving end of world class healthcare, public transport, municipal libraries etc.. what makes me angry is that I had precisely no warning. Without warning, it’s impossible to plan financially.
But I know I am not alone. Many small businesses and ‘independents’ like myself face just such a trial when entering their third year of business (which I am about to do). This is because of the way the social security payments are weighted to affect you most in the final trimester of your second year and throughout the third year of your business. The logic being to help you out in the first two years when you’re setting up – by postponing your payments to the third year.
Naively I thought that by paying in advance by direct debit, this would enable me to plan ahead. Not so, it seems once your tax return is in the system a load of new recalculated ‘balancing payments’ are billed for in the last few weeks of the year. Thus, if your second year in business was significantly more successful than your first (which mine was because my first year only accounted for 8 months of the year), then the balancing bill can come as quite a shock. Which it did.
No surprise then that most French businesses kick the can in their third year of trading. Without any credit facilities available in France, even a minor miscalculation in SS contributions can send a business under.
It is somewhat fortuitous then that I have been able to retain my UK bank accounts, where I have a fairly decent credit facility to call upon for times such as these, and it goes without saying…
… god bless Barclaycard.