Know what literature to expect, read it, ask questions if there are gaps in your knowledge.Be sceptical. If a deal sounds too good to be true, it probably is.Never be pressed into making a deal on the spot, whatever the discounts and special offers.Make your payments direct to the product company, not to the adviser.Keep all documents, receipts and records of conversations in a safe place in case of a dispute later on.I have free copies of Be Your Own Financial Adviser (which costs pounds 9.99 from book shops, or phone 0800 252100) to send to the first 10 people who write in saying what questions they'd like answered in Your Money. A middle way of acquiring some knowledge of basic financial principles - and then listening carefully to what's on offer - is a sensible and realistic route open to most people.That's long been my view. So I was pleased to see that it is shared by Be Your Own Financial Adviser, the latest financial guide from the Consumers Association (publisher of Which? magazine). The book advocates doing some homework before visiting an adviser, so you can judge the quality of the advice. The book also offers 10 tips for getting the most out of any financial adviser, and they are worth repeating here:Go only to an adviser authorised under the Financial Services Act, which can be checked on a register run by the Securities and Investments Board on 0171-929 3652.Know your adviser: is he or she able to sell just one company's products, or independent and able to recommend from the whole market? For a list of independent advisers in your area, phone IFA Promotions on 0117-971 1177; for advisers who charge fees rather than commission call the Money Management Register of Fee-based Advisers on 0117-976 9444.How can your adviser help you? Is he or she authorised for the areas of business you're interested in? Does he or she have relevant expertise? How does he or she keep abreast of new products?Think twice before buying without advice, because you'll lose some of the protection under the Financial Services Act.Be prepared. And those savers who qualify already could expect a bigger handout. Be your own adviserYou don't need to be an expert on the world of money to manage your personal finances efficiently, nor do you need to risk putting yourself wholly in the hands of a financial adviser.
A reminder to Woolwich carpetbaggers - people excluded from profiting out of the society's flotation because they opened accounts this year: don't touch your money yet. Last week the Prudential was reported to be sniffing around the society as a means to acquiring a high street presence. If the Pru or anyone else bids for the Woolwich, which is thought to be vulnerable to a takeover, there's a fair chance they'd offer these carpetbaggers a windfall to help win support for the move. The Lloyds Bank Small Business Guide, published by Penguin (pounds 16), contains an excellent summary of the pros and cons of being a sole trader, partnership or limited company.. But if you do de-register, you will have to pay back the reclaimed VAT on items that are still used in the business.For information on VAT and details on how to register, look under Customs & Excise in your local phone book. A new booklet, Starting Your Own Business, (reference number CWL1), which deals with the basics of income tax, national insurance contributions and VAT, is available from Customs & Excise or the Inland Revenue.Would you like to be a business?A question that arises for some self-employed people is this: are there advantages in becoming a limited company? There is no straightforward answer.A limited company separates your business assets - leaving your personal assets beyond the reach of creditors should the business ever get into trouble (though this will not be the case if you have made a personal guarantee to your bank or other creditors).Instead of being self-employed, you would be a director-employee of the company and pay yourself a salary.This can be useful for higher-rate taxpayers because profits can be left in the company rather than paid as salary, making them likely to be taxed at a lower rate, depending on the company's turnover.Another possible advantage is that you can channel more money into your pension through a company.But these considerations have to be weighed against the costs of setting up a company, having accounts audited, and dealing with more paperwork.Before forking out for professional advice, get an idea of the complex issues involved.
And that is a big consideration if you are thinking about registering voluntarily. In addition, registering means the chore of submitting VAT returns. Consider whether your time could be more profitably used by going out and getting more contracts and selling your goods and services.Lastly, registering for VAT need not be a lifetime commitment. If you find it all too much you can de-register, provided your turnover is below a certain limit - currently pounds 45,000. Zero-rated goods include books and children's clothes.Adding VAT to your own invoices is not a problem if you are supplying businesses that are themselves VAT-registered.
They simply deduct the VAT they have paid to you from the VAT that they have to hand over to Customs & Excise. In other words, it does not increase the cost to them of doing business with you.But if you are supplying the general public, or other businesses that are not VAT-registered, adding VAT will increase the cost of using you or buying from you. You do not have the potential downside of increasing your prices if you register, but you still get the advantage of being able to reclaim VAT on your own business costs. Exempt and zero-rated may sound like the same thing but they are not.
You cannot register if you are supplying only exempt goods and services - such as education, training and health care.If you sell zero-rated goods there is a high chance that registering will be attractive. But if he is also registered for VAT his overall saving increases to pounds 57.50 or 49 per cent (the pounds 17.50 VAT plus 40 per cent of the before-VAT price). The equivalent saving for a basic rate taxpayer goes up from 24 per cent to 35 per cent.Some goods and services are "exempt" from VAT, others are "zero-rated" - the rate of VAT payable is 0 per cent. If you do not reclaim the VAT you are able to include it when claiming allowable expenses on your income tax return.For example, if a higher rate taxpayer who is not registered for VAT buys an item costing pounds 100 plus VAT for his business that is an allowable expense. He can, in effect, save pounds 47 (40 per cent of pounds 117.50) on the cost by offsetting it against business income. It is also useful if you have a substantial capital outlay when you start your business - on things such as computers, fax machines and so on.But if instead you spend a lot of money on books and newspapers or travelling on public transport, there will not be any VAT to reclaim because none is payable on these items.The standard rate of VAT you can reclaim is 17.5 per cent of what you spend on goods and services (8 per cent in the case of gas and electricity bills, while some goods and services carry no VAT). The VAT you charge your customers does not increase your income.It has to be handed on - minus the VAT you are entitled to reclaim - to Customs & Excise.If you buy plenty of things on which VAT is levied, it may be worth registering.