The emotions, that anyone who is considering becoming self-employed goes through, when they finalise their decision are varied to say the least.
Tangible excitement mixed with genuine fear would perhaps be an accurate way to describe the sensation of going self-employed for the first time.
What most people tend to underestimate is the amount of work required before starting as a sole trader. To keep track of the amount of admin-like work that needs to be completed, it would be wise to follow a checklist that you can tick-off as you go. It will save you time and ensure that you have every task comprehensively covered.
In order to ensure that you are ready and raring to go when becoming self-employed, we have created a checklist for you;
- Firstly, you will need to know which form of trading applies to you. For example, if you are entering the business world alone, then you will be considered either a sole trader or director or you own limited company if you chose to work this way. If you have another person running the business with you, you may wish to trade as a partnership.
- Consider if you need some financial backing to start a business. If you feel that you do need some help moneywise, consider who and how you will get this money. Will it be from family and friends, a loan from the banks, angel investors or some other source?
- When becoming self-employed, it is absolutely vital that you keep a record of your accounts. Therefore, you will either need to find an accountant to help you with your bookkeeping, or ensure that you are clued up enough to keep records yourself.
- One of the key requirements when becoming self-employed is to ensure that you are set up to pay income tax on your earnings. You will need to register your new business with the HMRC and ensure that you declare your earnings at the end of each fiscal year.
- Depending on the nature of your new business, you may be required to pay VAT (Value Added Tax) on goods and services. You can find out if you are required to pay VAT using the HMRC website.
- You must decide exactly where you will be running your new business from. Working from the comforts of your own home has many fantastic benefits. However, it is essential that you discover if your property, whether rented or owned, has any rules in place restricting business activity. If you are renting an office space, you must ensure that you know monthly costs, outside of the initial rental payments. This includes broadband, electricity bills and more. Also, consider if the environment is suitable for the type of work that you are undertaking.
- Depending on whether or not you have employees working alongside you in your property, you may be required to pay business rates on top of your council tax. You will also be asked to pay these rates if you covert any part of your property into a shop/workshop or if client visits become a daily occurrence. A quick call to the VOA (Valuation Office Agency) will verify if you are required to pay business rates.
- When setting up a business at home, you will need to check your insurance policy and likely take out additional cover for any business activity within your household. This is not an expensive addition and most companies will combine any additional cover into one domestic and business policy. If your business requires clients to enter your property, you may be advised to take out public liability insurance, another inexpensive addition to your insurance policy.
- If you are using a trading name for your business, you will need to be aware of any restrictions in place. You may also be required to hold a license, depending on the nature of your business. Online advice will soon be able to lead you in the right direction.
- It is advisable to check if you are eligible to claim benefits or tax credits, which is dependent on the income of your new business. You can check this easily by getting in touch with an organisation, like the Citizens Advice Bureau, who can help you work out how much tax credit you could be eligible for.
- Once everything is in place, you can get to work on your new venture. Ensure that you keep up-to-date with all of your records, as falling behind can lead to major complications in the future. Above all, enjoy it. There is a reason that you decided to become self-employed, so embrace your new lifestyle!
If you have any further questions about setting up a company or the working options available to you, download our free working options guide or call 0800 230 0213 and talk to one of our industry experts.
Blog credit: Created by Informi