Beginner's guide to self-employment
Filed under: Career
If being your own boss appeals to you, check out this guide to improve your chances of being successfully self-employed.
Controlling your cash
When you become self-employed, you must let Revenue & Customs know within three months. Otherwise you risk a fine.
Once you are registered as self-employed, you will almost certainly need to start paying Class 2 NI contributions, which are £2.50 a week.
Even though you will not pay any income tax in the first year, it is also crucial to set aside at least an hour each week to do your accounts and to start saving up for your first tax bill.
Accountants recommend saving around a third of any profits over and above the current personal allowance of £7,457.
You do not necessarily need to pay an accountant to manage you affairs, although you may wish to invest in some easy-to-use accounting software such as that available at Accountz for £99.
Working from home
There are both pros and cons to working from home. It can, for example, prove hard to concentrate, which is why it is a good idea to have a separate room or area to work in.
If you are likely to have a lot of visits from clients or will be using your home primarily as an office, you should also look into whether you need planning permission to set your business up. Contact your local authority for more details about this.
Finally, get in touch with your home insurer to find out if you need to alter your policy and whether you need business insurance, which offers various types of cover including public liability and employers' liability. The latter is obligatory if you plan to take on staff.
Registering for VAT
If you expect to have a turnover of at least £73,000, then the current rules state that you must also register for VAT.
However, even if your turnover is less than this amount, some people feel that it is worth registering to look more professional if your clients are businesses.
If your clients are going to be consumers, on the other hand, you should avoid registering if possible as it will only serve to push your prices up by 20%.
Whatever field you are in, the success of your business depends to a large extent on potential clients finding out about it. So it is vital to get your marketing right.
Finding the right name for your business is hugely important and you will have more chance of attracting customers - and internet users - if you keep both it and any website simple and to the point.