Becoming self-employed could be the right step for anyone who has the necessary skills and experience that will be required to successfully run a business. As the recent uncertainty around jobs is taking its toll and people have seen the advantages of working from home many people who may not have contemplated self-employment are giving it serious thought.
Once who have decided on your business the next step is to choose a business name that is memorable and that reflects your business. You will need to register as a sole trader with HMRC so that they know you will be completing a self-assessment tax form and paying class 2 and class 4 national insurance contributions where relevant.
It is at this stage that it would be wise to seek the advice of an accountant as they will be able to guide you in terms of the bookkeeping you will need to undertake and any legal requirements you will need to fulfil such as having a business bank account. Setting up the bank account and any trade accounts for supplies if appropriate will mean that you are ready financially to begin your self-employed adventure. The accountant will also be able to advise you on any financial help that is available to new businesses that will give your new business an initial boost.
The new year is fast approaching and although your accounting year may run from April to April, January is always a good time to get everything in order. If you find that you are not very organised with your accounts for your business then you may choose to outsource it to a firm of accountancy’s or a book keeper. You will still need to ensure that you keep copies of the receipts and payments you make, but they will be able to manage the paperwork side of things for you.
Come January, lots of people will have to pay their tax and national insurance bills. Depending on what their profit was, this can easily rack up in to the thousands. It is vital that you try and save this money throughout the year so as not to end up trying to find a large sum of money just after Christmas.
If you are struggling to pay then you should speak to HMRC as soon as possible to see what can be done.
Now may be the perfect time to start working with an accountancy firm. It will allow them time to get to know you and your business before the task return i due next September.
If you have been self employed for a while or are looking to set up a new business then you may decide to set up a limited company. Unlike when being self employed, limited companies must have at least one director. Often people set up limited companies if they want to be able to employ people and to not have to have payments / loans etc against them as an individual.
Running as a limited company often gives your customers a higher level of trust and can make your business look more professional. It can often allow you to deal with bigger companies than you may be able to if you were self employed. But, there are some downsides.
Accounting often becomes harder when it comes to a limited company compared to that of a sole trader. You may have to pay VAT and corporation tax along with employee wages and contributions.
If you are thinking of setting up a limited company be sure to speak to a competent financial advisor or accountant before doing so and ensure that you have all your procedures in place before starting. This will make accounting easier when you do need to start filing returns etc.
It may be that for a long time you have wanted to set up your own business. Often, we work for others for a while and then realise that we actually want to have a go a being our own boss for a while. Setting up your own business can be risky if you have to invest a lot of your own money or if you have to have help from investors. You will feel under a massive amount of pressure to get it right in order to make your money or your investors’ money back quickly.
It is important when you set up your own business you have someone that can help you if you need advice or guidance. Sometimes you can get a business mentor. They will be able to give you broad advice on subject matters that they have some experience in.
There are some fantastic groups you can join to become a member of such as the FSB who not only can give you advice on general matters but also legal advice if needed. They have their own team of solicitors that you can call on when needed and staff who can help if you have to go through a tax investigation etc.
If you are an employer or responsible for other people in your job role then you need to ensure that you get the job at hand done without micromanaging people. Lots of people find it very hard to have a boss that is constantly watching over them and telling them what to do. If you do this, you may find that you have a high turn over of staff.
An employer does not need to be shouting all the time and micromanaging their staff in order to gain respect but they do need to maintain a level of professionalism and ensure that employees are happy and doing their job right. If you are generally a friendly person then you may find it hard to distance yourself slightly from your employees. It is easy to quickly become a friend which can then make it very hard if you need to be a bit firmer or discipline an employee.
There are some great courses for mangers to attend that can often be completed over a day or two. These courses are designed to help show you how to manage your staff correctly, improve morale and deal with disputes within the work place.
If you are self-employed then you need to start thinking about completing your self-assessment tax return. If you are completing it online then you will need to have done it by January 2022 but if you want to apply for the fifth grant or have to report your income to tax credits then you may need to complete it before the end of July.
Some people chose to do their tax return themselves whilst others many enlist the help of an accountant. You may wish to keep records and spreadsheets of all incoming and expenditure and then pass it across to your accountant to check through or you may decide that you just want to be able to give them bank statements and receipts and let them manage everything for you. Obviously, the more work they have to do the longer it will take and the more they will charge you. You need to find an accountant or accountancy firm that you can trust as they will be handling sensitive information about your finances. It is often a good idea to use an accountancy firm or individual that has been recommended to you by a friend or colleague.
If you are thinking of getting into the consultancy business, it’s not all just about the qualifications you have acquired. There are a number of specific skills you need to be a good consultant. Some of these qualities can be learned over time and others are to do with your personality and may be not so easy to adapt to if it does not come naturally to you.
Consulting is not just about telling someone what to do it is also about helping them learn and grow. You need to have a certain amount of teaching skills under your belt and you will need to be patient as some people may take longer than others to pick things up.
As a consultant it is vital that you have the trust of the business you are working with. It can be a quite a daunting time for them as they will need to allow you to have access to personal information and allow you in to see how the business is being ran. Building up trust can take time especially with some companies. BE open an honest with them and always keep them informed of what your plans are and why you want to do something.
There are a huge number of different types of jobs that can be done on a self employed basis. Some will still require you to go out to factories, offices, shops or driving in a car but others can often be done from home.
If you are looking to go self-employed then you must have a certain level of discipline to ensure that you get your work finished on time and to a high standard. Unlike an employed position, where you will often have to report to senior management, you will not have anyone checking up on what you have accomplished. This may seem like a bonus to start with, but if you are not careful it is easy to get complacent.
Time management is often one of the hardest things self-employed people struggle with, especially if you are working from home. There are often a number of distractions in and around the home which can very quickly and easily encroach on our work time. If this happens you will often find you get behind with your work and then have to work late nights or weekends to catch up. You may find it hard to switch off and if clients have your mobile number, they may contact you out of usual office hours. This can make it feel like you are always working and never have any time off.
More and more of us are having to work from home at present and IT is having to come in to play a lot more than we may be used to. It may be the first time you have had to work from home and you might have to do many of your usual tasks online or by using a computer. Lots of people have basic IT skills, especially the younger generation that have been taught it at school, but did you know that IT can really help you further your career and be better at your job.
If you find that tasks on the computer are taking too long then you may consider investing in an IT course. Some employers will happily pay for their employees to go on an IT course if they think it will be beneficial and that it will improve work productivity but even if they don’t you may still wish to attend one for your own reasons. Prices vary drastically depending on what you want to learn, but for a simply online course you may only have to fork out £30-£50.
Many colleges offer evening IT course for students of all ages to give you an overview of what you can do on a computer or on the internet.
If you run your own business then you have the option of using an accountancy firm to manage the financial side or doing it yourself. Depending on how large your business is and how complicated may mean that you will struggle to do all the accounting yourself. You may have employees and therefore also have to manage payroll.
There are a huge number of bookkeepers and accountancy firms out there that will do as much or as little as you want them to do. You may wish to do all the accounting yourself but then have them audit you every few months to check that you are doing it correctly or you may ask them to manage the whole thing, so you literally send all your invoices to them for them to input. They can also manage VAT returns as well as personal tax and P11D’s. Obviously, the more work you ask them to do the more you will be charged, but this can often free you up to allow you to manage and run the business as you need to so can often pay for itself. Why not get a quote and find out what an accountancy firm can do for you?