Are You Considering Going Self-Employed This Year?
Are you considering going self-employed this year? Is this year finally the year you live your dreams and start your own business? Before you hand in your notice with your current employer, here are a few things to consider:
Should you go self-employed?
The joy of being your own boss can be appealing, but it also has its challenges. For example, the buck stops with you! While you may be tempted by the opportunity of potentially earning more per day than you do currently, you will also have to work on your business for many hours for free.
A business, no matter how small, is time-consuming and something you should consider carefully.
Are you financially prepared?
While there are many stories online of people who started companies with no money and went on to become highly successful, there are lots more who struggled, ended up in debt and gave up on their business idea.
Before you resign from work and stop receiving a monthly salary, calculate how much money you will need to get your business off the ground and start making a profit.
You will not only need funds to buy equipment, build a website, print business cards, get insurance etc. It is also likely that you won’t be drawing a salary from your business straight away so you will need a serious emergency fund to support your new venture until you are able to draw income and have money in the bank to live off.
You will need time to build a client base. Even if you are lucky enough to have your first few clients ready and waiting, will that income need to go back into the business to continue to grow? Meaning you won’t be earning what you do now in employment.
If you are convinced that you have a fantastic business idea, but no funds, consider if it is something you could run alongside your current employment. Working on your own business at the evenings and weekends, while still doing your day job and crucially getting paid.
Legal and tax implications
Do you know what the legal requirements are for your business? Are there regulations you need to adhere to?
Familiarise yourself with information such as the data protection requirements – you can find information on GDPR on the Information Commissioners Website.
You will also need to comply with Health and Safety legislation, especially if you choose to rent a workspace or have employees.
Being self-employed will also have tax implications, and you must inform the HMRC, to ensure that you pay the correct amount of tax and National Insurance.
Structure your business
The type of business you want and the structure of your company are vital. Are you going to set up as a sole trader, partnership, limited liability partnership or limited company?
If you are not sure about the differences, then seek professional advice so you can structure your business correctly from the outset.
Where will you get your clients?
It’s ok having a fantastic product or service, but if no-one buys it, then you don’t have a business. Carefully think about where you will find your clients, how many you need to make a profit and what your marketing strategy will be to attain new business consistently.
When you are employed, you often receive benefits such as sick pay, paid annual holiday and possibly even private healthcare. All of that ceases when you leave your job and become self-employed.
If you are sick and unable to work not only are you not getting paid, your business may potentially cease to trade, especially if you are a sole trader. Very quickly you could find yourself in a difficult place financially.
Consider putting financial protection in place, such as income protection or life insurance. However, be aware that all these will be additional costs you didn’t have before.
Get professional support
Starting a new business is an exciting time, and you don’t want to ruin that enthusiasm by running into unforeseen issues right at the start. Getting professional support can make all the difference. MRA specialise in providing life centred business solutions, that means we help you create your startup in a way that works for your lifestyle and builds a successful business.
We can guide you on how to structure your company, business taxation, financial protection, and we can even help you find funding should you need it. Our life centred advisers offer objectivity and can help you blue sky new ideas and developments to discover whether they are financially viable. We are passionate about working with you to create the company you always dreamed of running in a way that is sustainable for the future. Contact us today for a no obligation chat to see how we can help you.