Being self employed is a dream for many it can offer so much – freedom to do what you want when you want, no commute to work, be in control of your destiny, do something you love. You name it the reasons for self employment are wide and diverse.
If you’re thinking of becoming going into business here are few things to consider.
This is often the first stumbling block people face. Think about the things you enjoy doing, think about your skill set, each and everyone of us has saleable skills. Research each of area of interest, read books, look online, seek advice from trade bodies. Remember just because there may be a lot of people doing the same thing doesn’t mean the market is saturated to the point were you can’t thrive. Some of the biggest business out there had very humble beginnings in a busy market but made it big.
Setting up the business
There are three main forms of recognised trading set up
- Sole Trader – most self employed people are classed as sole traders. You can employ staff and you keep all the business profits after tax. You are personally liable for any losses or debts in the business.
- Partnership – it’s more or less the same set up as a Sole Trader only two or more people share the profits and liability.
- Limited Company – a limited company is set up and becomes a legal entity in it’s own right. Each company has members assigned by shares in the company. The limited company is run by directors, directors have legal responsibilities that they must abide by. Any profits a limited company makes is owned by the company after it pays corporation tax.
Which business model is best for you is entirely your choice. If you are just setting off on your self employed journey Sole Trader is often the first starting point.
Finance for self employed people
Money is often a worry for many, being self employed can bring a host of other money worries that you may not be used to.
Self employed people need to make plans for sick pay, pensions and of course times when work may be slow. Budgeting is an important skill of being self employed brush up on budgeting do some reading or seek advice from other self employed people or an advice service such as Citizens Advice.
Grants, loans, family and friends may be able to help get you started, this useful Government Finance and Support Finder Tool may be able help find financial assistance.
It’s vitally important that you keep accurate and detailed records of the business. Some people try and do their own bookkeeping and accounts, even manage to submit annual tax returns. Many however employ the service of an accountant or bookkeeping service. If you are planning to be self employed or in a partnership accounts can more straight forward, however if you are forming a limited company seeking the help of a professional service is almost essential.
Many self employed business people prefer to leave bookkeeping and accounts up to professional services, they understand a professional bookkeeper can often save much more than the cost of the service, plus less bookkeeping means more time to do business.
This article has just been a quick insight into some of the things you should consider when setting off on your self employed journey.
First Class Bookkeeping provide a friendly, professional and experienced service to businesses in Wigan and the North West, if you would like to find out more how First Class Bookkeeping can help you get in touch today