Crucial Things to Do When You Go Self-Employed in the UK
A decade ago, the idea of becoming self-employed was nothing more than a pipe-dream for many ambitious individuals. These professionals dreamt of one-day being able to transform their lives by becoming their own boss, but they often didn’t have the money required to set up a traditional business. However, as the years have passed by, new and improved technology has entered the market. The rise of the internet, cloud computing and eCommerce means that anyone can launch their own business or begin trading online with very little initial investment.
Becoming self-employed or creating a solo business online is now easier than it has ever been before. However, that doesn’t mean that there aren’t a few crucial things that you’ll need to do when you go self-employed in the UK. Here are the important steps to remember.
1. Find Your Funding
The great thing about going self-employed in the digital age, is that you generally won’t need as much money to get started as you did when you were buying a brick-and-mortar business. You don’t need to pay for an office or a physical location that you can sell your products from. However, there are still some basic essentials that you’re going to need.
If you don’t have enough money in your bank account to fund the process of turning your spare room at home into an office, for instance, then you’re going to need to consider applying for a personal loan to bring your dreams to life. That loan can also pay for your new phone system, printer, fax machine, and computer.
2. Get Registered
Once you decide to set up as a sole trader or a partnership, you’ll need to keep in mind that you’re responsible for paying your own taxes and national insurance. If you’re working as a self-employed individual, you’ll need to register with the HMRC, and you can get help doing this by speaking to a professional accountant.
Make sure that you know what kind of business you want to create before you register. There’s a big difference between being a sole trader and a limited company. Discussing your options with your accountant can help to ensure that you’re paying the least amount of tax possible on whatever you earn.
3. Know the Basics of Tax and NIC
Even if you do decide that you’re going to pay for an accountant to manage your finances for you, it’s a good idea to make sure that you know the basics of taxes and how you pay your national insurance. This will help you to ensure that you’re saving the right documents behind whenever you get a receipt from a purchase or you send an invoice to a client.
Speaking to your accountant about the basics of tax and national insurance contributions will also help you to make informed decisions about when you should upgrade your business entity from sole trader to LLC and beyond.
4. Have a Business Bank Account
Once you know the basics of taxes and other yearly expenses, you’ll also discover the benefits of opening your own personal business bank account. Although it might seem like you can easily separate your business expenses from your personal expenses in a single account when you’re just getting started, you’ll find that it’s much easier to keep track of your expenses if you have a business bank account instead.
Look for a bank that you can trust, as well as one that doesn’t require you to pay very hefty fees on your business transactions. This will ensure that you have more money to put towards your bottom line.
5. Protect Yourself
Finally, make sure that you and your business are both properly protected. This often means figuring out what kind of insurance you’re going to need for your company. You’re required by law to have specific insurance policies in place depending on the kind of company that you’re going to run. If you’re not sure what kind of insurance you need, you could consider speaking to a business expert or someone from the HMRC to find out more.
For instance, if you employ someone else for your team – even if they just work part-time, then you’ll be required to take out some form of employer’s liability insurance that covers you for up to £5 million. Don’t take the risk of being left without the right protection just because you want to save money when starting your company.
