If you are thinking about becoming self-employed there are quite a lot of things to consider, so it is important that before you start working for yourself, you make some clear plans and know your legal responsibilities. Read our useful tips to help you to make the transition:
Plan your Self-employment
It is well worth putting some plans in place. If you are starting a new business from scratch you have probably made a business plan? It is a sad fact that as many as 70% of businesses do not survive their first year, but with realistic projections, planning and addressing issues promptly, you can avoid being a part of this statistic. Finances are going to be a key factor over the first 12 months of self-employment. Most people becoming self-employed won’t start generating income or profit straight away so ensure you budget each month. You also need to think about insurance for things such as income protection (although this can be expensive), health cover, public liability or indemnity insurance.
Get registered with HMRC
2. Your National Insurance number
3. The exact date your became self-employed
Every year you will be asked to complete a tax return, so you need to ensure that you have some accurate record keeping systems in place. Even if you can afford an accountant or have book-keeping software on your computer, you will still need to keep details about all your income and expenditure, along with related invoices and receipts. If you don’t have much time or inclination to keep records, it is vital that you at least ensure you have folders to collate your paper work in, sorted by month. This will help you greatly when you come to complete your self-assessment.
Remember if you aren’t sure about anything related to your self-employment, ASK! There are many organisations that can offer advice and support for self-employed people. Please refer to the end of this article for some organisations who can provide further advice.
Other things to consider:
- Retirement – look at your options for private pensions
- Registering for VAT (if turnover exceeds £79,000)
- National Insurance contributions
- Marketing yourself and your business
- Challenges – there may be periods of uncertainty and worry
Self-Employment Advice and Support
You can get further advice and support from the following organisations:
1. Business Link is government’s online resource for businesses. It contains essential information, support and services for you and your business – whether you work for a large organisation or are on your way to starting up.
2. HM Revenue and Customs
3. UK Business Forums
4. Which? Tax for the self-employed