Self-employment: the basics
Thursday 23 October 2008
If you think you could run a successful business then maybe self-employment is for you. Read on to find out everything you need to know about being your own boss.
You run things
Being the boss can be really exciting, especially if you’ve decided to turn a hobby in to a career or have come up with a new idea that could really make a mark. But remember, it’s hard work and it isn’t for everyone.
If and when you decide that self-employment is for you, then you should register with HM Revenue and Customs.
As the boss, you’ll need to make sure that you’ve got a good flow of work coming through – at least enough to pay the bills and other expenses. If you plan to hire employees then you’ll need to have enough to pay their wages too.
Taking days off will become more difficult too - you'll need to be in the office to confirm business matters and sick days are unpaid.
In the money
You’ll have to have enough money to get the business started and keep it going. You can try and get funding from loads of different sources including:-
Family or friends
Though it seems like a good place to start, it has its pros and cons. Make sure that anyone interested in your business can be trusted and that they know all about it before they lend you anything.
Grants, trusts or charities
The Prince’s Trust Programme offers funds and support for new businesses. If you are 18-30 years old you could get a low interest loan of up to £5,000, plus advice from a mentor.
Loans from banks
There are some great business accounts to suit a new starter. Plus, you'll get some good financial advice too.
Remember monitoring and managing money once you have it is just as important as finding it.
Sorting out your tax
When you work under a company, tax is sorted out under the PAYE scheme, which means you can pay it off a little bit at a time. However, if you’re self employed then you are fully responsible for paying the correct amount of tax and National Insurance Contributions straight to the Inland Revenue.
You’ll need to keep all business records and details of income so you can fill out an annual Self Assessment tax return.
Where will you work?
There are many places that you could set up shop. Here are some good places to start before you consider buying out an office block:-
From home
How comfortable would that be? You would need to check your tenancy/mortage agreement to make sure you can work from there though – your parents might come in handy for this. Otherwise, you may have to get permission from your local authority.
Market stall
You’ll need a permit from your local authority that’ll also advice you on local markets and costs.
Where ever you decide to set up, make sure that you have permission to be there and also consider health and safety.
Young Enterprise
This educational charity has over 40 years experience in inspiring and equipping young people to learn and succeed in business. They offer teaching programmes covering primary school to students in higher education students.
Visit Young Enterprise to see if you want to be one of their students.
