4.75 million people are now self employed, thats 15% of all people in work in the UK.
Why become self-employed – Citizens Advice
There is encouragement from the government for people to become self-employed and at first it seems attractive, especially if you have recently become unemployed or redundant. Although one of the main attractions of becoming self-employed is no longer having to work for somebody else there are several disadvantages you should consider. These include not being certain of having a regular income, having to arrange your own sick pay and pension and probably having to work long hours.
What should you do before you start your business?
- Create a Business Plan – research shows it will increase your profitby 20%
- Create a cashflow forecast – work out how muc money you will need to run your business and where you will get the funding from
- Choose the right structure – its important to consider carefully whether to be a Sole Trader, Partnership or Limited Company
- Talk to an Accountant – Accountants will help you register and set up your business and avoid the risk of penalties
- Market Research – is there a market for your product or service, how big is the market and why will customers buy from you
You’re responsible for:
- keeping records of your business’s sales and expenses
- sending a Self Assessment tax return every year
- paying Income Tax on your profits and Class 2 and Class 4 National Insurance – use HMRC’s calculator to help you budget for this
- your business debts
- bills for anything you buy for your business
- registering for VAT if your turnover reaches the VAT threshold
- registering with the Construction Industry Scheme (CIS) if you’re a contractor or sub-contractor in the construction industry