Many people have the dream of becoming self-employed, of having an unlimited earning potential, and of having total freedom to be your own boss and do the things you want when you want. Unfortunately, very few people ever take the necessary action to achieve this way of life.
When it comes to reasons why there are often many. Sometimes people just can’t afford to loose job security, and the guaranteed income each month. Others think that it is too complicated to set up and just don’t even give it a second thought.
The bad news
The bad news for everyone is that in this day and age no job is secure, and no monthly income is guaranteed. All you have to do is watch the news or read a newspaper to work that one out.
The good news
The good news is that setting up in business isn’t actually all that hard.
How to do it
A great way of testing the waters of self-employment, and one that many people are now turning to, is running an online business such as blogging, e-commerce or affiliate marketing to name but a few. You should however remember that just because it is online does not mean that you are exempt from registering your business. Anything you do that makes you money is classed as a business, and as such requires you to register and pay the relevant taxes. Whilst this may sound like a right old pain in the behind, it really isn’t. And running an online business can allow you to continue to work full time until such a time as your business is fully able to support you financially.
The first thing you will need is an identity. You’ll need a unique name, think up a logo (or have someone else do it for you), and get yourself a letter head sorted (you’ll need this for when you set up a bank account). There are many companies out there that offer low-cost packages for business cards, letter heads and compliment slips so it doesn’t have to be an expensive outlay. You could even make them yourself if you have a computer and reasonable quality printer.
Next you will need to set up your bank account. It’s worth shopping around as some banks offer free banking for life and high interest rates etc. Figure out what kind of ease of access you will need and choose accordingly. If you visit a local branch and ask for a business pack you will be given all the info you need.
Next you’ll need to register with HM Revenue & Customs to say that you are in business. There are many different legal structures to a business, but if you are a one-man-band and just trading online then most people choose to be a Sole Trader. Give the Newly Self-Employed Helpline a call on 0845 915 4515, and you can be registered in minutes. They will also register you for National Insurance Contributions.
You will need to keep some kind of basic accounting so that you know where your money has come from, where it has gone, and how much is left over at the end. A simple Profit and Loss Account/Cash Flow Forecast is a great way of tracking this info. Here’s a free Excel Template for you to use.
Each quarter you will receive a bill for your National Insurance Contributions, currently about £30 on the standard rate. It’s easy to pay as you can use direct bank transfer, send a cheque or pay over the counter in your local bank. These payments should be recorded in your books.
The great news in terms of paying tax is that than less your business turns over £68,000 a year you only need to provide HMRC with a three line account summary on your annual tax return: Income, Expenditure and Profit or Loss. This lines up with the VAT threshold – so you don’t need to register for VAT until you anticipate exceeding this limit either.
And there we have it – that is basically it.
There are other factors to consider, such as taking out Public Liability Insurance etc, but at this moment in time, in order to get you trading legally, that is all that it takes.
Over the coming weeks I’ll be talking more about running an online business, how to protect yourself, manage your finances, and build your business, which should tie in nicely with all the other posts that the team are providing for you. If you need any help in the meantime then feel free to give me a shout across at Major-Business.net.
Good one james.very helpful for newbies.having an identity and a logo makes us stand unique in the crowd & easily recognizable.Its a must for any business..
.-= Krish – lifesher´s last blog ..Focus By Discipline, Ensure Success =-.
Yeah, being unique is the key thing here! Do everything in your power to stand out from the crowd.
.-= Phil´s last blog ..A straight forward guide to UK Business Rates =-.
Well, I can vouch for the whole no job is secure thing. I’ve now worked at 2 different tech companies that have folded, and I’ve lost a job. That’s ok. I’ve been much happier being my own General for the better part of the past 5 years. You live and learn, but most of all, learn to take actions.
Brandon
.-= BrandonBurgh´s last blog ..Warrior’s Stumble – Breaking Through Barriers =-.
You’ve touched on an important point here… One that James talks about a lot… Taking action! If you don’t try you don’t get!
.-= Phil´s last blog ..A straight forward guide to UK Business Rates =-.
Job security and the guaranteed income are such a key factor. But I found these tips very helpful because in my head it was a whole lot more complicated, which was perhaps another turn-off. Thanks pal, liberating!
.-= Mo “Mad Dog” Stoneskin´s last undefined ..Response cached until Thu 13 @ 17:33 GMT (Refreshes in 57 Minutes) =-.
I know, it was a really daunting experience the first time I set up a busines… Then you realise that if you had known what to do from the start it would have been as easy as 1, 2, 3.
.-= Phil´s last blog ..A straight forward guide to UK Business Rates =-.
Thanks Phil that’s good tips. Why did I get myself an accountant when the tax return sounds that easy… d’oh!
.-= Jorgen Sundberg´s last blog ..5 Ways to Boost your Twitter Profile and Attract Followers =-.
Having an accountant is still a good idea, but not always affordable for a new startup. The new three line accounting threshold makes it simpler to get started.
.-= Phil´s last blog ..A straight forward guide to UK Business Rates =-.
Nicely laid out…
I learnt, good and bad in a way, early in my working life that “jobs for life” was always a sham really.
In stonemasonry it was always thought f a safe bet you would work for life often for the same company… 1992 black weds blew that right away, harsh lesson to learn so soon after qualifying… and it killed the passion for many of us too.
No jobs for life anywhere these days, if there ever were.
.-= rob sellen´s last blog ..Work to live or live to work =-.
You’re right Rob, nothin is safe anymore. The trick now is being able to read the economy and predict what is coming next… And if you can do it then can you do me a favour and sort me out with this weeks winning lotto numbers please
.-= Phil´s last blog ..A straight forward guide to UK Business Rates =-.
Thanks very very much for this particular article, Phil. It’s like God sent you to write this article today. I’ve been reading a whole lot on setting up internet businesses and marketing them and all that relates to them the whole of this week and last week.
It’s really great to have you break things down in this wonderful way even though I’m in a different country, all the business details are similar almost everywhere.
Thanks very much for this article, Phil. You don’t know how valuable I find this. I’ve even bookmarked it for the future to reread it in case I need to reference something
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Thanks again
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.-= Shirley Osei-Mensah´s last blog ..10 Tips For Marketing With Contests =-.
Hey Shirley, glad it was of use to you. Thanks very much for the comments.
.-= Phil´s last blog ..A straight forward guide to UK Business Rates =-.
Sounds like building a real business isn’t all that hard actually. I’m turning BluePop13.com into a business right now… It’s going to take a while to really build up but I’m going to do it because I know it can be done.
Good advice here, I’ll have to come back to this post and check some of these things out to consider for down the road just a bit.
.-= Eric´s last blog ..Having No Money Can Make All The Difference =-.
Awesome tips.
. Thanks for sharing this great post Phil
I think setting up a business isn’t a hard part, running a business is hard.
I love the simple way you’ve laid this out Phil. I am thinking about setting up my own business but I think I’ve made it difficult for myself with a low of complications that I probably should just ignore. I have a name and an idea that are pretty unique but no logo and no idea how I’m going to market.