It can be difficult to know where to start when thinking about becoming self employed. As well as considering the implications of being your own boss, and all it entails, there are a number of legal requirements of self employment that you must adhere to.
This guide to self employment will ensure that you are aware of the necessary steps to setting up on your own.
Register as self employed
The first thing to think about when becoming self employed is registering with HM Revenue and Customs (HMRC).
Informing HMRC that you are self employed is important for many reasons, including tax.
Being self employed means you will have to pay tax on your earnings as you would if you were employed by someone else. However, there are allowances and tax reliefs that you will be able to claim.
Choose a name for your business
You can either trade using your own name, or you can choose a name for your business. If you choose to form a limited (LTD) company, you must register your name with Companies House.
If trading under a company name, it is important that you put both the business name and your own name on all business stationary, cheques, invoices, letters and receipts.
When choosing a trading name, make sure the name isn’t offensive, isn’t too similar to a registered trademark or existing company name and isn’t misleading.
Decide on work premises
The type of work you do will largely determine where you decide to run your business from.
- You may choose to work from home to keep costs down. Make sure that you obtain permission from the local authority if needed, and ensure that your mortgage or tenancy agreement allows you to use the property for business purposes. Also consider home worker insurance.
- You could work from bought or rented premises. Take into consideration the location of the premises, lighting and heating bills, and any necessary health and safety requirements.
- Market stalls and craft fairs provide good opportunities to showcase your goods, if appropriate. Contact your local authority to find out where and when such events are held, and how much it costs to sell there.
Research business rates
You will need to look into paying business rates on your work premises to your local authority. Not all work premises require you to pay business rates, but many do, such as shops, factories, offices and warehouses.
Contact your local authority direct to find out whether you will have to pay business rates, and to enquire as to the cost.
Hire an accountant
Unless you are confident that you can keep your own books, it is a good idea to employ an accountant. Keeping detailed and accurate records of your finances is important if you are self employed, and whilst you might see hiring an accountant as an unnecessary expense, it will give you more time to spend working to make your business a success.