No more commuting, working the hours you choose and doing something you love: working for yourself is a way of life as well as a job. Nothing beats the freedom of being your own boss, and if it’s something you dream of, here’s how to set yourself up as self-employed.
Before you hand in your notice…
Before you take the leap into the world of self-employment, it’s important to be completely sure that this is the right step for you. While it has many fantastic benefits, it has plenty of downsides as well, so be honest with yourself: are you cut out for the self-employed life? Are you prepared for the financial insecurity that comes with not having a guaranteed salary? How will you manage financially if you don’t find enough work, both when you’re first starting out and then when you’re established? Will you have the self-discipline to work from home? Will you be lonely working by yourself? These are all questions to be seriously considered before you take the plunge.
Setting up as self-employed: the official bit
If you’ve decided self-employment is definitely the right way forward for you, the next decision you’ll need to make is what kind of business you’re going to be. If it’s just going to be you on your own, you might prefer the simplicity of being a sole trader, which means you’re personally responsible for losses your business makes, but you can keep your post-tax profits. This simply requires you to let HMRC know that you’re going self-employed.
You can also partner with another sole trader to create a partnership, and all you need to do is choose a company name, nominate a partner and inform HMRC. Your other option is to set up a limited company, which keeps your business finances and liabilities separate from you, but is a little more complex to set up and run. Take a look at these pros and cons to help work out which is best for you.
There are a few other things you’ll want to think about to prepare for going self-employed, so here’s a quick checklist of the main considerations.
- Website – it’s a good idea to set up a website promoting your services so that potential customers can find you online.
- Business cards and other promotional materials are useful for giving out to people you meet or network with.
- Office space – set aside a dedicated space at home if you’ll be working from home; alternatively, you may want to rent an office or other business premises.
- Insurance – if you’re going to be having members of the public on your premises, or carrying out work on site, you’ll need public liability insurance. It’s also advisable to take out professional indemnity insurance in case you’re held responsible for a mistake or poor advice, and don’t forget to take out small office insurance to cover your premises.
- Accounting – invest in some accounting software to help you keep track of your income and expenditure, and it’s worth finding an accountant to help you with your tax return. Start keeping all your receipts, including for your set-up costs, as these can be offset against tax.
Self-employment is an incredibly rewarding direction to take your career in, and we wish you the very best of luck on this exciting journey. Don’t forget that we’re here to help with all your business insurance needs.