Self-employment: six steps to a solid foundation

Self-employment: six steps to a solid foundation
Enterprise Nation
Enterprise NationEnterprise Nation

Posted: Wed 12th Jun 2013

Climbing out of your comfort zone and leaving a secure job to work for yourself is a big step. But thousands of people every year are drawn to the rewards that self-employment can bring. Josh Hall, content writer for Enterprise Nation partner Simply Business offers these six steps to make sure you get off to a solid start.

Simply Business | Josh Hall

Autonomy, hours to suit and the chance to steer your own career are just part of the attraction of self-employment, writes Josh (left). Success however needs a firm foundation, so before you take on the big boys, make sure you've crossed your 't's, covered your back and polished up your permits.

1. Plan for success

Even if you plan to work alone as a freelancer, you should still consider yourself a business. So put together a business plan that sets out what you offer, who your customers are, how you'll market yourself, realistic financial forecasts and where you want to be in one, three and five years' time. A plan will help you think strategically about what you're doing, as well as offering a guide to growth. Remember, though, it's not set in stone so it can be changed as your business develops. You'll also need a business plan if you're looking for any kind of business funding to help you get your idea off the ground or set up new projects.

2. Stand out with your name

A good business name can make all the difference and help you stand out from your competitors. Research what your competitors call themselves and think up something catchier, or go the sweet-and-simple route and give your business the same name as yourself. Whatever you choose, be sure to have it printed on all your stationery and marketing material - and open a business bank account in the same name.

3. Make sure you're legal

You'll need to check any licence or permit requirements for your area of business. If you're a childminder or street trader, for example, you'll need a local authority licence. If you're a catering business, you'll need a food hygiene certificate, and other kinds of business need a qualification to trade. You can find advice on licences and permits on the Simply Business legal knowledge base. You may also require insurance - and some clients won't take you on without it. public liability insurance or professional indemnity insurance, for example, could be essential for you.

4. Get registered

As soon as you start trading, you'll need to register your business with HM Revenue &.Customs - failing to do this within three months of starting up could land you with a fine. You'll need to tell them what kind of business you are - whether a sole trader, partnership, limited company, cooperative or franchise - all of which are dealt with differently for tax and national insurance purposes. At the same time as registering your business, you can register to file your tax returns online. This is quicker and easier than paper filing. If you expect your turnover to be higher than £79,000 per year, you'll also need to register to pay VAT.

5. Get a grip on your accounts

It pays to have a firm grip on your day-to-day or month-to-month finances from the outset. Invoicing, monitoring cashflow, working capital and expenses, paying yourself a salary, ensuring you put aside enough money for your tax payments - these are all essential if you're actually going to run a financially sound business. Knowing how your business finances work will also help you with accurate forecasting and business planning. If your business activities are straightforward, it's simple enough to do this yourself with good accounting software such as FreeAgent or even with Excel spreadsheets. Otherwise, hire a good accountant or bookkeeper. Be aware also of what you can claim as a business expense. These include investment in equipment, office rental, stationery and even part of your mortgage, utilities and council tax if you operate from home and some travel and subsistence expenses. Make sure you claim everything you're entitled to. And finally"¦

6. Find a good place to work

A good working environment is essential if you're going to work well. If you're setting up an office, workshop, studio or shop, think carefully about the location (be close to your customers) and be completely aware of what you're committing yourself to in terms of your lease or licence. You may prefer to start out at home, in which case you'll need to investigate whether you need to pay business rates or obtain planning permission from your local authority. It all depends on the kind of business you run and whether clients or employees will be visiting you. If you are running a home-based business, you should inform your insurance company of your change of circumstances - your standard home contents and buildings insurance may no longer be enough. You might also need other forms of cover. Alternatively, you can do what thousands of mobile and freelance workers do as a matter of routine nowadays, and work from co-working spaces, business lounges or public places with free wi-fi access. It's low-cost (often free), flexible and enables you to change location to suit you. Use a website like Worksnug to find co-working spaces near you or check out organisations like Club Workspace or Regus to work out what's best for you. Josh Hall is content writer for Simply Business. You can read more of his advice articles for small businesses on the Simply Business knowledge base.

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Photo Credit: Jared Tarbell via Compfight cc

Enterprise Nation
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Enterprise Nation has helped thousands of people start and grow their businesses. Led by founder, Emma Jones CBE, Enterprise Nation connects you to the resources and expertise to help you succeed.

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