It’s one of the most common career dreams: what if you were the one in charge, with the freedom to choose your own hours and set the direction of the business yourself?
In fact, according to research by Quickbooks, more than 40% of UK workers dream of saying goodbye to their boss and starting up on their own.
Even if you have scoped out a brilliant new product or service, it can feel like a big step to go it alone. However, like most big tasks, it’s more manageable when you break it down into simple steps. So, here’s our checklist for some of the more practical elements you need to organise to be your own boss.
- Let the taxman know
If you’re a sole trader, you’ll need to let HMRC know that you’ll be filling out a self-assessment for your taxes. If you decide to start a limited company, you’ll register it for corporation tax as part of the process.
The tax system can be bewildering, but to help you find your feet, HMRC provides free online training, offering videos, webinars and email updates.
- Choose the right name for your business
What’s in a name? Quite a lot these days, when it comes to people finding you online. If you’re creating a limited company, you’ll need to develop a unique moniker. Search the Companies House register to find one that hasn’t been taken yet.
- Set up a business bank account
As a sole trader, you can run your business out of your current account, but it might be easier to keep the finances separate. For limited companies, it’s a legal necessity to have a dedicated bank account – treating company funds as your own personal piggy bank will get you in serious trouble.
Unlike personal current accounts, business accounts typically have fees or transaction charges, so when comparing accounts, look at how you will be charged.
- Explore your funding options
Starting a business often requires some initial investment; if your business will need extra cash to kick things off, understanding your funding options is essential. To raise the necessary capital, you can look into small business loans, government grants, or even crowdfunding platforms.
Highlighting the pros and cons of each option can help aspiring entrepreneurs make informed decisions about how to finance their venture without risking too much personal financial stability.
- Get insured
Going it alone can feel like a bit of a risk, but it doesn’t have to be reckless. Having the right insurance is vital to protecting your livelihood from nasty surprises and ensuring you stay in it for the long haul.
Advice service, Money Helper, has useful information on the different kinds of insurance you might want (or be legally required to have), depending on your type of business, from equipment to employers’ liability insurance.
- Start accounting for everything
You need records of everything you spend money on and all your sales and income to keep the taxman and Companies House happy. If you don’t want to pay for an accountant, taking a book-keeping course can give you the skills to keep track of your own finances, at least until your company grows bigger.
- Organise your workplace
When self-employed and working from home, there are many remote working-related business expenses that you can claim, including a proportion of your:
- Gas, electricity and water bills
- Internet and telephone bills
- Rent and mortgage interest costs
- Council tax
Try this simple calculator to get an idea of how much your tax savings could be.
If your business will have separate premises, remember to budget for business rates: you’ll get a bill from the council in February or March each year.