subject: Commencing Self Employment [print this page] Going self-employed is a dream for many people, although not everyone who thinks about it actually gets round to doing it. Some people can't wait to give up their employment to start on their own while others are simply pushed in this direction by circumstances such as redundancy. In any event you will probably (and sensibly) intend working in an area that you are familiar with. But running your own business is quite different from working for someone else for a number of reasons. For a start you are risking your own money, while any money you make is your own profit. For some people, that is a major motivation while others find the idea paralysing. Before you start down the road to starting your own business, you need to be aware of what kind of person you are; otherwise, you may cause yourself unnecessary stress.Once you know what you kind of business you plan to start, you will need to think about whom you are going to sell to and how to reach them effectively. There is no substitute proper research to ensure your marketing is directed accurately rather than wasted by aiming at everyone at the same time. The more you find out before you start the better. You need to plan carefully, with the financials prepared as well possible. More businesses fail for lack of cash than for any other reason, so you must make sure you have the resources to sustain you if it takes longer than you expect to get the business running properly. You will also have to organise systems to ensure you are able to deliver on time the goods or services you are providing.There are some things you legally must do when you start as a sole trader. The first is to register your self-employment with HMRC. You can now do this quite easily online but you have to remember to register within three months of your business starting or you will be fined 100 for late notification. You will also need to consider whether or not you should register for VAT. You are only obliged to do so if your turnover is above the registration threshold but there are circumstances in which you might want to register voluntarily. For example, you may be buying a significant amount of equipment on which you want to reclaim the VAT or you may simply want to appear more established than you are.Preparing your accounts and completing a tax return probably aren't your highest priorities but maintaining accurate accounting records is key discipline for a small business owner. But you do not need to keep overly complex records. Rather it is important that you have a clear system that is appropriate to your situation. For a small one-person business, a spreadsheet be quite adequate (and we can supply you with one that has been extensively tested). For a growing business a professional package might be appropriate. A good accountant can point you in the right direction but make sure that they do not just confuse you with technical jargon. It's important that you understand what you have to do and why it matters.You will need to complete a self-assessment tax return, so make sure you claim all allowable expenses in order to reduce your tax liability without doing anything that might make you subject to an HMRC inspection of your return and your records. Even worse, you may end up paying more tax than necessary. It is not complicated to get it right with appropriate advice and it can be expensive to make a mistake so please don't economise by trying to do everything yourself when you start out. You will have plenty to do to get started, but if you take good advice and prepare well then why shouldn't you succeed?
