Becoming self-employed allows you to 'be your own boss' and work more flexibly, but there are also downsides to self-employment.
You therefore need to consider whether being self-employed is right for you and your circumstances.
The information we provide is not comprehensive, nor does it replace professional advice. But it will help you to think through some of the implications to becoming self-employed.
We also publish information on starting a business from home.
For a useful introductory guide to setting up your own business, visit the Money Advice Service website.
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It is important to consider the financial implications of becoming self-employed. Unlike being employed, there will be days when you do not earn money, for example holidays or sick days. Also, you won't have an employer contributing to a pension.
You should work out the following before committing yourself to being self-employed:
- minimum income required to cover your living costs and outgoings
- realistic predictions for weekly or monthly earnings
- provision for unexpected business expenses, for example vehicle or machinery breakdown
- the amount required to pay your annual tax bill.
This will help calculate the amount of income you will require.
You should also consider the need for financial administration of your business. Making products or delivering services is only one aspect of being self-employed. You (or someone else) will need to find time to quote and invoice customers, chase clients for payment, keep accounts for your tax return and do the other tasks needed to keep your business running.
If you are applying for or already have a mortgage, you must check with your bank or mortgage provider to see if becoming self-employed will impact that.
If you are on existing benefits, contact your benefits office and explain what are proposing to do before you become self-employed.
If you have been unemployed for 26 weeks or more, you may qualify for the New Enterprise Allowance to set up a business. This scheme also provides support from business mentors in the early months of trading. Ask your local Jobcentre Plus Adviser for further details, or visit the GOV.UK website to find out about help with moving from benefits to work.
It's easy to get swept up with the idea of being your own boss, but being self-employed and responsible for your own income may not be the right thing for your personal circumstances.
You should consider the following before committing yourself to being self-employed:
- how being self-employed will fit in with your lifestyle and family commitments, for example childcare
- how the needs of your customers will impact you
- how the peaks and troughs of your self-employed work will fit in with your other commitments.
Setting up as self-employed
What you need to do to set up as self-employed depends on your type of business, where you work and whether you take people on to help.
It is important that you have a written business plan, even if its short. This helps you to think through all the factors you'll need to consider when running your business.
Visit the GOV.UK website for templates and examples of business plans.
Register your business
You will need to register your business with HMRC for tax purposes. This means you will need to decide if you operate as a:
- sole trader (if you take full responsibility for your business finances)
- limited company (if the company's finances are separate from yours)
- partnership (if you are setting up a business with others).
Visit the GOV.UK website for information on registering your business.
There will be different rules depending on where you will work. Visit the GOV.UK website to check what your responsibilities are if you:
Taking on people to run your business
You will have responsibilities if you are taking on people to help in your business. Even if you take on agency workers, freelancers or sub-contractors you have some responsibilities, for example their health and safety.
Visit the GOV.UK website to check contract types and employer responsibilities.
If you work at or from home, you should be aware that the accommodation within your home used as an 'office' may be liable to business rates. Visit the GOV.UK website for guidance on business rates when working from home.
For enquiries relating to business within the New Forest, contact our business rates team by phone on 01590 646119 or by email to firstname.lastname@example.org.
You may need a licence to operate your business from home, but this will depend on the nature of the business. The Government Licence Finder tool will help you to identify the licences you will need to operate your specific type of business and whom to contact.
There are certain types of insurance cover that you need to have to run your own business from home. These are to protect you, your employees and your customers. You can call the British Insurance Brokers Association on 0870 950 1790 for guidance and advice, or visit its website for insurance guides for small businesses.
In addition, running your own business may impact on your existing home, motor and other insurance policies. It is important to speak with your insurer before starting your business.
The General Data Protection Regulation (GDPR) controls how you handle and store people's personal information. This includes information on your customers and employees. The Government's Information Commissioner provides independent advice and guidance about data protection and has a useful assessment tool for small businesses.
Making business contacts
Networking with other small business owners is a powerful way of building your business and enabling you to overcome isolation. It can also be also be a low-cost marketing method for developing opportunities and contacts.
We publish a list of local organisations that offer business events and networking opportunities.
Business start-up support
We publish a list of several organisations that can support new businesses.
We also work with several partner agencies to provide a range of business support options. Contact our business support team by phone on 023 8028 5735 or by email to email@example.com.