There are lots of reasons for wanting to work for yourself. Whether you’re doing it to fit in better with family commitments, or because you want to be your own boss, there are many things to think about to make your business a success. Here are some useful tips to help you get started.
Take stock
Work out a budget for your own living costs before you take on the cost of setting up a business. Make sure you’re ready financially, so your business has a better chance of being successful.
Budgeting helps you see how much money you have coming in and how much is going out. Working for yourself may mean financial sacrifices in the early years, so see where you can cut back.
You need to have enough money to last until your business starts making money. Be realistic, otherwise you risk your business failing if you run out of money.
Sometimes a change in your circumstances may mean that your benefit rate will change, or you may become entitled to, or no longer qualify for, a certain benefit. So make sure you check.
Starting up
Get a personalised list of step-by-step tasks to set up your business, so that you can plan properly and avoid costly surprises.
Get a personalised list of step-by-step tasks to set up your business. A key decision is choosing the right legal structure for your business as this affects (among other things) the tax and National Insurance that you pay and the records and accounts that you have to keep.
There are many different types of finance available, but not all of them may be appropriate for you, so get a personalised list of the most suitable finance options for your business.
Use the Business Support Finder to see what Grants you may be eligible for.
Buying a business that’s already established may be easier than setting up your own. But make sure you’re able to value a business properly, and check the information the seller gives you is correct.
If you’d prefer to sell somebody else’s product, you may want to think about buying a franchise.
Pensions
You need to think about saving for your retirement and, if you employ people, you may be legally obliged to offer them access to a pension scheme.
Depending on how many people you employ, you may need to provide them with access to a pension scheme, so find out what you are legally obliged to do.
The government has proposed changes that will mean all employers will have to offer and pay into a pension in future. This will start in 2012.
If you are going to set up a pension scheme for your staff, you will need to decide what type of scheme to offer. You may be able to join the scheme too.
If you don’t have staff or you don’t intend to set up a pension scheme for your staff that you can join too, then you should think about saving for your own retirement. You can do this by starting an individual personal or stakeholder pension.
You may want to use existing pension funds to help purchase commercial property via a SIPP
Insurance
Make sure you know what types of insurance the law says you must have. And think about protecting yourself and your business against other unexpected events.
You may want to look at getting insurance cover which will protect you (and your business partner or family) if you die, become seriously ill or need help with private medical costs.
Tax
Make sure you know what taxes you’ll have to pay and when you’ll have to pay them. You should also find out if your business is entitled to tax advantages.
There are different types of tax on businesses. You’ll need to find out which taxes your business will have to pay and what accounts you’ll have to keep. A good start is to check whether you are considered as self-employed.
You should check if your new business is entitled to any tax advantages, as you won’t automatically receive them.
Once you’re up and running
You should check the financial health of your business and review your household budget on a regular basis to spot any potential problem.
Identify seasonal trends within your business and manage them.
Be prepared for a poor business year. It’s wise to review your budget regularly. If your circumstances change, for example income from your business falls or your mortgage payments go up, look at your budget again to make sure it’s realistic.
You should also review your personal situation regularly to make sure that you’ve got your financial priorities sorted.
