Achieve your goal of self-employment!Traditionally you enter a career at the bottom, hung in, worked your way and get recognised for your efforts and rewarded in promotion. Unfortunately this hasn't been the case for a while. No one is exempt from the new order. From entry-level through to middle management up to executives individuals find themselves missing rungs on the corporate ladder, downsized or outsourced. Job security no longer exists.
There are many reasons for wanting to be your own boss. You want to be more creative. You want to run things your own way. You want to aim for financial independence. You want to use your knowledge and skills more fully. The desire to go into business themselves is attractive, but this is risky; perhaps too risky for the average corporate castaway is willing to take. For those taking up a franchise might provide more reassuring. Even if you feel that a franchise is not for you there is a lot of advise available from these sources that can help you put a plan together. Planning requires time and you may need expert advise of an expert to tell you how realistic your plan is.
You should start out with a personal budget. Often starting up a business means that you can't draw a full salary for a couple of years. List the positive and negative aspects of being employed and going self-employed. List the risks and try to weight them. Some risks are small, but don't ignore anything as the more you research the more chance you will have of adjusting these risk factors. Some risks involve a loss of your time and effort; others could result in the loss of all your savings, home and even your personal relationships.
Being self employed requires drive and energy. You need the temperament and personality to keep accounts in order alongside the work of the business. You need not only to be good at what you do but to be able to sell what your business offers. You will work seven days a week, at least until you become established.
Certain professions are supported by contractors and freelance workers. You may have to be limited company, not just a simple sole-trader and would need the support of a qualified certified accountant. The set up costs are low as you can buy an off the shelf company . Accountancy fees are anything from £400 to £2000 per annum The more work the account does for you the more they charge.
Being a contractor could be very similar to the work that you have been doing, but now you go in as a trouble shooter, add value, solve problems and add to the task force of the client. When the task is completed you leave. This runs the risk of being considered a temporary employee of the client and so you are taxed on all that you earn, have limited allowances to offset against taxable income and have both your personal and company national insurance and income to pay. The rules may be interpreted differently by difference Inspector of Taxes and there are few contract jobs that are obviously and completely out of these rules. Read up about IR35, umbrella companies, Section 660 and other tax laws that can affect you at Shout 99 and Professional Contractors Group.
On the positive side you can offset business expenses against profit.
and pay yourself a small salary from the net profit. The profit is taxed
at corporate rates and does not incur National Insurance contributions.
More of the money remains in the company which in turn could fund
expansion and growth.
The downside of becoming an employee of your business is legislation.
"In 2005 alone there were 2,868 pages of new Public General Acts and approximately 13,000 pages of new Statutory Instruments, making a total well in excess of 15,000 pages (which is equivalent to over 300 pages a week) excluding European Directives and European Regulations, which were responsible for over 5,000 additional pages of legislation."
Even if you want to know the law it is virtually impossible to find out. There is no freely available web site that contains all the up to date versions of the law. Even if you do find the law you are looking for it is peppered with references to amendments and repeals and statutory instruments to be considered first.
As an alternative consider if you could you get a better job at the company you are currently working for. Perhaps a different job, somewhere else? Would the results satisfy you as much as running your own business?
Last updated 5th March 2009