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 recruitment specialist Robert Half, about three out of ten employees dream of saying goodbye to the boss and running their own company.
But it can feel like a big step to go it alone. Like every task, it’s more manageable when you break it down into simple steps. So here’s our checklist for the things you need to organise to be your own boss.
Let the taxman know
You’ll need to let HMRC know that you’ll be filling out a self-assessment for your taxes if you’re a sole trader. 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 offers free online training with its own experts.
Choose a name for your business
What’s in a name? Quite a lot these days, when it comes to people finding you on search engines. If you’re creating a limited company, you’ll need to come up with 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,” says personal finance writer Emma Lunn.
It can feel like a bit of a risk to go it alone, but it doesn’t have to be reckless. Making sure you have the right insurance is vital to protecting your livelihood from nasty surprises and ensuring you stay in it for the long haul.
Insurers AXA have a smart online tool to help you find out what kind of insurance you might need, depending on your type of business.
Make sure you’re compliant
Red tape can seem like a drag, but it’s there to protect us all. You can make sure your business gets off on the right foot and complies with the right regulations by checking the Government guide at greatbusiness.gov.uk.
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 accountants, 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 workspace
If you’re settling into a home office, be aware that you can claim some tax relief on the bills you pay. It’s best not to use one room solely for work, though: you could be hit by capital gains tax on the money you make when you sell your house.
For companies with separate premises, remember to budget for business rates: you’ll get a bill from the council in February or March each year.