Deciding to become self-employed could be the most rewarding career decision you make. From being more flexible to having complete workflow control, the benefits are many; just ask the 4.6 million people who’ve already taken the sole-trader plunge. Make a success of going it alone by following this checklist:
Cash flow
Before starting out you’ll need to do some financial planning, with enough in the piggy bank to cover six months’ worth of personal expenses, just in case. This will ease any cash-flow pressure during the crucial start-up period.
Tax
When you become self-employed you may be entitled to tax credits, depending on how much you take home and how many hours you put in each week.
You’ll have to complete an annual tax return by 31 January; any later and you may be landed with a penalty.
Pensions
With no employer pension contributions, you’ll have to pay into your own pension pot. Your state pension won’t cover you, so look into the different kinds of schemes – from self-invested private pensions to stakeholder pensions – to see which suits.
Protection
Work insurance for self-employed people is vital; if you’re unable to work then you might not be able to meet your financial commitments.
Self-employed public liability insurance will protect you if somebody claims your business was responsible for their accidental injury.
Employees
If you need to hire staff then it’ll be up to you to pay them at least the minimum wage. You’ll also be responsible for their national insurance and tax contributions.
By 2018 all employers must have workplace pensions in place for staff that qualify.
Going self-employed isn’t just a case of running your own businesses; it’s about keeping up with your legal responsibilities and tax obligations, too. By following this checklist, your self-employment adventure can get off to the best possible start.
You’ll want to concentrate on the commercials once you’re up and running, so for peace of mind check out our full range of business insurance products.
