While redundancy is hardly ever welcome, it can be an opportunity. Rather than spend time hunting for a position in a pool of potential jobs, more and more people are choosing to use the welcome brain space to plan and strike out on their own.
Recent surveys have shown significant increases in the number of self-employed people in the UK. If you have recently been made redundant, your options might seem unclear. Here are some top tips to consider if you are thinking about joining the ever-growing ranks of the self-employed.
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Redundancy can come as a shock, and panic is often the first response. Of course, losing your job can be a particularly unpleasant experience, for both emotional and financial reasons.
But it is important to understand that redundancy doesn’t have to mean the end of your career. By choosing self-employment you have already made a decision to take matters into your own hands – and in this way you can turn redundancy into something positive.
Think about your skills
It may be that you already have a clear idea of what you want to do in business. Many people choose to build a business around the skills they learnt as an employee, but others prefer to branch out into something entirely new.
Make sure that you think carefully about the skills you already have, and the skills you might need to make your business idea work. You might consider going into partnership with others in order to ensure that you have all the necessary expertise.
Sort out your tax affairs
You will be required to register as self-employed as soon as possible – and you will need to register for Self Assessment by the 5 October following the end of the first tax year for which you need to complete a tax return.
As a self-employed person you must also pay Class 2 National Insurance Contributions (NICs). Editor’s note, 2018: for the 20118-19 tax year these are charged at £2.95 a week. You can register for both NICs and Self Assessment through the HMRC website.
Once your turnover reaches a certain threshold, you will be required to register for VAT. Some business owners choose to register before they reach this threshold. Read more about VAT registration.
You should also get into the habit of budgeting for tax as soon as possible. Make sure that you set aside enough cash each month to ensure that you can pay your tax bill when it becomes due. Consider investing in bookkeeping software to make this process as simple as possible.
Insurance is a vital consideration for any business owner. Your insurance requirements will depend on the nature of your work, and on the nature of your clients. You are, however, likely to require professional indemnity insurance and public liability insurance. If you become an employer you will usually be legally obliged to take out employers’ liability insurance.
Find your clients or customers
Finding clients is one of the most significant challenges facing any self-employed person. If you are working in a similar field to that in which you worked as an employee, you might choose to use your existing contacts to help build up your client base. But if you are moving into a new field, finding your first clients can be tough.
Thankfully, technology has made the hunt for customers easier. The effective use of social media like Google+, Facebook, Twitter, and LinkedIn can be a significant help. There is also a range of free tools on offer to help you build a website.
There are, of course, many less technologically adventurous ways in which you can find customers. If yours is a bricks and mortar business you might choose, for example, to place adverts in local media, or run a physical launch event. Similarly, if you are running a retail business you might choose to kick-start things with some well-chosen promotions.
In the rush of setting up your business, it can be difficult to maintain a sense of perspective. There can be so much to do that you forget to look forward.
But planning is an important part of running a business. Make sure that you take some time to put together a comprehensive business plan, setting out your goals and strategies for the coming couple of years. This document will help to guide you through the process of expansion, and help to ensure that your business fulfils its potential.
Looking for self-employed insurance?
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.