Solitary chicken - need advice

[Olly]

So, after a year's planning I have just given in my notice at work and I'm about to enter the wonderful and rather scary world of being self employed. I'm feeling both excited and slightly sick! I know some of you Omleteers are, or have been, self employed and I wanted to know if you have any tips or advice? Is there anything you wish you'd known beforehand, or that you'd do differently if you started again? Did it work out for you and if not, do you regret having tried?

 

Can I just remind everyone that for good reasons there are strict rules on the Omlet forum about advertising and I'm definitely not encouraging anyone to break these! Please don't post about WHAT you do, it's the HOW that I would love to hear about.

[gavclojak]

Im sorry I don't have any advice but I just wanted to say well done you for taking that scary step of being your own boss. I'm sure you will have sleepless nights to come but I'm sending you good luck

[Angie]

Keep good paper work, do figures and finances monthly, it helps when doing your tax returns . Pay your NI stamp religiously...pension / benefits you may one day have to claim.

Check up on the wages allowed before tax , it is always changing. If working from home ? you can claim a percentage of certain bills against your tax allowances, you will need to check with the tax office which ones.

You can also claim against your tax for work clothing. So if it applies to you keep receipts.

Also if driving is involved your mileage rate. ( ?p per mile you can claim, not sure what it is these days.)

If you think you can do your own returns it will save the expense of an accountant.

Good luck .

[kinsk]

Be organised.

 

Keep records.

 

Little things you think at the time are insignificant add up to take a lot of unravelling. Have a diary and write everything down in it. Not sure what you are doing but every job / client time write it down.

 

I have a plastic wallet in my bag which every receipt goes into. Set aside a time slot each week, I do it on a Sunday morning whilst watching Sunday Brunch, to sort through my receipts and time sheet and list them down. Be strict with this.

 

If you are invoicing people do it promptly, set terms, and again set aside an allotted time to chase up. Don't be afraid of chasing payments.

 

Register as self employed with HMRC.

 

Most of all good luck! I am going through the same process, it's exciting but daunting.

[Willow]

If you aren't confident doing your accounts get an accountant. I hate opening letters from HMRC so I paya little extra and my accountant has them sent to her. It means I never miss a payment or deadline due to unopened post so is cost effective

 

Tell people you know that you're freelance and keep in touch with them. My two best jobs have been via people I know. Do favours to ex-colleagues, they will remember you. (I don't mean that in a cynical way, more the favour you do has a way of rewarding you in unexpected ways)

[Beantree]

I bought an inexpensive and simple software package for the accounts which allowed me to fill in my short tax form every year in 15 minutes. No need for an accountant if you keep things simple and update your accounts every day. I used my personal bank account which is free, not a business account which isn't. If your car or van is only business use you can claim everything against tax. Try to avoid being VAT registered as that gets complicated. The earnings limit for paying National Insurance is much lower than the tax threshold. You need 36 years of NI contributions to get a full state pension (at the moment). There is a tax helpline which will explain what you can and can't claim for (can't claim for training courses, only travel to them and stationary!). Capital allowances system has changed a lot so you don't need to depreciate stuff, which has really simplified it.

 

There are only four problems with self-employment I can think of. Bad debt, work security, sick pay and personal pension contributions. But there are so many benefits and I could never work for anyone again. You didn't say what line of work you will be doing, but good luck with it Olly.

[CatieB]

Gosh how exciting.

 

I was wondering the other day how long you had left. Is this when you planned to do it? If so wow doesn't time fly although I'm sure to you it feels like it has been forever.

 

I can't help with your question, having never been self employed but I want to wish you the best of luck in this new exciting adventure.

 

Keep us posted with what you can x

[Daphne]

I agree with all of the sensible advice above. I will have been self employed for 11 years in July and never regretted a second Like Beantree I could never work for anyone ever again (not sure that they'd have me TBH)

 

Anyway, definitely register immediately as S/E with HMRC so they know. I would avoid registering for VAT unless you have to because of your turnover levels - it is a pain keeping VAT records, almost worth having an accountant for although I've never had one. Also with VAT you become 20% more expensive - you are less competitive and in a price-sensitive market this is not helpful!

 

I am scrupulous and up to date with my record keeping. Its not difficult, I have a very noddy accounts system on excel, there are plenty of straightforward packages around. I keep all receipts, claim for everything you are entitled to (eg mileage at HMRC rates), pro-rata use of rooms/utilities at home if you work from there, stamps, IT, office furniture etc. I have a timesheet which I complete regularly, invoice clients on time, chase for payment. I don't pay much to run a biz bank account, I only set it up to look more professional, not sure that I'd bother again. You can get very cheap but decent quality business cards and other stuff from a well known advertiser (!) Can pm if nec.

 

On the fun side - take some time to choose a name as you'll have it for a long time. Make sure it doesn't belong to somebody else as well in your area (try an online search). Depending on what you do, I'd advise against calling yourself anything with your name/initials/address in it as it immediately marks you out as being a very small business which some clients are baised against this. Then choose/make up a logo or brand ID; you need it for your business cards and if you choose something easy you can brand other online or other documents (eg invoices) if this is appropriate. You can also carry the theme into websites and presentations (eg sales pitches) if relevant.

 

Again, depending on what you do - investigate social media. Its the single biggest thing most new businesses ask about and I'm not the person to advise about it, but I know it can be very important indeed, but not to everyone. You will need to market yourself. Most people find this hard as it doesn't come naturally to many of us, boasting about how good we are at something, but you do have to do it. If people don't know you exist, they can't buy from you. Word of mouth, recommendation and networking is the best way in my view, depending on your sector of course, so work your contact book!

 

There is plenty of advice online about how to run a business (I posted a long list of possible sources of help in a thread recently which was locked and then unlocked, unfortunately I can't remember who started it).

 

Finally, there are massive risks: No work=no pay, there can be isolation and you do have to be disciplined. Despite this the rewards are far far greater in my view. Its not the money, its the freedom and flexibility I have in my life, and I am truly grateful for this. I can more or less do what I like when I like Good Luck Olly

[Olly]

Thank you for all the replies - yes CatieB, this is what I have been planning since January last year, when I felt very glum at returning to work and decided I had to make some changes. I have to work out three months notice, so I have got some time to finalise the details, and as my niece is a graphic designer I have called in some repayment on the aunty account (she is heavily in debt ) and got her to design a logo for me.

 

Daphne, it's very encouraging to hear what you say - I have spoken to a few self-employed people and they all say that it's the best thing they have ever done, but I know it's not going to be easy. I've done a lot of planning, and I've spoken to a bookkeeper - I'm never going to earn enough to pay VAT, which is probably just as well, but I am going to use him to do my accounts because I think it will be more cost-effective in the long run. Despite having a professional background I have something amounting to a phobia about HMRC correspondence and he will be able to advise me on what I can charge as a business expense. Some very good advice in your post, thank you - and thanks also for pointing out that there are some fun parts to this, it's easy to forget that!

[The Dogmother]

That's great news Olly, and a big step as you say.

 

Only a small proportion of my income is through self employment as I need the job security of a 'proper job' due to being a single parent. As the others have advised KEEP RECORDS, and I am really focussed about this - it's my profession! I'm also phobic about the HMRC, so have taken advice from my dad (retired finance director) and enlisted the help/advice of a friend's husband who is an accountant. He looks over everything before I submit it, and advises on anything claimable. If you need to ring the HMRC, then 8.30am is the best time to avoid 'death by hold music'.

 

The current mileage rate is 45p

 

Good luck!

[redsunset]

I second most of the above. In my case I am now working on my own so submit my own returns with the help of a friend who used to be an accountant (she gets free foils for her trouble) and I've cut the accountant out as a small business.

One thing I will say is make sure you have a good savings pot incase of accidents. I tripped on my own driveway almost three yrs ago (double ankle fracture) and had three months of no income at all and two months at part time until I was able to stand for 8-10 hours straight again. That's the downside. I'd never change it though as although it's hard work, holidays are a fraction of what employed would be, I love the flexibility of being my own boss.

Go for it. With hard work and a bit of creativity and forward planning/thinking, you will never regret it

[WitchHazel]

Register on LIinkedIn and keep your profile up to date. It's very common for people to check this. It may also be helpful for you when following up leads etc.

[Valkyrie]

Companies House is a good way of checking to see if anyone has a company name in existence. And don't be scared of the tax people - the VAT lady was very helpful when hubby started up.