More people than ever are starting their own business in the UK. After all, who doesn’t love the idea of being their boss? By early 2024, approximately 4.5 million people in the UK had leapt to self-employment a trend driven by the appeal of work-life flexibility and autonomy. But starting your own business in the UK isn’t as easy as it may sound.
Although you gain control over your schedule, you also shoulder a range of responsibilities, from managing sales to handling taxes. If you’re considering self-employment, here are the top five tips to help you successfully start your own business in the UK.
Here are the top 5 tips you need to know to become self-employed in the UK:
1. Weigh the Pros and Cons
Self-employment demands more time, effort, and resources than traditional employment. You’ll miss out on perks like paid holidays, sick leave, and other corporate benefits. To manage this shift, it’s crucial to plan how you’ll handle any initial financial constraints or unexpected challenges that arise.
2. Ask Yourself the Right Questions
Before diving into starting your own business in the UK, ask yourself:
- Do I have sufficient savings?
- Is my workspace and equipment ready for business?
- Do I have the expertise and dedication needed for success?
- Can I manage both the administrative and managerial tasks?
- How will I secure clients?
- Am I prepared to handle taxes and revenue management?
Once you’ve decided to pursue starting your own business in the UK, register with Her Majesty’s Revenue and Customs (HMRC). You’ll need to provide information about yourself and your business, including your name, address, National Insurance number, and the start date of your business.
In the UK, you have until October 5th following the end of your first tax year to register. The UK tax year runs from April 6 to April 5. So, if you start your business in January 2024, you’ll need to register by October 2024. If you start in September 2024, you’ll have until October 2025.
3. Sort Out Your Insurance
As a self-employed individual, you’ll handle your insurance. This includes National Insurance, which is based on your annual earnings:
- Class 2 National Insurance: If your annual profit is £6,725 or more, you’ll pay approximately £3.45 per week.
- Class 4 National Insurance: If you earn £12,570 or more, you’ll pay 9% on profits between £12,570 and £50,270, and 2% on earnings above £50,270.
4. Manage Your Taxes
Handling finances is a key part of being self-employed, from keeping profit and loss statements to filing tax returns. You must file a self-assessment tax return and provide HMRC with accurate financial records annually. While some self-employed people manage their taxes alone, many find value in working with a UK tax consultant or accountant. A professional can help you avoid costly mistakes and may even save you money by identifying allowable deductions.
Conclusion
Starting your own business in the UK requires more than just a desire to work independently. You’ll need to secure clients, build business partnerships, create sales and marketing plans, and manage your finances and taxes. Before registering as self-employed, evaluate whether you have the resources and resilience to handle these responsibilities on your own.
With careful planning and the right mindset, starting your own business in the UK can be a rewarding journey.
Disclaimer: All the information provided in this article on “Starting your Own Business”, including all the texts and graphics, is general. It does not intend to disregard any of the professional advice.