I first registered as self-employed when I was in my early twenties and struggling to find a job in the wedding industry which would work around my two young children. I had no idea what I was doing, no business plan and no real idea of how I would succeed. Long story short, my business never got off the ground and I ended up closing it and going to work full time, putting the children into nursery. Although I loved working as a wedding coordinator, I also loved the idea of being able to make money for myself. In 2017, after I had my youngest son and going back to work after maternity leave was not feasible for us as a family, I decided to once more register as self-employed. This time I was going to be focusing on my blog and freelance writing and I went into it with a clear head and a better idea of what self-employment involved.
These are some of the things to consider when registering as self employed with HMRC, based on my own personal experience.
Get The Right Cover
Car insurance, annoying to sort out, perhaps, but everybody with a car has to have it, right? The same logic should be in place for those who have their own business. Income protection pays out a percentage of your salary if you need to be signed off work. The amount you are paid depends on the level of cover you choose when you set it up, but generally speaking this is around 50-70% of your income. As well as this, you may need additional insurance, depending on the industry you are working in. Make sure you research fully and get the right cover for you to avoid issues down the line.
Create a Filing System
I am awful at filing paperwork. I have everything in the house, but when it comes to finding something I struggle and end up getting stressed. I knew that I needed to be more organised when it came to my business, so I set up a system, which I have stuck to over the years. I bought myself some budgeting notebooks from Wilko, which are split into months, with a handy wallet attached to the back page for receipts. I here I record every payment I receive, along with the date I received it. I then total up my income for the month so that I have a record of this. Alongside this I also electronically file all of my invoices in folders for each campaign and in each month. I can then easily locate an invoice if I need to, or if I am audited.
Have a Business Plan
This is something I didn’t do first time round with my wedding business and it was a big mistake. You don’t need anything too technical, but having a plan for the first few years of your self-employment will allow you to have focus and to feel confident that your business will succeed. It is also great to have in case you are ever looking for funding through a grant, loan or even from a family member or friend, so that it is clear what your long term plan is and when you see yourself breaking even and starting to make a profit.
Look at Your Finances
Before I registered as self-employed, I needed to know that I would be able to afford it. In a way I was fortunate as I hadn’t been earning anything before I started and we were able to live on Ed’s one salary. I had chosen not to return to work after my maternity leave because the cost of childcare for Benjamin would mean all my income would go on his nursery fees. So I knew that any income I did make through my business would be a bonus, but that I couldn’t afford to have any big outgoings. Fortunately for me, I already had a laptop, camera and phone so I didn’t really need to make any expenses. I did need to register my blog as self-hosted, which had some cost, but I factored this in and was soon able to ‘pay myself back’ after I started making some money.
I knew I wouldn’t need to pay tax in my first year of trading as I was set to earn a minimal amount, however I made the decision from the outset to put aside 20% of everything I earned into a savings account so that I knew I would be able to cover a tax bill if I had one. I have continued to do this and am so pleased that I have as it has saved so much stress and worry about being able to pay a bill when it comes through. I have always been quite safe with my money, and it may seem over the top but it works for me and has also meant I have been able to give myself a nice bonus at the end of each tax year when my bill hasn’t been as high as the amount I have put aside. Even if this method isn’t right for you, it is always a good idea to think ahead and to have back up plans and rainy day savings in place just in case something goes wrong or an unexpected payment comes up.
This is a sponsored post, however all words are my own.