Self employment

Self employment can be attractive because it offers many advantages such as flexibility. However, a high degree of commitment is involved and you will lose rights to benefits associated with being employed.

Your product and research

If you wish to start up your own business you should have an idea about what you are going to do. Thorough research of your product or service, customers, competitors and the market is essential. Questions to ask when conducting research include;

• Is there a need in the market for your product or service?
• Is your product or service unique, distinct or superior to those offered by your competitors?
• Who are your competitors?
• Will your product or service be profitable?

Finance

If you have undertaken thorough research and still wish to become self employed, the next thing to consider is finance. There is a high possibility that your business will not be profitable straight away so you should have sufficient reserves to last you for a period of time without an income from your business. One option is to start a business on a part time basis while still employed.

If you need funding for your business there are many sources available such as a bank loan or overdraft. Banks are very helpful to those starting their own businesses and a discussion with one or even two is definitely worthwhile. They will discuss your financial situation and how they can help. Most give you free banking facilities for the first year, some even extend it to two. They provide advice on how to plan your business and how to organise your accounts. If, however, you need to borrow, they will want convincing proof of your ability to repay.

Starting up

When you start up in business you will need to register as self employed for tax and national insurance purposes. You can do this by calling your local tax office who will provide you with a unique reference number. You will be invoiced each quarter for national insurance and you will have to complete an annual tax return. You will also need to check whether you will have to pay value added tax (VAT). 

If you need help managing your finances, you should seek the advice of an accountant. You can find further useful information about starting up your own business online from organisations like the department of business and enterprise regulatory reform (BERR) or other similar agencies. 

Other things to consider

There are several other things to consider when becoming self employed. These include:

• Whether you are going to trade as a sole trader, in a partnership or as a limited company;
• What will your business be called? - You should check whether a similar or the same name is in use;
• As a self employed person you will be responsible for health and safety so you will need to ensure that your premises complies with current health and safety legislation.  You will need to find appropriate premises and arrange suitable insurance cover;
• If you employ other people you will be responsible for paying wages, tax and National Insurance contributions.