Millions of people across the UK are nursing the dream of setting up their own business and going self-employed. What stops them, however, is the fear of leaving secure, full-time employment. That’s why many people decide to start their business on the side.
Starting a business on the side means you can get the feelers out for your new venture, start to build up an audience and client-base, and still retain the benefits of a steady paycheck at the end of each month. It’s the best of both worlds!
If you’re thinking of going down this route, though, you can’t just register your business with HMRC and get going — there’s written (and unwritten) rules that need to be followed. So, if you’re thinking of going it alone while you’re still employed full-time, what do you need to know?
The full-time implications
The first step is to check your current employment contract for any clauses that prohibit you from starting your own business. You might even want to have a conversation with your HR team (who can often deal with enquiries confidentially) to see whether starting a business would create a conflict of interest. The last thing you want is to accidentally breach your contract, after all.
Once you’ve got your head around the contract implications, it’s best practice to sit down with your boss and let them know what you’re up to. It’s quite common for employers to approach side-hustles with an open mind these days, and even allow you to work a reduced schedule if all parties agree. Approach your current employer about flexible working hours or a reduction in your contractual hours if you could benefit from it.
Whilst your desire to leave your full time job may be burning inside of you, remember you’re still employed. Be respectful. Don’t waste company time working on your business idea and leave on good terms — you never know when you’ll have to call upon your former colleagues or boss for support.
Registering your business
Whether you’re planning on becoming a sole trader or a limited company, you’ll need to let HMRC know. This is so you can file your Self Assessment on time and pay the correct tax on your income. It’s a legal requirement to inform HMRC once you start earning from your business. Don’t create any additional worry or concern for yourself by not having your taxes organised.
The answer to whether you’re a business or not is all to do with your intent — or as HMRC calls it, your “badge of trade”. If you’re deemed to have a badge of trade, you’re operating a business, no matter how much you insist it’s just a hobby. Factors that can influence your badge of trade classification include the frequency of your transactions, whether or not your transactions look and feel like those of a registered business, and why the transaction happened in the first place.
If you’re on the receiving end of payment for any activity (a paid post or link, product placement, attending an event or vanilla advertising), you’re instantly a business as far as the taxman is concerned, so get yourself registered!
Striking a work/life balance
Working two jobs can be very tricky to juggle. Ensure you make time for yourself, friends and family and have designated pockets of time where you aren’t working. It’s about work/life balance, not work/work balance.
Overwork yourself and both endeavours will suffer. Devote too much time to one and you’ll hinder the other. What if you wear yourself out setting your new business up, only for it to fail, leaving you in a job at which you’ve been underperforming for months? It’s a hell of a balance to strike.
The key is to manage your time effectively: devote a day to relaxing and distancing yourself from both your jobs, ease up your schedule if you’re starting to feel burned out, and make sure you’re putting your wellbeing first.
Your accountant can help, too!
If you’re planning on going self-employed, an accountant is an invaluable asset, not only to make sure you’re registered for the right taxes and set-up properly, but also to help you navigate the hurdles and challenges you’ll face as a new business owner.
Crunch, the accountancy platform that any introu member gets exclusive access to through their Perks scheme, can even register your business on your behalf when you take up one of our accountancy packages. Their paid packages include a team of expert accountants and client managers that are available whenever you need them to answer your questions — and you’ll never be asked to pay extra to speak to them.
Thanks to our exclusive partnership, you can even enjoy a 10% discount on Crunch limited company packages and a £5 per month discount on our sole trader packages for the first year! All you need to do is head to the introu Slack to find out more about this discount.
