Can you transform your freelancer operation into a registered small business…
At some point many freelancers think life would be easier if they were running as a small business. Whether that’s because they’re getting enough work to be employed five days a week, 50 weeks a year, or they feel they’ll never be taken seriously while working from their bedroom.
But if you want to make that move, you’ve got to have a few things in order. These are a good starting point…
Office space
While you don’t necessarily need to make the leap from home office to commercial office space, it’s something that’s worth considering if you’re becoming a small business.
It does come with some costs, but can help add an air of professionalism to your company while also providing you with amenities like meeting rooms, faster broadband and reception services.
And you don’t need to sign up to long contracts these days – serviced offices provide short term contracts allowing you to give it a try. Alternatively you have the option of taking a virtual office, giving you the appearance of operating out of a prestigious address whilst still working from your home office.
Enough business
The main decision to make is whether you have enough business to run as a small business. You’ll need to create a business plan based on your current workload plus any additional costs such as office space, the paperwork involved etc. But you can make some tax savings, so these could help.
If you’re working flat out as a freelancer though, it might be worth becoming a small business so you can hire extra staff to handle either some of the daily admin work or to help you out of projects.
Management skills
Running a small business takes a lot more – and wider range of – skills than being a freelancer. It involves everything from handling your finances and taxes to people management if you’re bringing in new employees.
Speak with other small business owners you know to see if they can offer any advice or provide some on the job training.
Finding the time
It’s a bit of a Catch 22 situation. You want to move to a small business so you can bring in extra people because you’re so busy, but because you’re so busy you don’t have time to set up a small business.
Basically, you’ll need a few months whereby you can set aside at least a few hours a week to starting setting up the business. There are a number of tasks from creating a new website to writing job adverts, so make sure you can fit them in around your current workload.
The right documentation
And yes, there’s the paperwork. While there have been moves to make it easier and reduce the red tape, there’s still plenty to be done.
Here are some of the things you’ll need to do:
For sole traders you must:
• have a National Insurance number
• register for self-assessment with HMRC
• keep records of your business’s sales and expenses
• send a yearly Self-Assessment tax return
• pay Income Tax on your profits and National Insurance contributions
To set up a limited company you need to:
• have a name and address for the company
• register with Companies House
• have at least one director and a shareholder
• have articles of association (agreed rules about running the company)
• set up your company for Corporation Tax
Posted by The Secret Businessman