Self-Employment

5 Things to Know to Become Self-Employed

5 Things to Know to Become Self-Employed

Becoming self-employed is a big decision, as to choose such a way of living will mean giving up a regular income from an employer and then being responsible for your own earnings. If you have a family who rely on you financially, you will want to believe that you can make enough to support them to at least the standard that you did before. In favour of being self-employed, your earning potential is now only limited to your ability to grow the business. This article will look at some of the things that you ought to know to become self-employed in the UK.

 

Type of Entity

Many business people will start off as sole traders, or partnerships if sharing the knowledge and expertise of running the business with one or two other persons. A decision that is important is whether, in the case of a small business, to make it a limited company. The advantage of this is in being able to protect personal assets, such as a house that is being lived in by a business owner and their family. The disadvantage is in the time and expense to set up and register a new company with Companies House and in the documents required to continue to run it. Specific documentation is required, including a certificate of incorporation, a memorandum of association, articles of association, and share certificates. In addition, statutory registers need to be kept up to date, including a register of members, a directors’ register, a register of directors’ home addresses, secretaries’ registers, and charges’ registers.

Generally, limited companies fair better than non-incorporated businesses in terms of the tax that they pay, because rather than paying income tax, they pay Corporation Tax on their profits, which at the time of writing was 19 percent. In addition, they can claim a wide range of tax-deductible costs and allowances that are set against profits.

 

Staffing

The decision about staff may come later in the life of a business if you are to first establish the business on your own and then grow it to a size that means staff is required to help run it. Conversely, you may straight away require additional knowledge and support to help you run the business from its infancy. If you are employing staff in the UK, a relatively new law requires that employers automatically enroll workers in a workplace pension scheme when they are at least 22 years of age, but below pension age, and earn at least £10,000 per year.

To pay staff, you will also need to find out about HM Custom and Excise’s PAYE (Pay As You Earn) scheme, which was set up to collect the required tax and national insurance from employees on behalf of the government. Alternatively, if you can afford it, you could enlist the services of a bookkeeper.

 

VAT

Being VAT (Value Added Tax) registered has its advantages and disadvantages. It costs money administering the scheme on behalf of the government, but on the other hand, it allows you to claim back the VAT on your purchases. You will, however, have no choice over whether to VAT register if your turnover, in the UK, exceeds the £85,000 threshold permitted. This applies to 12-month periods ending 2020/21.

 

The Financial Help Available for Businesses

Banks and similar financial institutions will offer financial assistance to small and larger businesses. To be given a start-up loan, a good business plan is required. This is like a household budget and should include all the anticipated income and expenses that the business is likely to receive and incur during a trading year. It should factor in the fixed costs required for start-up and the projected variable costs incurred in running the business. It is also usually necessary to show projected profits for the next 5 years. Long-term, banks can also offer business loans and overdraft facilities to help with cash flow problems and seasonal variations.

 

Market Research

To establish demand for your product or service it is vital that, before starting your business venture, that you have conducted your own thorough market research. If not your own, that the research is from a reliable secondary source.

 

In conclusion, there is much to think of to start-up and run a business of your own. Hopefully, this article has given you some idea as to what is involved.

 

Posted by David Presutti in Self-Employment, 0 comments
Key Ethical Practices to Keep Any Business Competitive

Key Ethical Practices to Keep Any Business Competitive

I always try to ensure that my business is competitive by taking a brutal analysis of my ethical behavior and striving to set an excellent example for everyone around me. In industry, ethical behavior refers to conduct that applies fairness and honesty to colleagues and clients. Treating everyone ethically helps our businesses by building customer loyalty, attracting and retaining talented employees as well as avoiding legal problems. The following are some key ethical practices I follow that I have learned over time are crucial to the competitiveness of a business.

 

Building Customer Loyalty

Treating customers unfairly, for example, by overcharging them is unethical. If clients are unjustly treated, they will not become repeat customers, and they may end up spreading the word to their peers, which leads to losses in our businesses. Having a strong and loyal customer base is one of the critical successes I have seen in companies. I find that serving and working with an existing customer is more economical than acquiring a new one.

 

Improving Company Reputation

Having a good company reputation helps create a positive image of any business.  Reputable businesses can expand their client base through word of mouth referrals more than adverts put on any platform. Having a reputation for unethical dealings in our companies may hurt any chances the company might have of obtaining and retaining new customers. This is especially so in this era of social media and networking where dissatisfied clients are quick to spread negative information about any bad experience they might have had when dealing with our companies.

 

Retention of Good Employees

Talented employees at any level in our businesses and organization want to be fairly compensated for their dedication to the work they are doing. I try to reward them by advancing them in their careers through job promotions depending on the quality of their work and dedication and not at all by favoritism. Our employees want to be a part of a company whose management tells them the truth about how the business is faring in case there are instances where there will be layoffs and reorganizations. When we practice fairness in our organizations and deal with the employees reasonably, we will have a greater chance of retaining the talented ones.

 

Avoiding Any Legal Problems

A few business and company owners tend to cut corners to maximize their profits. We may decide not to comply with the environmental regulations, labor laws, and might ignore workers’ safety or even use substandard raw materials while making products. When the law catches up with us, we may end up paying hefty penalties such as legal fees and being fined by government agencies. In the long run, this ends up impacting our business negatively and even more financially from a large number of fees and fines that will be charged.

 

One advantage that companies may enjoy when they observe the regulations put in place by government agencies is having a good image in the eyes of the law and the public. They also avoid financial losses associated with breaking these laws.

 

Conducive Work Environment

Employees also have a responsibility to be ethical from the moment they are interviewed. They should be honest about what they are and what they are not capable of and the level of their experience. When the employees are ethical, we, as the employers and their superiors in the organizations, will be assured that the team we work with can have a great and positive co-existence.  We will also be able to trust them with the organization’s confidential information and business secrets.

 

Employees who are caught up in lies ruin their chances of being advanced by their supervisors and might end up getting fired. Some of our business might end up facing significant losses, for example, in some industries like restaurants and grocery stores where untrustworthy employees steal foodstuff or in finance departments where employees might steal money or misappropriate funds leading to massive losses in our businesses.

 

We always try to cultivate a culture of honesty and ethics among our employees. We have a simple but detailed code of conduct that we need our employees to read and commit to when we offer contracts. We also hold regular training programs to help our employees understand ethical behavior for their own good, the good of the business, and that of our clients.

 

These are practices I believe can contribute to the competitiveness of any business in all sectors of the economy.

Posted by David Presutti in Industries Talk, Money and Shares, Self-Employment, Think Business, 0 comments