There are a few key points to remember when you are starting in business:
1) Arrange insurance coverage:
a) for the business
b) for business use of your vehicle
c) for business use of your home
d) for yourself!
2) Notify HMRC that you have started in business. This can now also be done online.
3) Decide on how you will record your business transactions. Perhaps on a spreadsheet, via a bookkeeper or via online or offline bookkeeping software. Make sure you record all your expenses, otherwise the tax relief could be lost.
4) Make sure you set aside time to work on the business growth plan, in addition to working in the business.
5) Start saving towards the tax and national insurance liabilities. National insurance is a commonly forgotten extra tax for the self-employed. Also allow for the payments on account towards the following years tax liabilities (the self-employed pay tax for two years together) – these could mean your first tax bill is over 150% of what you were expecting.
6) Ensure that the tax deadlines for return submission are planned for and met. Otherwise you could end up paying needless fines and penalties (of £1600 or more in some cases, even if there is no tax due) which exceed the cost of getting professional assistance.
7) Record your business mileage. Even short trips to the bank or post office mount up over the year and if not recorded could cost you in lost tax relief.
8) Decide whether you may be better off getting some assistance to help you with the business, whether that is a virtual PA, a bookkeeper or other professional who can save you money by freeing up your time for fee earning work instead.
9) Plan to set aside time for increasing your own knowledge. “You’ve got to learn more to earn more” – this will put you ahead of your competitors and give you an advantage in any industry changes.
10) Make sure that you are allowing enough free time in your schedule. Many people start a business in order to have more free time, but end up actually spending many more hours working. The most important business asset is yourself, so ensuring that time is blocked out in your diary can actually increase your effectiveness.