Going self employed - a couple of questions
Discussion
Following taking Voluntary Redundancy at the end of December I have decided to go self employed again as a Freelance Automotive Standards Auditor and Mystery Shopper. I have an agreement in principle with a company who I will be doing work for. They are well established and well know in the sector so hopefully no worries about getting paid etc.
So I have 2 hopefully simple questions:
1. I will be trading as a sole trader, do I use my name as the business name or do I try and come up with a fancy name e.g. XYZ Auditing. Not planning on setting up a bespoke website at this stage looking to keep things simples
or I could call it Simon_R Auditing? what are people thoughts.
2. What insurance cover do freelancers have? Is it just a case of Public Liability or do I need anything specific.
3. Has anyone got some recommendations for software to use for invoicing? or shall I just use excel? I will not be creating huge volumes of invoices but just want an easy and free way of managing it.
Many thanks for any help
So I have 2 hopefully simple questions:
1. I will be trading as a sole trader, do I use my name as the business name or do I try and come up with a fancy name e.g. XYZ Auditing. Not planning on setting up a bespoke website at this stage looking to keep things simples
or I could call it Simon_R Auditing? what are people thoughts. 2. What insurance cover do freelancers have? Is it just a case of Public Liability or do I need anything specific.
3. Has anyone got some recommendations for software to use for invoicing? or shall I just use excel? I will not be creating huge volumes of invoices but just want an easy and free way of managing it.
Many thanks for any help
Edited by Simon-R on Friday 23 February 13:04
Simon-R said:
Eric Mc said:
How many customers will you be invoicing?
Initially only 2 or 3 but over time I hope this will grow but probably to no more than 20???HMRC are increasingly looking carefully at people who "claim" self employed status. If the position is "labour only" and bears a strong resemblance to employment, you are an employee and not "self-employed".
If you are operating as an individual (i.e. a self employed "sole trader") and HMRC challenges your status, if they decided you were really an emplkoyee, it's the people you are working for who would have to stump up any underpaid PAYE and NI.
If you were operating through your own limited company and HMRC decided you really should be treated as an employee, it's YOUR LIMITED COMPANY that has to find and pay over the missing PAYE and NI. This is IR35 in action. Note IR35 does not apply in the sole trader situation described above.
Simon-R said:
Following taking Voluntary Redundancy at the end of December I have decided to go self employed again as a Freelance Automotive Standards Auditor and Mystery Shopper. I have an agreement in principle with a company who I will be doing work for. They are well established and well know in the sector so hopefully no worries about getting paid etc.
So I have 2 hopefully simple questions:
1. I will be trading as a sole trader, do I use my name as the business name or do I try and come up with a fancy name e.g. XYZ Auditing. Not planning on setting up a bespoke website at this stage looking to keep things simples or I could call it Simon_R Auditing? what are people thoughts.
2. What insurance cover do freelancers have? Is it just a case of Public Liability or do I need anything specific.
3. Has anyone got some recommendations for software to use for invoicing? or shall I just use excel? I will not be creating huge volumes of invoices but just want an easy and free way of managing it.
Many thanks for any help
Only reason to go limited is to cover yourself - it’s more secure if there are any issues; anyone comes after you. Otherwise, it’s more hassle being limited; not a lot more - but more. So I have 2 hopefully simple questions:
1. I will be trading as a sole trader, do I use my name as the business name or do I try and come up with a fancy name e.g. XYZ Auditing. Not planning on setting up a bespoke website at this stage looking to keep things simples
or I could call it Simon_R Auditing? what are people thoughts. 2. What insurance cover do freelancers have? Is it just a case of Public Liability or do I need anything specific.
3. Has anyone got some recommendations for software to use for invoicing? or shall I just use excel? I will not be creating huge volumes of invoices but just want an easy and free way of managing it.
Many thanks for any help
Edited by Simon-R on Friday 23 February 13:04
The other reason is to be taken more seriously. Not so much an issue these days depending on your sector.
Personally, I’d use a name that is not your own; giving you scope to expand it in future, get others on board. But there’s no right or wrong answer here. Before settling on a name; check nobody is using it for anything similar; worth checking companies house and TM database:
https://beta.companieshouse.gov.uk/
https://trademarks.ipo.gov.uk/ipo-tmtext
Book a domain name and use a good email; look more professional and future proof yourself should you grow and need a site / online presence.
Whichever name you settle on, just go to your bank and get a business bank account setup. They’ll just want some details and a headed paper with your new co. name. Easy enough to do something in Word.
If you want a landline number for your business, to appear pro; check out telecoms world. I have a few number with them; very good. Just forward it to your mobile:
https://www.telecomsworldplc.co.uk/
Invoicing; what smart phone do you have? There’s a LOT of apps for doing that; some very good I hear.
First decide your trading mechanism:
Sole Trader:
As a ST the trading name can be anything. Make it snappy & descriptive. Think about getting a domain name that contains the name - you don't have to use it now but changing later is a pain. Set up a business email address - Gmail is ok. Office 365 with your own domain may be over the top to start.
I'd suggest opening a business bank account (Joe Bloggs trading as Whizzy Inspectors) & getting a separate credit card. Always keep business & personal expenditure separate as it makes admin much easier. Get a business mobile phone number & buy a dual SIM phone.
You should have Public Liability insurance but maybe also insure your equipment & possibly Professional Indemnity, but that can be expensive. Look at the Caunce O'Hara website.
If you are just selling your time, only producing a few invoices & not buying much then you can do all of your accounts & invoices in Excel. There are online accountancy services you could look at but it's not essential to begin with if the volume of purchases & invoices is low (although they help to keep track of things like which invoices have been paid & bank account reconciliations etc). Get yourself organised with a folder & file receipts etc every month (I staple them to the credit card bill). it doesn't take much time if you keep on top of it. However there are changes coming (Making Tax Digital) so you may need to use other software in future. See Eric's posts in other threads about this.
VAT comes into play if you are going to be doing over £85k of business inthe tax year a rolling 12 month period.
Speak to an accountant experienced in small businesses before you start.
Sole Trader:
- Slightly easier in terms of accounting. No PAYE etc to administer
- No IR35 issues
- Flexibility in taking money from the business
- Some clients may not use ST - see Eric's post above for why
- You are the business entity & all your assets are at risk
- More complex to set up & accountancy costs may be higher
- IR35 may be an issue
- Potential to reduce tax liability by use of salary/dividends
- Limited personal liability if if goes wrong
- Potential to reduce tax liability (often set up with wife who does admin etc)
- IR35 may be an issue
As a ST the trading name can be anything. Make it snappy & descriptive. Think about getting a domain name that contains the name - you don't have to use it now but changing later is a pain. Set up a business email address - Gmail is ok. Office 365 with your own domain may be over the top to start.
I'd suggest opening a business bank account (Joe Bloggs trading as Whizzy Inspectors) & getting a separate credit card. Always keep business & personal expenditure separate as it makes admin much easier. Get a business mobile phone number & buy a dual SIM phone.
You should have Public Liability insurance but maybe also insure your equipment & possibly Professional Indemnity, but that can be expensive. Look at the Caunce O'Hara website.
If you are just selling your time, only producing a few invoices & not buying much then you can do all of your accounts & invoices in Excel. There are online accountancy services you could look at but it's not essential to begin with if the volume of purchases & invoices is low (although they help to keep track of things like which invoices have been paid & bank account reconciliations etc). Get yourself organised with a folder & file receipts etc every month (I staple them to the credit card bill). it doesn't take much time if you keep on top of it. However there are changes coming (Making Tax Digital) so you may need to use other software in future. See Eric's posts in other threads about this.
VAT comes into play if you are going to be doing over £85k of business in
Speak to an accountant experienced in small businesses before you start.
Edited by Mr Pointy on Saturday 24th February 13:53
Mr Pointy's post should be a permanent sticky. It sums up concisely the pros and cons of limited company v' sole trader (and even partnerships).
The only point I'd make a small correction on is the measurement period for the £85,000 VAT threshold. It's not based on the tax year. It's not even based on your trading year. It's based on a rolling 12 month period. So, at the end of every successive 12 month period, you need to ensure that you haven't breached or are about to breach the VAT threshold.
The only point I'd make a small correction on is the measurement period for the £85,000 VAT threshold. It's not based on the tax year. It's not even based on your trading year. It's based on a rolling 12 month period. So, at the end of every successive 12 month period, you need to ensure that you haven't breached or are about to breach the VAT threshold.
Thanks to all of the really useful pointers, I think I will go with the sole Trader option as it will not influence whether people do business with me at this point, i dont think.
I am already in conversation with an accountant and will talk to some insurance companies on Monday. Other than that just need to sort Bank Account when I have decided on a trading name.
Once again thanks for all of the information
I am already in conversation with an accountant and will talk to some insurance companies on Monday. Other than that just need to sort Bank Account when I have decided on a trading name.
Once again thanks for all of the information
No problem.
Because the threshold is measured on a rolling 12 month basis, many people have been caught out because they have not monitored their turnover closely enough.
Even Vince Cable, when he was Secretary of State for Business, Innovation and Skills and the President of the Board of Trade in the recent Coalition Government fell foul of this rule.
Because the threshold is measured on a rolling 12 month basis, many people have been caught out because they have not monitored their turnover closely enough.
Even Vince Cable, when he was Secretary of State for Business, Innovation and Skills and the President of the Board of Trade in the recent Coalition Government fell foul of this rule.
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