With the effects of the coronavirus pandemic pushing the country officially into recession, many employers have been forced to make redundancies which have caused the unemployment rate to increase across the nation.
However, the pandemic seems to have had a significant impact on the professional lives of women in particular. LinkedIn data shows that many women are experiencing increased stress levels, lack of job security and are taking on a disproportionate amount of childcare responsibilities when compared to men. Additionally, a survey conducted by the University of Exeter shows that women are more likely to have their hours reduced or be made redundant during the pandemic.
This has prompted some to think about starting their own business with recent research conducted by LifeSkills research revealing over half of aspiring female entrepreneurs in the UK say that the Coronavirus pandemic has made them want to start their own business. The BBC recently interviewed four women about their reasons for starting a business in lockdown. The female entrepreneurs found that setting up their own businesses has given them the flexibility to focus on the other areas in their personal lives such as studying and managing households all whilst running their businesses.
If you are feeling inspired and would like to set up your own business, it is important to note that some procedures and processes must be followed when setting up as a sole trader or limited company in the UK.
Our corporate law expert, Ashley Sutherland provides some quick tips to help you get started.
Setting up as a sole trader
Things to consider
Before setting up as a sole trader, do ensure it’s the right thing for you. There are plenty of reasons to go self-employed, including more flexibility, a better work/life balance, and an opportunity to earn more than you would when working on a salary for a company.
Some questions to ask yourself before taking the leap are:
- Have you thought about losing the benefits of being an employee, such as holiday pay, sick pay, employer pension contribution, and other benefits you might have from being employed by a company?
- Do you feel confident about managing your own business, including cashflow, keeping records, and completing tax returns? Moreover, you may have to chase people for payments, and manage challenges or complaints, etc.
- Are you clear about how you will get clients or customers?
- Do you have any life-changing events that you should take into account, like moving house or a new baby, that could take time away from the days you can work (and where you would be paid if you were to take annual leave if you were employed by a company)?
- It can be more difficult to get a mortgage when you’re self-employed. Be sure to do your sums, and it’s good to have a few years of healthy accounts behind you if you will be approaching banks or building societies for mortgage quotes.
Setting up as a sole trader – going self-employed
If you’ve considered the questions above and are still keen to set up as a sole trader and ‘be your own boss’, here is a checklist that can help you get started.
- Tell HMRC that you’re self-employed for tax purposes so they know you’ll be paying your tax through Self Assessment. You can register on the gov.uk website.
- Set up a business bank account.
- Establish some processes for monitoring cash flow, profits, and evidence of your business expenses. Those who do this well have a much easier time when it comes to completing their tax returns.
- Secure business insurance. You’ll tend to need professional indemnity insurance and public liability insurance, which are the main types of business insurance to consider. Remember to check your car insurance, too, if you’ll be using it to travel to meet clients, etc.
- Think about setting up a private pension. You won’t be paying into a workplace pension, so it’s a good idea to set up a private pension, ready for your retirement. Although you won’t benefit from employer contributions, the government contributes to private pensions in the form of tax relief.
How we can help
Ensuring you get everything right, from insurance to GDPR to Health and Safety obligations, can be a mean feat, particularly if you don’t have a business background or previous knowledge of setting up as a sole trader.
To make sure you get everything right the first time, our commercial solicitors can work with you to go through your checklists and get you prepared for the next step in your professional journey. Getting something wrong or not being fully prepared could be costly and prevent you from reaching your full potential when you go self-employed.Contact us