Registering as a business?

Blitzwing85

Hi

I'm currently employed full-time and in a good job. However, i would like to work for myself and have gained the relevent contacts over the years to do so. Before i contact them i need to have a company name etc and be legit.

How do i go about setting up my own business?
Are you allowed to do it while still being employed elsewhere?

In todays economic climate i want to keep my current job (for now) as it's 99.9% secure.
Now, i know this will mean i get hammered on tax..but hear me out.

The jobs i'll be doing in my own time for my business will be almost 100% profit before tax, and will require very little time and effort with very inexpensive overheads.
I also plan to spend some years building up customer relations and getting my name around before breaking out fully on my own so i don't mind if i get taxed a lot.


I'll be providing a Calibration service, so naturally once my business is named then i'll have to be approved to ISO standards etc but i know where to go with that.


Just want to make sure i've got everything covered from a legal point of view before i make a penny.

Vader123

You need to check with your current employer (or your employment contract) to see if it has any restrictions about other work.

You then you need to register as a self employed with HMRC within 3 months of trading.

Vader

Gertie_Walker

Just to add to the above, the 3 mth grace period has been abolished, you now need to register with HMRC as soon as you start to trade.

I am not sure I agree that you need to register a company - if you are starting small, there does not seem much point, but you need to take professional advice form someone who has an overview of your financial situation.

Hammyman

Blitzwing85 wrote: »

The jobs i'll be doing in my own time for my business will be almost 100% profit before tax, and will require very little time and effort with very inexpensive overheads.

I'll be providing a Calibration service, so naturally once my business is named then i'll have to be approved to ISO standards etc but i know where to go with that.

You'll find you've a load of expenses. Everything from a stamp and the envelope its attached to can be claimed for. Hell, you're going to have a load of capital costs for the equipment you're going to be using and you also claim the mileage for going to look at that equipment and buying it.

Blitzwing85

Gertie_Walker wrote: »

Just to add to the above, the 3 mth grace period has been abolished, you now need to register with HMRC as soon as you start to trade.

I am not sure I agree that you need to register a company - if you are starting small, there does not seem much point, but you need to take professional advice form someone who has an overview of your financial situation.

I'm not sure how the approval process would work if i wasn't a registered company. Guess i'll have to look into that.



My company has no issues with me working extra as far as i know because when i was younger i got a 2nd job (although i quit after 2 nights).


I do have a guy coming into work in 2 weeks who started his own calibration company who i'm now on friendly terms with so i think i might see if he won't mind discussing it with me while he's on-site.

But it's nice to get a few points to start with...as i have no idea how all the lega and tax side works.





Incidently, a none related question...
I recently received a bonus...this bonus was £500 less than my usual monthly pay...(before tax) Yet the TAX and NI was greater from the bonus than my normal pay.
Is this correct?

They have taxed me as if i was earning about £45000 a year, as opposed to simply adding my bonus on my total yearly pay and taxing accordingly.
It's almost like it counted as a second wage or something!!!

Gertie_Walker

I dont know what you mean by approval process. the type of legal structure you are trading under is no concern of your clients.
I think you need half an hour free with an accountant if tax is really new to you.
Yes, the extra tax on your bonus will be correct. the tax tables which are used by your employer to work out your tax assume that you are going to be earning that amount ev ery month, so it has knocked you into higher rate tax. The extra tax will be gradually reapid to you over the enxt few menths when it becomes clear that this is not the case.

PlutoinCapricorn

The first port of call is https://www.businesslink.gov.uk.

There is a step by step guide to starting out. One of the first decisions you need to make is whether or not to start as a Sole Trader or get a Limited Company. This depends on many things, but the standard advice is to start small, build up alongside your main job as a sole trader if possible, then have a company if and when the business is big enough. But some clients might indeed prefer to deal with a limited company.

LittleVoice

Just because your employer was content for you to have a second job a while back does not mean they will be happy with you having outside work now - particularly if it is in any way in their own line of business. They don't want you taking work off them, using contacts with their clients if that is what you are about.

KiKi

You need to decide whether or not you are setting up as a Sole Trader or a Limited company - the legalities and tax for each are very very different, as is the 'registration' for it.

Use the business link website above (two posts up) to look at 'legal structures' and decide how you want to set up. Many people set up as Sole Traders and then become incorporate limited companies later on, but if you have specific liabilities then you may want to set up a ltd company straight away. Also consider whether or not to register for VAT - again, use the business link website.

It's far too complex an area to provide simple advice for, I'm afraid.

KiKi

Blitzwing85

Gertie_Walker wrote: »

I dont know what you mean by approval process. the type of legal structure you are trading under is no concern of your clients.
I think you need half an hour free with an accountant if tax is really new to you.
Yes, the extra tax on your bonus will be correct. the tax tables which are used by your employer to work out your tax assume that you are going to be earning that amount ev ery month, so it has knocked you into higher rate tax. The extra tax will be gradually reapid to you over the enxt few menths when it becomes clear that this is not the case.

By approval i mean that i have to be approved to the national standards to perform a calibration service.
They have to audit me.
Maybe i'd be allowed to do it without this approval but it's unlikely any company would use the service without.

I figured that's what would happen but didn't think i'd get the tax back gradually. Nice to know!! I'll keep an eye out for that in future pay slips. I got taxed £130 too much by my workings so it's be ncie if i got that back. If not...it was still unexpected money as i only asked for a pay rise...which i'm still getting start 2011. I won't complain!

Blitzwing85

PlutoinCapricorn wrote: »

The first port of call is www.businesslink.gov.uk.

There is a step by step guide to starting out. One of the first decisions you need to make is whether or not to start as a Sole Trader or get a Limited Company. This depends on many things, but the standard advice is to start small, build up alongside your main job as a sole trader if possible, then have a company if and when the business is big enough. But some clients might indeed prefer to deal with a limited company.

Thanks for the link. I'll make sure to have a good browse through this site. My intention was to begin as a sole trader while still at work.
I'm going to be using up a lot of my free time as i'm also studying for a Hons Degree through Open Uni. (although i will do most of this at work do be honest.).

What i'm also deciding on is whether to perform the service at the customers site, or to pick up and set up my own place. Maybe best to start on-site until the business is making good money...just in case it doesn't take off as much as i hope.