Starting Own Business While Employed

Danny1967

Hi all. I'm wondering if anybody can point me in the direction of a definitive guide to starting your own business while you are currently employed.
I see there are options for setting up as a sole trader versus limited company, and I understand that a lot of this is around liability for debts etc. What I'm really interested in is understanding the Tax/NI impact & responsibilities.
As a background, I work in IT and earn a reasonably good wage, but would like to set up my own web development company. It will be just myself at the beginning, and if things take off, I may consider employing additional staff in the future. My hope is that it will allow me to retire from my employed position and focus on my own business.
Thanks in advance for any guidance you can provide.
Danny1967

getmore4less

Check your contract of employment and conflicts of interests.
Not just the business but time. 

MovingForwards

HMRC have sufficient information to get you started.
When it comes to tax / NI you fill in a self-assessment form, same as anyone else would who runs a sideline with a view to making money.

oh_really

You have a duty of fidelity to your employer, you may have to start a conversation with them before progressing.

Brynsam

Danny1967 said:

Hi all. I'm wondering if anybody can point me in the direction of a definitive guide to starting your own business while you are currently employed.
I see there are options for setting up as a sole trader versus limited company, and I understand that a lot of this is around liability for debts etc. What I'm really interested in is understanding the Tax/NI impact & responsibilities.
As a background, I work in IT and earn a reasonably good wage, but would like to set up my own web development company. It will be just myself at the beginning, and if things take off, I may consider employing additional staff in the future. My hope is that it will allow me to retire from my employed position and focus on my own business.
Thanks in advance for any guidance you can provide.
Danny1967

Go to https://www.gov.uk/browse/business and read the relevant bits. If that doesn't give you what you need, a chat with an accountant is your next step.

As others have said, do check first that you aren't putting your job in jeopardy by starting a business on the side, especially if, as it seems, you may potentially be in competition with your current employer.

AskAsk

unless you set up a limited company, the earnings will come through as self employed status and will be added to your employment income for tax purpose.

Brynsam

AskAsk said:

unless you set up a limited company, the earnings will come through as self employed status and will be added to your employment income for tax purpose.

...and if you set up a limited company, any salary from that will be added to your other employment income for tax purposes, as will any dividend income in excess of the £2K a year tax free dividend allowance: https://www.gov.uk/tax-on-dividends

Danny1967

It looks like my first recourse is to take advice from a seasoned accountant. They should be able to advise on the best option for minimizing earning loss.
For those who seemed concerned with the coi re my current employment status, that discussion has already taken place at both upper management and HR director level, with certain understandings documented & agreed.

oh_really

Further, you may be signing a working time opt out with your employer if aggregate hours exceed those included in the regs.

TELLIT01

Danny1967 said:

It looks like my first recourse is to take advice from a seasoned accountant. They should be able to advise on the best option for minimizing earning loss.
For those who seemed concerned with the coi re my current employment status, that discussion has already taken place at both upper management and HR director level, with certain understandings documented & agreed.

Good to hear that you have already had a conversation with your current employer.  With many employers it's not simply about conflict of interest, it is also regarding the effect any other employment may have on your effectiveness and efficiency in your current role.  As an example, a colleague of mine wanted to do weekend bar work and was told by their main employer that they would not agree to them working late Sunday evenings on the basis that they would be tired on Monday mornings.

Danny1967

TELLIT01 said:

Good to hear that you have already had a conversation with your current employer.  With many employers it's not simply about conflict of interest, it is also regarding the effect any other employment may have on your effectiveness and efficiency in your current role.  As an example, a colleague of mine wanted to do weekend bar work and was told by their main employer that they would not agree to them working late Sunday evenings on the basis that they would be tired on Monday mornings.

I'm in a position that I now work from home full time. I do not have fixed hours and as long as my employer is happy that I am getting my "day job" done, there is no issue.
It's about my personally being able to balance both, and luckily, the specific role I do - and will be doing working for myself - makes that much easier than most careers.