Getting things clear - considering self-employment

FIREmenow

Hi all, I am just exploring self-employment alongside my PAYE job which is 4 days per week. I have not invested any money yet and want to get everything clear first and not rush into anything. I’d be grateful for any comments or recommended resources to help me look into things further.

I think sole trader would be the best route, and cash basis accounting. I would have about one day a week to dedicate to it and, down the line, may reduce hours in my main job over time if my own business grew. I have a good employer with decent benefits so I would be unlikely to go totally self-employed until semi-retirement in 10-15 years when I aim to be financially independent but may still work a little for myself if I enjoy it.

The area I am interested in is related to my current role (and skills and experience) but is not quite the same. It would be conducted online from home, with 1:1s, groups, and webinar type formats available, with clients being private individuals. I don't want to go into specifics at this stage. It is an unregulated field, but does have professional bodies and suggested standards which I want to adhere to.

I think set-up items would be:

Personal/business laptop (% expense allowable for business use. I currently only have a work laptop.)

Website
Logo and trading name

An appointment booking and purchasing system that could be embedded into the website

A secure cloud platform to store/share documents and host sessions - I am thinking Google Workspace for this as I am familiar with it.

Business bank account and any fees 

Marketing - social media accounts with content prepared and scheduled, marketing strategy.

Initial basic training in this new-but-related area in order to be accredited and accepted as a member of the relevant professional bodies.

Professional body registrations.

An accounting system, whether this is my own spreadsheet or some free/cheap software.

Insurance - professional indemnity

Possibly a cheap work mobile, may have an old handset, cheap SIM.

As initial training isn't an allowable expense of a new business, my thinking is to invest in basic training to get me established (~£1250), and then more expensive advanced training to expand those basic skills would be considered CPD and an allowable expense in later years? Are there other guidelines anywhere on the difference between initial training and CPD? I've read the examples of allowable/not allowable business expenses for training on gov.uk, and training to advance in the field seems ok. This would be the largest ongoing expense I think so would want to get it right. I would prefer this more cautious approach to see how viable the business is. 

If I start basic training, I can also build up some of the required hours of experience needed for registration through my other job if I can pitch it right to my boss, which would help build my skills and confidence ready for private paying customers.

With all this in mind, a rough timeline might be to do basic training during summer 24/25 tax year at my own cost and try to build experience hours up through employed work to meet basic accreditation requirements with professional body. Then if things go well, start trading - this could be toward the end of the 24/25 tax year. My understanding is that if set-up expenses are under £1k it makes sense to just use trading allowance without claiming expenses. In addition, if getting started in 24/25 meant earnings were under £1k, then I would not yet need to register as a sole trader?

Having read a recent post about this I'm not sure I have been thinking about trading allowance in the right way.  I thought it was either be a sole trader or use trading allowance (with max income £1k), but I think from recent reading you can be registered as a sole trader and use trading allowance, and that the either/or is between trading allowance or expenses. So trading allowance only makes sense of expenses are £1k or less in the specific year, is that right? Is there part of self assessment where you indicate that you want to use trading allowance? In a situation where first-year expenses are greater than earnings, can this be carried over at all?

Then, if not already registered, register as a sole trader for 25/26 tax year once earnings are set to exceed £1k.

How does this sound? Am I missing anything or are there other factors you think I should consider? Are there other set-up items or ongoing expenses I should be factoring in? My next step will be to estimate costs for each item.

Thank you in advance, I like to have a good idea about things before I commit, I'm really interested in this related field and what might come of this.

Savvy_Sue

Can I just check that you know what your contract says about taking on other work? And that if it says you need their permission, that you'd get it? 

FIREmenow

Savvy_Sue said:

Can I just check that you know what your contract says about taking on other work? And that if it says you need their permission, that you'd get it? 

Hi Sue, thanks for your reply. I would need to speak to my manager about it as per my terms and conditions. As I am part-time, it's unlikely they will object and some colleagues also have two jobs, but I will follow the process and check this thanks.

Do you think there's anything else I need to factor in?

Thanks again

Savvy_Sue

I couldn't see any glaring omissions, but it's the potential overlap between salaried and self-employed which seemed most crucial to sort out first. 

DullGreyGuy

For anyone considering self employment my advice will always be to really kick the tyres on 

1) How are you going to find your customers... too many people have a "build it and they will come" mentality and think that a website and an instagram account is going to get people flooding in whereas 12 months later they are getting 1-2 people a month to their website and so far have only had one enquiry 

2) How much you are going to charge... similar to the above, a lot of people may start off thinking £15/hr would be great for their side gig but then fail to factor in how much time is spend on non-billable hours like doing marketing, creating content for social medial, dealing with enquiries from customers, runs to the post office etc etc. In some cases 1/3 of your time may actually be billable so your charge of £15/hr becomes £5/hr which suddenly looks less appealing. As a service rather than physical product it's probably easier but still worth ensuring it stacks up when you factor in all the extra hours effort required. Wife used make/sell hand crafts, she enjoyed doing it but I suspect she was really making less than £1/hr as she underestimated her material costs and the total time to make and sell 1 item. 

FIREmenow

Thank you both, good points there. 

Customers when starting will be a challenge and I have been reading up on marketing strategies and business models. There is potential for clients to be funded for these sessions via their workplace, so I would build a lot of information about this into the website etc. These are block booked in advance to maximise the funding so would be good sources of steady income. I'm not sure whether invoicing a mixture of businesses and private individuals will change how it is best to operate though. 

Hourly rate I have been researching from 'rival' websites in the field. A short introductory chat would be free, then £40-50 per hour seems about right when working towards a qualification. Once qualified £75+ seems to be realistic, with many charging ~£100 when experienced, then rocketing up when targeting an executive market of corporate clients eg. senior leaders. Sessions tend to be 55 mins, and you might do 4-5 max in a full day. £40-50 is double my PAYE hourly wage and hopefully will help account for the non-billable hours. Initial logged hours of experience needed for qualification would be part of my paid job and any resources, forms, templates etc I develop at work would be similar to in my own business so I would have a head start on these.

Does anyone have thoughts on good website builders for a nonexpert (or bad ones to avoid!)? Would need to work well on mobile devices, be able to embed an appointment booking and payment system, have a blog section and resource section. If I go with Google Workspace then a Google site would be an option but I don't know how they are rated by small businesses or clients.  I've got the impression that certain brands/setups are seen as less professional and a bit too cheap?

LessImpecunious

FIREmenow said:

Does anyone have thoughts on good website builders for a nonexpert (or bad ones to avoid!)? Would need to work well on mobile devices, be able to embed an appointment booking and payment system, have a blog section and resource section. If I go with Google Workspace then a Google site would be an option but I don't know how they are rated by small businesses or clients.  I've got the impression that certain brands/setups are seen as less professional and a bit too cheap?

Have a look at Create.net - we use for a webshop, and I'm pretty sure they cater for all those things; very simple to set up with a small and very helpful team, so you get quick and personal help with any problems, plus a facebook members group always there to offer extra tips and advice.

FIREmenow

Thanks again. I will have a look at Create.net.

I was just looking at some tech radar reviews on the best website builders and/or hosts, which someone here recommended on another thread. I was wondering about the correct terminology - if I require the ability to take payment, is that all known as e-commerce? There is no stock and it would be a person booking an appointment slot for an online service. Just checking that this is still just known as e-commerce when I'm looking for appropriate website builders or if it's a specific thing within ecommerce. Does booking through a calendar of available slots slots (and then completing a payment process to secure the slot) have a particular name or type of plugin required?

Trying to get my head around the different pros and cons of different builders before committing, but they are all slightly different.

Thanks in advance for any ideas