Setting up and going self employed. So now you've decided what type of service you plan to offer, it's time to get down to the nitty gritty. Most people think that this is the most difficult part, because they've never set up a business before. But you'll be surprised just how simple it is. Now, if you're setting up your business in the UK, you will need to decide whether you plan to work as a sole trader, or under a private limited company. Now a sole trader is a person who is the exclusive owner of a business, who is therefore entitled to keep all profits after tax has been paid, but the set person is also liable for all losses.

So your advantages of being a sole trader include, you're the boss, you get to keep your profits, your startup costs are low, you have maximum privacy. Establishing and operating your business is simple. It's easy to change your legal structure. At a later time if circumstances change, and you can easily wrap up the business. Now, some disadvantages of being a sole trader include a lack of perceived status. So sole traders are sometimes not seen as professional as limited companies, there is no legal separation, so your liabilities and your debts are all pulled together for your business.

If your business fails with the debts to pay, not only will you lose your income, you could, but you could also end up having to owe them money, okay, which they could easily take from your assets, so your own assets. So regardless of whether your business is connected, it doesn't mean that you potentially you could lose, you could lose your home, as well as face bankruptcy So that to me, it's quite a massive disadvantage. Now with a private limited company. They operate slightly differently, because it is a type of privately held slow business entity in which owner liability is limited to their shares but Is there is therefore limited to having 50 off your shareholders and the shares are banned from being traded publicly. Now, your advantages of owning a private limited company include better access to capital so in terms of you know, raising shared capital capital so getting loans for example, limited liability and restrict sales of transfer of shares So, you know, your shareholders can't just you know, just decide to sell it continued existence as well you get tax breaks.

And once you actually register your company, you know, where something like Companies House in the UK name is protected by law so no one else can use the same name as you or anything deemed to be too similar. some disadvantages are peddle limited, private limited company include with the you're responsible for your own taxes. So you and you also have to present annual accounts and they have to be prepared and submitted to companies out Company accounts, like I said, are submitted annually, but they are also in public records. So that's means that they're available for anyone to view. So traders therefore have more privacy than public limited companies, private limited company, excuse me. And then you've got slightly more higher administration cost due to a number of documents in four minutes in the shareholder resolution.

That depends on how busy you are and how much people you have involved in setup because mine is pretty minimal. And it's because my setup is minimal. So it's about doing your research and knowing what works best for you. But once you have decided the best option for you, the next step is to actually register with companies house if you are operators as unlimited private limited company, and you can set up a private limited company really cheaply from around 15 pounds. So the price of setting up a company really is minimal. And there are some great deals available where you can also get cash back when opening a business bank account as well as other benefits as a company Users cool companies made simple and it's a great site to check out for, you know, in order to get your business app on.

If you do plan on working as a sole trader, you also need to register as a self employed person with HMRC. You will also need to register if you choose to bring a business as limited so whichever The case is, if you go solo as a sole trader, or you go to the Ltd, you still must register as self employed. And that's because, you know, if you were if you are a limited owner, you still are legally required to carry out a self assessment tax return as you would if you're a sole trader. Now, registering as self employed is really quite simple and doesn't actually take very much time. In fact, it's even though it's free to register here in the UK, it can take just a few minutes on the laptop. The rules around working or self employed could be a bit clearer mind you HMRC says if you started working as a sole trader or a company director, so you know your directional derivative company for example, In March 2018, for example, you must register as self employed with HMRC by the fifth of October.

So at the very latest that's because March 2018 is in the 20 1718 tax year. So, the fifth of October 2018 will be your business second tax year, which would fall in the 20 1819 bracket is a bit confusing. So my advice is always to you know, register as soon as possible. As soon as you actively start seeking work and if your business otherwise you may be breaking the law and therefore liable to pay a fine. If you are unsure then do get in touch with HMRC if you live in the UK, or your relevant tax authority, where you reside. Whether you choose to start your own business as a sole trader or private limited company, you will have to keep all financial records for your business as well as start to pay your own national insurance.

Could you be But for more information, please do visit HMRC or your local tax office where you reside. So you can really start self employed by going online you know and filling out the the form to register a self employed sole trader or by actually calling HMRC they got a new self employment health life that you can call that. So the things to remember, if you're not self employed, make sure you do the following. Firstly, register as self employed with your local tax authority in the UK that would be HMRC if you're working as private limited company, you will need to set up a business bank account with your business corporations tificate. So you will receive that when you register your company with companies house or if you go via companies Made Simple or whatever when you choose to go by. Do put money aside ready to pay, you know, bills such as your national show contributions as well as maybe like 20% of your income for tax purposes, it's actually worth setting up a actual separate account, a savings account that you can use to put in your tax savings money.

And so you can get into the habit of putting that away. Be sure to find out what your business needs to pay VAT and ensure that you set up financial record record keeping system so this can be an Excel spreadsheet or you know, just so you can record your monthly expenses net and outgoings and there's obviously lots of different software out there you can use to help you record your expenses as well. Include your certificates, update your stationery make sure you've got your thing set up, see your website, you know, your logo, all that setup as well. And then what you want to do is find out if you need to pay any business rates when your business property that's if you choose to go and hire a property or depends on how you choose to operate and when you choose To operate from later on in the course we'll touch on location.

But if you do choose to use a property, then there may be some business permits. So you need to make sure you find out about that. Some helpful resources for you HMRC have do have some leaflets, giving you overview on self employment and answer quite a few questions as well. And I'm sure your local tax authority will have the same. But from my perspective, when I chose to go and start consulting a few years ago, I decided to start my company as limited. And I also hired an accountant to help me you know, file taxes and all the information that you have to get to Companies House.

You know, I do know that there are consultants that manage their own accounts, but for me, I know where my skill set live, so I was happy to outsource that and save myself the headache again. But obviously, this is something that I was initially nervous about being a lot of consultants are nervous about this in the first instance when you're first Setting up. One of my tips I will give you however, is to make sure you do get into the habit of recording all your expenses in a timely manner. My first setup, okay, it was a slight disaster in the sense that I left it until the last minute. So I had to literally pull it all nighter to make sure all my expenses are about to date and I had to do that and get my info over to my accountant. So please do not do that.

Save yourself the hassle. set a reminder in your calendar on your phone to just log and record your expenses at the end of the month to keep yourself on your toes. And also remember that there's a lot of information out there about setting up for your business. So feel free to you know, research and make sure you feel ready and take the step towards independence and being your own boss. What steps do you need to take to transition from your current situation to become a consultant