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Being your own boss

Many of us dream of controlling our own destiny, especially when it comes to work. After all, being your own boss has a number of potential benefits. These range from the ability to decide what you do and when you do it, to the potential to earn more than you would as an employee.

Being self-employed could also help you enjoy a better work/life balance. Cutting out the daily commute and the stress of office politics may also improve your quality of life and lead to greater job satisfaction.

Be prepared

Working for yourself can be challenging at times. Some may embrace the absence of HR systems or colleagues (both senior and junior) but for some people it can be a lonely experience.

If you’re the kind of person who relishes your own space and can set your own goals, then being your own boss could be the move you’ve been waiting for.

Recipes for success

It takes a certain type of person to make a success of being self-employed. To begin with, you'll need the right qualities, such as determination, drive and the ability to set clear objectives.

And it’ll help if you’ve got the right business skills, like time management, sales, marketing, finance and accountancy. Big or small, as your own boss you’ll ultimately be responsible for selling yourself and your ideas to other people including lenders, investors, potential partners and employees, as well as your products and services to customers.

Don’t forget, you can always bring people on board to help you fill any skill gaps you have.

Tax and National Insurance

If you decide to become self-employed you'll need to register with HM Revenue and Customs (HMRC), either online or by calling 0300 200 3504. They'll send you a guide to starting up in business that explains the records you'll need to keep, how to pay your National Insurance and how they'll calculate your tax.

You'll be sent a self-assessment tax return to fill in every year. So you'll need to be organised about keeping records and completing your return on time.

Decision-making

Before you take the plunge into self-employment, it is also worth considering that working for yourself can dramatically change your lifestyle – and your finances. For example, regular working hours could be a thing of the past.

Your income could also become less predictable, so it’s important to have back-up plans in place to help minimise any pressure on you and your family.

Insurance

There are a few practicalities worth bearing in mind, too, especially when it comes to business insurance. For example, if you decide to work from home, you may need to extend your home contents insurance to cover office equipment.

As such, it’s important to tell your insurers that you're running a business from home and check that you are covered.

If you employ anyone – even part-time – you'll also need employer's liability insurance. In addition, it’s advisable to do a risk assessment of any parts of your home the public might visit. You might need public liability insurance in case someone injures themself while on your property.

It might also be worth thinking about taking out health/accident insurance. If you're unable to work because of an accident or serious illness, this will give you a regular income.


YOUR NEXT STEPS

Finally, here are the most important laws, rules and guidelines you need to be aware of when you choose self-employment:

  • Ask your local authority whether you need planning permission to use your home for business purposes, especially if you need to make alterations.
  • If you employ staff, make sure you know your employees' rights, including the National Minimum Wage (NMW) and the Working Time Directive (limiting the hours employees can work per week).
  • Disability legislation: the Disability Discrimination Act covers small businesses. See Government services and information for more details.
  • Check your mortgage to see if running a business from home is allowed, and inform your lender if need be.

Further advice and support

For help with tax-related issues, HMRC has a variety of tools and guides online.

The Citizens Advice Bureau offers a useful self-employment checklist.

Planning to become self-employed might also be a good time for a free personal financial review to help you budget as your business gets up and running.

While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Lloyds Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.

Find out more about our range of business insurance products.