SELF EMPLOYMENT

Being self-employed and working from home are not necessarily comfortable bedfellows. Many businesses fail each year because, among other things, the owner has found it difficult to mix domestic life and business life in the same setting. Advice abounds from banks, accountants and various business organisations, and we hope the following notes will help you form some idea of what you will need to discuss with your advisers.

1. Find yourself an accountant, one who is used to dealing with people doing what you do. Ask for recommendations, and then ask a few of them to tell you what they can do for you and what it will cost you.

2. Work out the basics of your paper system before you do a thing. Whether you are making a profit or loss at any particular time of the year, cash flow will determine whether your business thrives or declines; quite simply, if you don't have the cash to pay the bills, your business is dead. And don't think you will be able to rely on the bank - last minute support of businesses is not what they are into. So, make sure you always issue invoices promptly, and get over any potential embarrassment about chasing for payment. Also, do not undercharge for your work or offer discounts to get work - such actions are likely to be quoted as precedents to prevent you charging reasonable prices in the future.

3. Keep all of your receipts in order so you can be sure you can claim all expenses against income.

4. On the whole you will be paid without any deductions, so get into the habit of setting aside adequate sums for tax and the profit related element of National Insurance.

5. In anticipation of earning money, set up a separate business account. Don't be tempted to mix your business income with your domestic expenditure; it could lead to some very complicated accounting, not to mention some unnecessarily high accountancy bills.

6. Register yourself as self employed and set up a direct debit to pay the weekly flat rate amount on a monthly basis.

7. Organise suitable business insurance to cover office contents, staff, public liability and any other requirements that your business needs.

8. What about personal insurance? What happens when you are too ill to work? Investigate income replacement insurance if income ceases when you stop working. Perhaps investigate how you can continue to pay premiums on certain policies when your income ceases. And make sure the car covers you for business mileage.

9. What are your earnings going to be for the first year? Do you need to register for VAT sooner or later? Discuss the situation with your accountant.

10. If you work alone consider joining a trade association where you can meet other people in similar circumstances to yourself and where there might be business advantages. One with a very wide membership and a widespread branch network is the Federation of Small Businesses, who can be contacted on 01253 336000

REMEMBER You should not use any information contained on this page as the basis of any action until you have discussed matters with your financial adviser.