Want to become self-employed but aren’t sure where to start? Or maybe you’ve started earning a bit of money on the side, want to officially set up your business and feel a bit overwhelmed by all the jargon?
In this post, I’ll share with you the steps you need to take to get your business basics in place so you can tick off all the tax, money and planning side of things and focus on making money in 2024.
Ready to Become Self-Employed in 2024?
According to Statista, as of December 2023, there were around 4.37 million self-employed workers in the United Kingdom.
So whether 2024 is the year you take your first steps to become self-employed or you’ve been earning a bit of money on the side and want to get serious about your business, you’ll be joining a growing tribe of people in the UK making money doing what they love.
It’s no secret that being self-employed is hard work and even though the benefits outweigh the challenges, it can be a bumpy road.
I’ve been a business owner for nearly a decade and I’ve made mistakes. And even though I can’t go back and tell myself everything I needed to know about starting a business, I can tell you!
I can’t promise that this post will give you everything you need to know to run a business – that would grossly underestimate what it takes to be a successful business owner.
Instead, this post focuses on the first part of your self-employment journey – getting set up as self-employed with the basic business tools you’ll need in place and important questions on the tax and money side of things answered so you’re ready to confidently start working for yourself and earning an income of your own.
Inside this guide, you’ll find a series of steps that you need to complete. There are action steps for you to work through and links to extra information so you can learn more about becoming self-employed.
There’s quite a lot here! So make sure you complete one task at a time to avoid getting overwhelmed. And don’t forget to bookmark this post so you can easily come back to it and keep working through it.
Any Questions?
I’d love to help if you have any questions about this topic. Feel free to ask over in my group ‘The Self-Employed Club‘.
Do Some Initial Research
One of your first steps is to spend a short amount of time researching your business idea. Deciding to become self-employed is super exciting and it’s really easy to dive in and start the ball rolling – but I’ve made that mistake.
If I had only spent a small amount of time researching and planning my business, I would have made far fewer mistakes and been able to move forward from the set-up stage more confidently.
At this stage, just start learning more about your potential business and keep some informal notes. It’s just about getting a flavour of how things will look as a business owner.
Action Steps:
- Follow relevant social media accounts, including your competitors
- Join relevant Facebook Groups
- Start getting an idea of any licences, permits, software and any related costs that you’ll need
- Research how much people might be willing to pay for the service or product you plan to sell
- Start gathering ideas together on how you’ll find clients or customers
Set a Start Date
Before you go any further, set a realistic start date for completing your business set up and officially going self-employed.
The set-up phase is just the first part of working for yourself and one of the best ways to help you successfully get through this phase without drifting is to set an official start date for your business.
You can change it. That’s the beauty of being your own boss, you can shift deadlines around to suit your needs!
But, it’s best to stick to something realistic though and use it to keep you moving forward.
Action Steps:
- Think about how much time you have available to start your business
- Consider any other reasons that may affect your choice of launch date
- Set your launch date and put it in your diary
Clarify Your Business Idea
Hopefully, you’re now starting to think like a business owner and your dreams of being your own boss are feeling in reach! Your next step is to start developing your business idea. This is where your work begins and your idea comes to life.
Essentially in this phase, you’re going to start ‘putting pen to paper’ to make your business idea clearer and better defined. By the end, you’ll have clarity on what you’re selling and who you’re selling it to.
One of the biggest problems I hear from self-employed indivuals is that they aren’t making enough sales. While sometimes there are really good reasons for struggling with sales, I have found that individuals lack clarity on what they are selling, to whom and why. That’s why this next step is really valuable and lays the foundations what happens next in your business.
Read => How to Craft a Mission Statement for Your Self-Employed Business
Action Steps:
- Briefly describe what your business does
- Define your ideal audience and client along with their frustrations and hopes
- Write down what sets you apart from your competitors
- Put into writing your motivation to go self-employed
- Craft your mission statement and keep it handy
- Create your product plan
Work Out How You’ll Find the Money You Need to Get Started
I’d like to tell you that you can start a business with no money. But it’s unlikely. And although you can probably keep things to a minimum with a bit of looking around, taking advantage of discount codes and free trials, chances are there are going to be some things you’ll need to pay for before you start making money.
Your next task is to work out how much money you’ll need to get your business off the ground and decide how you’ll pay for it.
The easiest way to do this is to create a start-up budget.
A start-up budget is a spreadsheet that details all the one-off expenses you’ll need to pay to set up your business and keep going until you generate enough income to cover ongoing business expenses like your email account, software subscriptions or website hosting.
Once you have this number, you can then work out how you’ll pay those costs such as savings, a personal loan or a business loan.
Action Steps:
- List your one-off set-up costs
- Estimate how long it will take you to generate a steady income from your business
- Calculate start-up costs
- Decide how you’ll fund getting started
Map Out Your 12 Month Business Gameplan
One of the biggest questions new business owners ask is ‘do I need a business plan’?
If you’ve read any of the generic ‘how to become self-employed’ blogs on page one of Google you’ve most likely been told that you do. And there are many accountants, business owners and bank managers who will disagree with me, but you don’t need a business plan to go self-employed.
Some businesses do need a business plan because they are seeking outside investment or loan facilities from banks. But many side hustlers and business owners will tell you business plans are overwhelming and time-consuming for solo workers and a distraction from what really matters – making money.
You do need a plan, however. You need something that will keep you on track, guide your every step, help you make the right decisions and keep you productive (even when time is limited).
So instead of a business plan, map out a 12 month business game plan for yourself.
Again, doing just ‘12 months’ goes against all the business planning guides you’ll find on the internet which insist you need a 3 year, 5 year and 10 year plan. But it’s very common for sole trader businesses to change and evolve quickly making initial plans redundant.
Of course, keep in mind where you’d like to be in the future and you can adopt more traditional methods of business plan when the time is right. But at this stage don’t let it distract from what you need to achieve in year one to get to year five.
Action Steps:
- Choose 3-5 business goals you want to achieve in the next 12 months
- Write down the tasks you need to complete to complete each one
- Create your quarterly goal plan
- Create a 12 month marketing plan
Bonus tip: add targets, metrics and deadlines wherever possible
Choose a Legal Structure
Now you have a much better idea of what your business will do and how you’ll make money, it’s time to decide on a business structure. So in the next step, it’s up to you to figure out which one to choose.
Despite the hype, you don’t actually need a Limited Company to run a business and there are other business structures available which may suit your circumstances better. The main ones in the UK are:
- Self-employed (sole trader)
- Limited Company
- Partnership
- Limited liability partnership
Each of these UK business structures requires different paperwork to set up, offer varying levels of personal protection and have their own tax rules to follow. So which one should you choose?
The answer is it depends on your circumstances, wants and needs.
Read=> UK Business Structures Explained
Read=> Is it Worth Setting Up a Limited Company?
Don’t forget, it’s possible to start working for yourself and earn £1,000 in income (not profit) before registering as self-employed with HMRC and paying any tax – this is known as the trading income allowance.
Read=> How the £1,000 Trading Allowance Works
Read=> How to Register as Self-Employed with HMRC (2024)
Action Steps:
- Create a 12 month financial plan to assess your business profits
- Understand the pros and cons of each business structure
- Choose your business structure
- Register your business (unless you plan to use the £1,000 income allowance)
This guide and many of the others on my website assume you are registered as self-employed. The rules are often different for Limited Company owners.
Choose a Business Name
Choosing the right name for your business will contribute to your success as well as help you to feel good when you present your business to potential customers and on social media.
If you’ve chosen self-employment as your business structure then your own name will legally be your business name. But you can choose to trade under a brand name of your choice, known as a ‘trading as’ name. There are pros and cons but depending on your audience and marketing plans you may want to choose a name for your business.
If you’ve chosen a Limited Company then your business will legally have its own name which will appear on the register at Companies House.
Read=> How To Choose the Perfect Self-Employed Business Name
Action Steps:
- Create a shortlist of business names
- Check the Limited Company name is available at Companies House*
- Check the domains are available
- Check the social media names are available
It’s best to choose a domain and social media usernames that match but if it is not available you could use your own name.
*you may want to hold the Limited Company name at Companies House with a dormant company in case you ever want to switch from sole trader to Limited Company.
Create Your Branding
Congratulations! You’re moving closer to bringing your dreams of self-employment to life! The hardest part is getting started and working your way through the process of becoming self-employed – but you’re doing that.
Now it’s time to set up your business branding and once you’ve completed this step things are going to feel very real and exciting.
Action Steps:
- Decide which brand assets you’ll need
- Create a colour palette
- Choose a font suite
- Create your brand assets
Get to Grips With The Money & Tax Side of Things
One of the hardest parts of becoming self-employed can be learning about the money and tax side of things. But that’s hardly surprising if the concept of tax is new to you or you’re used to your employer dealing with it for you through your payslip.
Now is the time to start understanding what you should be doing, the forms you’ll need to fill in and by when so you are totally prepared.
When you’re self-employed you’re responsible for keeping a record of your income and expenses, filling in an annual tax return (known as self-assessment) and paying any tax you owe on your business profits.
So your next task is to get to grips with the money and tax side of things so you can confidently manage your finances.
Read=> Self Employed Tax: An Easy Guide for Beginners
Read=> How to Do Your Own Accounts When You’re Self-Employed
Read=> How to Pay Yourself as a Sole Trader
Action Steps:
- Understand which taxes will affect you
- Work out how you’ll set aside money for your future tax bills
- Start tracking your income and expenses
Sort Out Your Basic Business Infrastructure
Hopefully, things are starting to get more exciting as your business takes shape. The next step is to start getting all the core tools you’ll need to run your business in place so you are fully prepared to start marketing, selling and delivering your product/service.
If you haven’t already, this may be when you need to put a little money into becoming self-employed as you sign up for the tools you’ll need.
Action Steps:
- Set up your tools
- Create templates, resources or freebies
- Keep a list of your subscriptions, costs and passwords
- Review your start-up budget to confirm they are in line with your estimated costs
Start Making Money
A big well done! You’re ready to launch your business. You’ve got all the business basics in place to start marketing and selling. It’s time to start making money without the worry you have done all the right things to start your self-employment journey with confidence.
Next, it’s time to start making money as soon as possible! Don’t lose sight of the action plan you put in place at the start of this process. The next steps you need to take will all be found inside it. Keep reading it and moving forward.
Want to Read More About Becoming Self-Employed?
If you’ve enjoyed this post you may like to read more about becoming self-employed. Here are some of my most popular blog posts on this topic…
- How to Stop Procrastinating and (Finally) Launch Your Online Business
- 9 Profitable Online Business Ideas For Self-Employment in 2023
- Should You Tell Your Boss About Your Side Hustle?
Any Questions?
I’d love to help if you have any questions about this topic. Feel free to ask over in my group ‘The Self-Employed Club‘.
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