UK I am thinking of becoming self-employed, any advice/help/warnings would be greatly appreciated!

[Cassells Spark]

Hello everyone I am new to this forum so ease me in gently!!!

I often found myself coming across this forum when I was seeking help or advice towards queries I had.

I am an Approved Electrician with 8 years experience across domestic, industrial, commercial and medical locations. I am often doing jobs on a night time or on a weekend and I feel it maybe time to take the plunge into self-employment and setting up on my own.

I am not naive enough to know it will be easy and a roaring success- hence why I am here. Any sort of heads up or advice that people have would be greatly appreciated or what I should be aware of by doing this sort of transaction.

Any help would be appreciated!!! Thank you!

 

[Dustydazzler]

If I were starting up a new brand today I would 100% invest in a well produced YouTube channel.
Lots of tool reviews and loads of DIY advice clips.

 

[telectrix]

you can be the best sparks going, but if you're not a ruthless businessman and a good organiser of finances/tax/etc., you'll fail. still, if you can handle the non-payers, nutty customers that change their minds half way through a job, scammers that want a big % of your earnings (useless advertising, joblead suppliers, etc.), other trades that just want to sabotage your work: go for it.

 

[Dustydazzler]

As above...

You can be a bang average sparks but good at business then you will be just fine

You can be a great sparks but awful at business then you will fail

It took me probably 3 years to get my pricing right , initially I didn't bother checking what other local sparks were charging. I just went with a flat rate of £20 per hour.
Once I found out what they were charging I suddenly realised i was about half the price of my rival sparks.
At that time in my area most sparks were nearer £40-60 per hour.
No wonder i was flat out working 7 days most weeks and people ringing me every single day asking me to do their job asap.
I was the cheapest by a country mile and rushing around like a loon for half the money

 

[pc1966]

It would help you a lot if you have a partner who can help out on the "business side" in terms of stuff like handling invoices, orders, deliveries, etc. Otherwise you can find yourself without enough time to do the work and make sure actually get paid for it!

 

[Midwest]

Some good advice. After I retired some years ago, I thought I could return to the industry, just doing odd jobs here and there, as I had a pension.

However, I found myself not being able to pay myself any money some months, just to keep paying the overheads.

Having jobs to do at nights and weekends, is not going to pay the bills. Your going to need initial bread & butter work, constantly coming in, like work from a builder, kitchen & bathroom fitters or estate agent work.

 

[Cassells Spark]

Appreciate everybody's replies thank yous very much, everything has been taken on board.

 

[Mike Johnson]

The problem with being self employed is most of the time you are too busy working to find the next commission, so when one ends you have no work to follow on with.

 

[sinewove]

As above...

You can be a bang average sparks but good at business then you will be just fine

You can be a great sparks but awful at business then you will fail

It took me probably 3 years to get my pricing right , initially I didn't bother checking what other local sparks were charging. I just went with a flat rate of £20 per hour.
Once I found out what they were charging I suddenly realised i was about half the price of my rival sparks.
At that time in my area most sparks were nearer £40-60 per hour.
No wonder i was flat out working 7 days most weeks and people ringing me every single day asking me to do their job asap.
I was the cheapest by a country mile and rushing around like a loon for half the money

Where are you based
[automerge]1584104297[/automerge]

As above...

You can be a bang average sparks but good at business then you will be just fine

You can be a great sparks but awful at business then you will fail

It took me probably 3 years to get my pricing right , initially I didn't bother checking what other local sparks were charging. I just went with a flat rate of £20 per hour.
Once I found out what they were charging I suddenly realised i was about half the price of my rival sparks.
At that time in my area most sparks were nearer £40-60 per hour.
No wonder i was flat out working 7 days most weeks and people ringing me every single day asking me to do their job asap.
I was the cheapest by a country mile and rushing around like a loon for half the money

How long ago were you charging £20/hr dusty?Up here in Yorkshire,some sparks are still charging that.?

 

[Cassells Spark]

One other thing which has been on my mind is the way in which I would pay my tax etc. Can anyone guide any light on that side of things for me please?

Appreciate all the replies. Cheers.

 

[Mike Johnson]

I was self employed as a single trader for over twenty years and used Quickbooks, no double entry to confuse things and it worked out the PAYE automatically as you entered your bills and invoice's, it also worked out your VAT liability, even if you don't earn enough to pay VAT it's still worth voluntary registering as all your expense's are 20% cheaper, mostly handy for fuel and equipment.

 

[Midwest]

You'll need to register with HMRC as a sole trader to start with. The best advice, is speak with an accountant, not necessarily a large firm. There are independent ones out there.

They are the best people to speak to, with someone going self employed for the first time. There are some tax benefits with opening a business, and purchasing tools, clothing, vehicles etc.

We can all give our experiences, but a good accountant will best advise to your particular circumstances.

 

[snowhead]

As Midwest, speak to an accountant,, before you actually start.

I was S/E for a while over 40 years ago , long before the fancy computer programs were available.
After year 1 went to an accountant with several bags of invoices and a few scraps of paper and bank statements only to be greated with,,, If only you'd come to me first,,,

Lesson clearly not learnt,, a couple of years later I bought a trading shop business, as well, registered for VAT and at the end of year got an assessment of £10k VAT as I'd failed to submit in time.
Went to the accountant with several bags this time to be greated with,, You're not getting the message are you?,,
Cost me £750 in accountants fees, no more VAT to pay other than the correct amount (not £10k) and no Income tax to pay.

 

[Dustydazzler]

Where are you based
[automerge]1584104297[/automerge]

How long ago were you charging £20/hr dusty?Up here in Yorkshire,some sparks are still charging that.?

when working full time self deployed I covered most of surrey and parts of south London. Basically anywhere within a hour of my house In Guildford.
back then 20£ per hour / £140 per day was what was a pretty standard rate For most trades. I then starting finding out local firms had increased there rates significantly, some charging £40-60 per hour or more....
you can be looking today at £80 am hour for a local electrician in my area

 

[robd]

You need to be organised and flexible. I still have problems fitting paper work in as you save some space to do it then people ring up and you end up slotting jobs in. Tbh it's a constant learning curve, personally I'll never be a millionaire from it but it means I don't have a boss sending me on rubbish jobs and I have less sleepless nights than when I was on the books (work that one out). Being organised is biggest thing I think, I use QuickBooks and that has helped me get a bit more on top of things. As mentioned Def see an accountant/some accountants, pick one you like and see how they want you to organise things before you start if you go for it. Generally you submit your tax at the latest of end of Jan for the tax year the year previous, you then pay your bill plus the next year ahead on a prediction based on what you made the previous year so you are always paying your tax before you've submitted your return and that's in 2 instalments. Personally wouldn't be able to do it without an accountant to tell me what to pay. Definitely doable if you want to do it but would arguably be easier staying on the books especially if you like coming home at 430 and not having to sit at your desk. All that said I enjoy it...mostly.

 

[pc1966]

As other have said, speak to an accountant before you start, maybe also see if there is any support for start-up businesses who can also give advice.

The gov is moving towards its "Making Tax Digital" goal so whatever you do for submitting to HMRC it has to eventually be done electronically. Getting one of the accounting packages makes a lot of sense (my accountant recommends Xero, above have said QuickBooks, but go with whatever your accountant tends to use as they will guide you). One major advantage of many of those packages is they help you collect travel info on jobs automatically for billing/mileage reclaim, allow invoices you pay to be photographed and noted as they happen, and to keep tack of invoices being paid (or not). Whatever you do don't end up with a sack of paper at the year's end!

You might want to become a Ltd company. You will need to be VAT registered if total business income is above £85k in any 12 month period (not just your accounting year) but it might be an advantage even if less as you probably will have a fair amount of stuff you can reclaim on (as others have pointed out), again an accountant can advise.

You will need to open a bank account for your business. If a sole trader you might get away with another personal account, but for a Ltd company this will have to be a business account (the only real difference is they they will charge you for the privileged of having it). Keep your work and personal transactions well clear of each other, arrange to pay yourself as needed from the business account, otherwise you risk real trouble if anyone investigates unfounded allegations. If you form a company then these days HMRC want PAYE done in real-time, for that you can either use some feature of any accounting software you use, or see if your accountant runs a payroll service.

You will also need business insurance. For general sparky work that should be simple enough to find, and also make sure your car/van is covered for business work and not on domestic car insurance. Again it can make sense to find a local insurance broker you can speak to, they are more likely to get you sorted with what you need than the on-line market sites.

Same goes for a pension scheme. Maybe not high on you agenda yet, but it will make a big difference one day. Don't delay in sorting it out!

For your sanity you might want to get a separate business mobile, or a dual-SIM phone, rather than using your personal phone with all of your friends on it. Allows you to set it to voicemail outside of working hours if you need peace, etc. Ask around as some of the companies (Vodaphone, BT, etc) offer various call forwarding options, to get the similar results with existing phones.

Finally don't forget some marking stuff. Business cards and the like to get your name known when you visit folk. I have seen some who get little stickers with their business name and contact info to put on CU, etc, after they finish the job.

 

[Mike Johnson]

And don't forget PI insurance if you set up as a sole trader.

Quickbooks has payroll built in, and I never used an accountant, two tax inspections in the time I was trading and never a problem, in fact I over paid my VAT by £0.80 on one inspection, it only took two VAT inspectors three days to find that out.

Quickbooks also has built in Invoice templates, automatically tracks everything, can't recommend it highly enough.

 

[Dustydazzler]

In light of the covid19 pandemic I wouldn’t be going self deployed anytime soon....

 

[ipf]

In light of the covid19 pandemic I wouldn’t be going self deployed anytime soon....

Agreed. Hold your horses.

 

[Mike Johnson]

Yes not deploying myself anywhere soon.