Running a business of your own is everyone’s dream, but it also is one that you need to think long and hard before chasing. As with everything in life there are pros and cons of being a self-employed. Among the big benefits are the fact that you will be your own boss, leaving you free to work hours that suit you and pick your own holiday times. This is great, but you also have to factor in cons like the loss of sick pay, paid holiday time and job security, as well as having to handle things like your own accounts. If you are still on board for self-employment, we will look at three ways of ensuring it is a success.
- Register as self-employed
One of the first things you will need to do is to register yourself as self-employed with the IRS. If you are going to be hiring other people, you will need to apply for an Employer Identification Number (EIN) from, but even if you aren’t you will have to register the name of your business for tax reasons. You will also need to register your business for other things, including Value Added Tax (VAT) – which is taxation on services or goods – and health and safety, among other things. More detailed information about the likes of VAT can be found at the IRS website.
- Get all the tools you need
Whatever kind of business you plan to set up, you will almost certainly need some specific tools to assist with your self-employment. These can range from a computer to a car. If travelling to meet with clients is essential to the running of your business, you will need a vehicle of some kind, while if you are setting yourself up as a joiner or plumber, you will need specialist tools like screwdrivers and hammers. A computer is something most self-employed people will need to have, as it is easily the most efficient way of keeping records of your finances – another essential requirement if you don’t want to get into trouble with the IRS. Keeping proper financial records can be pretty daunting for many newly self-employed people, but there is specialist accounting software that you can get; such as Sage One, that makes bookkeeping a lot easier and more efficient. Built-in statements and reports let you take a look at your income and expenses, allowing you to always keep an eye on your cash flow.
- Insure your business
This is another step you are legally required to take, but it makes sense to do it anyway. Insuring your business protects you financially in the wake of something going wrong. There are different kinds of business insurance, but you should definitely get a general liability policy, as this protects you in the event of negligence claims, injuries or accidents – covering everything from settlement bonds and lawsuit costs to property damage or medical costs. If you are providing a service, such as consultation, then professional liability insurance will cover you against negligence or malpractice claims, while product liability insurance protects your business against injury claims as the result of defective products. You will probably only need one of these, depending on the type of self-employment you are planning. Finally either home-based or commercial property insurance will be needed, depending on whether you plan to work from home or separate premises, as it covers potential loss of equipment or damage to the workplace.
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