Sole Trader Questions

[SigmaSecurity]

Hi all

I am currently employed full time by an electrical installation company and after nearly twenty years working at the same firm i very much like to become a sole trader. Not necessarily for an improvement in my earnings but a more flexible lifestyle.
I have no mortgage or dependents and with two years salary tucked away in a savings account the time is now right.
Thing is though although there is an awful lot of information available on the internet i am very much on my own on this and i would very much appreciate any advice that would help point me in the right direction.

As i see it to become a self trader i would have to:

1. Register for self assessment
2. Obtain public liability insurance (optional but wise)

As i have all my own tools and a suitable vehicle then the above is all i would need to make a start?


However this leads to many more questions:

a. Am i right in saying that i can still be employed fulltime by my present employer and operate as a sole trader(contract permitting)?

b. If the answer to question a. is yes how would this affect my national insurance contributions? I already pay Class 1 national insurance through my employer but would my self-employed contributions, class 2/4, be treated in an entirely separate way?

c. What after registering for self assessment i do not do any business, do i just fill the form in in April to show this?

d. I would be working for an hourly rate or day rate. Would i need a contract for this or a purchase order? How would this be a legal document or is it based on trust?

e. Invoicing, i am told the norm is to invoice within 30 days but new clients should be invoiced after 7. Would payment normally be expected within 30 days? What happens if no payment is received?


The above may seem like dumb/naive questions to those that know but any help would be very much appreciated.

Many thanks,

Sigma

 

[Comedora]

a. yes
b. it would depend on your total combined income
c. to avoid such situation do not register for self assessment before you start getting any work
d. it is always advisable to have some sort of agreement in written, be it a contract or standard T's & C's
e. it's entirely up to you when you are going to bill, but to avoid problems as much as possible before granting a credit, do necessary checks on your client (i.e. credit check, references etc.)

 

[IanG]

Going to disagree on a.and say no, that would make you an employee.

 

[Scalloway]

I understood the OP to mean he was working for other people, rather than for his employer.

 

[IanG]

i can still be employed fulltime by my present employer [in that role] and operate as a sole trader [for all additional work for other people]

i can still be employed fulltime by my present employer and operate as a sole trader [in order that I can choose hours and workload within the remit of that role I used to have]

Could do with seeing which one of these two.

 

[SigmaSecurity]

Could do with seeing which one of these two.

The first one. I am currently employed fulltime.

 

[paulears]

Still not clear. If you become self employed but most of your work comes from a single client, HMRC will rightly determine you are an employee. If you have a spread of clients, and do the odd job for your old employer it will be fine, and it's even fine to work as an employee and be self employed for work you do when you are not working for them. You can be officially employed and self employed for tax purposes. The decider is simply how the IR35 rules fit you. Do the HMRC questionnaire that has been recently revamped. If your employer wishes to operate you as self employed it can be risky for both sides, especially if they provide you with a list of work to do, tell you when it must be done, and what to charge. Would they be happy with you substituting somebody else to do the work, and do you negotiate direct with the customers?

 

[IanG]

You can't be self-employed and retain what is effectively a full time position at one company.

 

[HarveyIT]

You can't be self-employed and retain what is effectively a full time position at one company.

I disagree. You might argue that this is not common, or maybe not, but how about working full-time for an employer, and being self-employed at the weekends (if viable)? (however, this is not the only example)

 

[k100danny]

I think he is referring to keeping his current position at one company as an employee whilst his business gets off the ground and of course yes this is perfectly doable providing your contract allows you to set up a business/ working for another business in the same sector. A lot of employment contracts obviously don't allow this for good reason.

 

[IanG]

Sorry, to be clear.

You can be an employee and also take on work at weekends as a sole trader.

What you can't be is a sole trader, then do a substantive amount of work for your ex-employer.

Notice the latter usurps the employer's obligations in respect of tax an NI, hence why it is not acceptable to HMRC.

I don't wish to say you can't do additional work. If the relationship with the current employer is in question, my understanding is that you can't realign that relationship within a different legal setting when the other parameters remain largely the same.

 

[TODonnell]

I've read that 30 days, while normal, is ... foolish. Why not ask for immediate payment, if you have given people have your goods or service?

Just a thought.