Starting a Business While Working Full Time?

[anzo]

Good Morning,

I'm new to the forum. I'm 22 years old and work full time as an IT Technician for a very large manufacturing company. I have been in this job for 5 years which was handed to me when the previous director became a general manager when the business was sold.

I love the line of work, but not so much the place - I feel like I've out grown it and it's now holding me back from learning more. I don't have any qualifications in IT and it's all down to my own studying and experience. I can now comfortably tackle any problem within within a small-large organisation, on the IT side of things.

The problem occurs when I want additional training, I've asked work but they're not in a position to offer training as IT fuctions may become redundant as systems move to another site - so it seems eventually I'm going to be offered another position that I don't want, or take redundancy. In this current climate redundancy is something I definately don't want.

At the same time I've been looking for employment elsewhere. I've had only one interview within 6 months and I feel that may lack of qualifications are the stopping me - unfortauntely people see that you're only 22 years old and assume you don't know anything unless you hold a degree, it's complete ageism, but I think it's true. Companies can't afford to have someone under qualificated at the moment.

So, it leaves me with three options; 1. Get training, 2. Stick at work and stick it out, 3. Do 1 and 2 aswell as earning money on the side.

I plan to keep my 39 hour a week job and then work for myself after hours - not so I'm over worked and my performance drops elsewhere, but just a client a day for example, 5 days a week for £20 and it's an additional £100 in my back pocket for training.

However, my question(s) as follows:

1. Tax and NI - I pay this on my current income, if I work for myself will I have to pay it on that as well, or is there a band that if I make under £XXX I don't have to pay it?
Keep in mind that this business is mainly to fund my training - however if It becomes successful enough I would certainly stick with it and perhaps make it my full time job.

2. To pay Tax/NI from my own income, will I have to be a registered company?

3. Can anyone see any downfalls in my plan? Any advice would be fantastic.

4. Ideally before doing all of the paperwork for this company, I'd like to test the water as it were to check if there is a market out there for it.
Perhaps a couple of posters and adverts placed in some local shops and see how much interest I get from it, would this be legal (HMRC wise?)

I can see this really working out for me, but I'm finding it difficult to get the right, and useful advice. The reason I think it will be a success is that I am not relying on this business as part of my income, it's an experience which comes with the benefit of cash.
And because I'm not in it primarily for it to be successful, I can pretty much beat any price anyone else is offered - if someone is quoting £20 to fit a router, I'd happily do it for £10 as I've nothing to lose.

So, thank you for reading, apologies that its a bit long winded and in depth, but I'm really trying to find the answers I'm looking for. Unless I include all of the information I fear I'll just end up with a generic answer like I have done from everywhere else.

Thank you.

 

[psanghani]

HI Anzo

For tax info click on this link http://www.hmrc.gov.uk/rates/it.htm. I don't think you need to register as a company to pay tax/NI from your income, I think you just register as being self employed aswell just visit the HMRC website they should have all this info.
I think you are doing the right thing if you can handle your job, launching and running the business and your social life you have a continuos flow of income while creating a potential bigger opportunity for yourself. I also like the fact that you are intrested in further training which may help you in running your business.
I am a Business and Management student at uni have had lots of business start-up training and I may be able to help you, feel free to send me a Private message of further details of what your business is about

 

[Steve202]

Don't forget some insurance, even it only covers the basics. That way if something goes wrong when your at a customers house, your at least covered by your insurance. Axa sorted me out with mine.

 

[Officebird]

As has been said you don't need a company, just start up as self employed and as long as you tell HMRC within the first 3 months then you are fine. Give them a call or check out the link you have been given as it's full of useful info.

As for putting up posters etc that would be fine but are you able to take enquiry calls whilst you are at work (I'm not trying to plug my call answering here just pointing it out!). Most people will ring during the day so you don't want to be missing potential clients.

I think as you are only planning to be doing £20 worth of work a night it would be well within your capabilities to do this whilst working full time.

Insurance is definitely needed, I've always found Hiscox cheapest. Try speaking to Business Link to see if they can help.

Good Luck

 

[will1872]

I've setup an I.T. company part time, whilst working in my current full time role, pm me if you like.

Having a steady income coming in whilst working full time is a good way of building your business up, I'd suggest looking at what your competition is charging and base your rates round that, don't be selling yourself short or going in with very low prices, remember one day your aim is to make a living at this full time!

 

[anzo]

Thank you to you all, been a fantastic help. Any more advice will still come in handy.

Will, I will drop you a PM when I have a minute, there are a couple of things I'd like to run through with you if you don't mind?

Thanks all.

 

[will1872]

Thank you to you all, been a fantastic help. Any more advice will still come in handy.

Will, I will drop you a PM when I have a minute, there are a couple of things I'd like to run through with you if you don't mind?

Thanks all.

Sure send one when your ready Anzo

 

[The Inside Mole]

You'll need to register with HMRC within 1 month of starting (it used to be 3), if you register now they will usually let you have a 53 week year for the first year so this week will be added onto 2010-2011.

With regards to tax I assume your personal allowances are used you by your main employment, that means all your self employed profit (income - expenses) will be taxable at 20% and 8% for NI class 4. You'll also need to pay NI class 2 at £2.40pw or claim a small earnings exemption if your profits will be under £5,075.

 

[thecyclingartist]

Just a quick thought, I don't see anyone else has mentioned... check your employment contract if you're going into the same business/target clientelle to make sure there isn't a non-competitive clause that would prevent you from working in a place (including self employment) that would conflict with your employer.

 

[Gooseberry]

Hi, I was just about to add check out your emplyment contract first too. But other wise its up to you how you do it. Working full time and the part time for yourself is very hard work, I know because Ive dont it and it means no days off and very long days. But if you put in the time and work it will pay off.

Good luck.

 

[Jon236]

You'll need to register with HMRC within 1 month of starting (it used to be 3), if you register now they will usually let you have a 53 week year for the first year so this week will be added onto 2010-2011.

With regards to tax I assume your personal allowances are used you by your main employment, that means all your self employed profit (income - expenses) will be taxable at 20% and 8% for NI class 4. You'll also need to pay NI class 2 at £2.40pw or claim a small earnings exemption if your profits will be under £5,075.

Surely this is only upto a certain amount, as per usual income tax thresholds? Ie once you earn over a certain amount, then your tax rate will go up?

 

[The Inside Mole]

Surely this is only upto a certain amount, as per usual income tax thresholds? Ie once you earn over a certain amount, then your tax rate will go up?

Yes, sorry I was automatically assuming as he would still be under the main theshold, good point.

When you combined the two (earnings from full time and profit from self employment ) income tax is payable as follows:

For the first £37,400 it would be 20%
then anything over that amount would be taxed at:
Between £37,401 - £150,000 - 40%
Then over £150,001 - 50%
(All at 2010-2011 rates)

 

[Jon236]

Thanks Jasmine, I thought that was the case, but wanted to make sure incase I'd got the wrong end of the stick along the way!

 

[Stephen Berry]

I think that most things from the original post are covered - I'll add one - NI deferment
http://www.hmrc.gov.uk/nic/ca72b_notes_12_08.pdf

If you have a main employment (paying NI), then with deferment you can wait, see how much NI you have to pay and do so at the end of the year. If you fit the criteria (which with the little information we know from you does seem likely) HMRC will, when requested, issue a deferment notice and asses your liability after your year's profit is known.

 

[AcousticRiley]

Hi Anzo, this is an old thread but I'm interesting in hearing an update from you. Did you start your own company? Are you still in your full time job?

Let us know where the last few months have taken you.
I plan to take a similar path and would love to hear your experiences.

 

[Ashley_Price]

Hi Anzo, this is an old thread but I'm interesting in hearing an update from you.

As Anzo's last activity on this website was back in April 2010, I think you can take it as read that you won't get a reply.

 

[AcousticRiley]

I'm hoping the email notification will lead the poster here and present us with an update.
Let's hope his absence is due to there not being internet on the Caribbean island he's just bought. =D

 

[UFOnaut]

I work for internet provider. Clients of my company have many problems with their PC's and networks, but company don't offer such services as PC and network repair (provides only internet access to clients). I have many clients who need such services and they call me private. Clients are glad that they have a man who can service their internet connection and lso do same thing to thier PC and local network. My earnings are 5x of my salary.

 

[Liz Broomfield]

Hi Anzo,

I've been doing this since August 2009, although things started to pick up with the business in April last year. It is hard and tiring and you need to be good at time management, and eventually something has to give, but that can be positive.

I second what everyone says about registering as a sole trader with HMRC (no need to set up a registered company or go VAT registered yet) and it's also worth seeing if they are running their becoming self employed courses in your area (usually at your local library) - I did a morning course when I was just starting and it was brilliant - free, and the tutor got info on all of us at the beginning and tailored it so she let me know about my own situation during the course. Well worth it.

Other hints:
1. Keep records from the beginning - invoices out, payments in, money you spend on it. Just on a spreadsheet or two but makes it easier.
2. Keep hold of your p60 in April from work - you'll actually use it when you do your self assessment!! (you just have to copy info off it though, nothing hard)
3. Time management is key. Work out when you work well, do business work then. e.g for me, early is best, so I sometimes get up at 5 and do a couple of hours before going to the day job.
4. Tell your company that you're doing this, or your boss at least, then they will understand if you rush off dead on 5 when you used to stay late. But make sure you're not in conflict with your contract.
5. Schedule time off. I try to make sure I don't work after 9pm on a weekday and not after 12 on a Saturday. Also don't spend all your annual leave doing work for your business (do what I say, not what I do!)
6. Find stuff to cut corners on and do it. I got a cleaner for a couple of hours a week and cut down on a couple of hobbies. You can't do everything.

I have been doing on average 40 hours a month since April on the business, that's chargeable hours with another amount on networking, admin, advertising, social media, website etc. And the day job was 36 hours a week.

I have started to transition things over by asking to drop a day a week at the day job which starts tomorrow - I kept a note of what I earned per month at the business and made sure it averaged more than 1/5 of my wages at the day job for a number of months before I did this.

Good luck! PM me if you need any further info/advice.

Liz

 

[Ashley_Price]

UKBF is one of those strange sites. People either stick around for a long time, or come, as one question never to been seen again.

As I said above, with his last activity being in April, we shouldn't hold our breaths. And he will have only got an email notification if he set it up to do that.

 

[Liz Broomfield]

Oh no! I did that great big long post and somehow hadn't noticed this page full of where is he now stuff! Oh well, maybe someone will find it useful somewhere!

 

[dubsie]

Hi Guys

I stumbled across this thread and its all been pretty interesting.

I'm in a similar situation to anzo. I have been trading merchandise for a US brand in my spare time (outside of my full time hours) and am wondering about my tax situation.

I havn't registered as self employed or paid national insurance (except from on my annual salary). I take that from the advice given in this thread, I really should of! Does anyone know what sort of penalty I would receive for trading for the last 10 or so months?

Im also interested in knowing what stock is classified as. I have heard that this is counted as profit and that I need to pay tax on holding it. Is this the case? I have already paid VAT on the goods.

Thanks for all the advice already given!

Best regards

 

[IndiCafe]

Stock is just stock, a current asset. Not profit, not even a business cost until it is sold. No tax other than vat, which in your case is likely to just be included in the stock valuation. Sounds like you should get an accountant who can advise you.

 

[Simply Business]

Hi Anzo,

Don't underestimate the power of your experience. Your experiance has given you the confidence to be able to say that "I can now comfortably tackle any problem within within a small-large organisation, on the IT side of things" and it's important that you make sure your CV notes the different aspects you have worked on - "cabling" "software installation" "customisation" "routing" etc. But this experience is also a good way of helping you target which sections of the industry you look to go into and the work you want to take on from a self employed point of view.

You'll find that if you get a one off job with - even a small office - to do some router work they will request that you have public liability (PL) cover in place before they offer you the contract.

PL cover is designed to protect you against any injury's (and associated costs) you may cause during the course of your work - a staff member trips over your bag.

If you have any queries or questions around business insurance cost's and options please feel free to send me a direct message or follow http://ow.ly/3DgjR

Kind Regards

Tim

 

[thetime22]

As long as it doesn't drive you crazy in the process, all the best to you.

 

[Working First Aid]

To the OP,

Sorry, I haven't had time to read the whole thread, but I can say that I am currently starting a business whilst working full time.

It IS harder, especially with family life to consider too - but I feel it is helping to keep my interest keen, as I am always looking for an extra 5 minutes free time for additional research, or to do a little more to my business/marketing plan.

Keep at it - it will all be worth it in the end!

 

[hoff_uk]

I had exactly the same question as the original poster here and this has been a great help.

Thanks!

 

[gleparker]

Hi everyone,

I was hoping for some advice in relation to this thread:

I work within the public sector and with all of the uncertainty at the moment I was looking at setting up a small internet business. This is in no way related to my job role and therefore would in no way present conflict with my employers, however, I understand that I am obliged to keep them informed as to what I'm doing.

Is there anyway I could 'test the water' with this idea before fulling launching it/ registering it as a business and therefore affecting my tax / national insurance??

I have only just started thinking about this the last couple of days and it's all very daunting!!

Thanks.

 

[Scalloway]

If it is classed as a hobby business ie having a very low turnover and minimal profit HMRC will probably not be bothered.

 

[iwannabe]

I'm actually in the same shoes! I've found a niche in the International market which I'm trying to test out by outsourcing everything from production to supply to distribution. This is a HUGE experiment, but if it works, it means that I can carry on with my day job and only have to spend 30 mins - 1 hour a day on my business. Currently, I'm looking for a UK based company that can type, letterhead and send letters on your behalf... Any ideas, anyone?

 

[evocart]

Havn't got time to read the whole thread now but noticed that someone said that you have to register within 3 months and then someone sad within a month. This has now changed and you have to register the business the day you start otherwise you may face a penalty. More information available on the business link website.

 

[jadejackie]

Now I am in the same position as you are. I have a job. Also I hold my own business at my spare time. I think this is the best way to let you success.