Saturday, 26 January 2013

Business Tips - Part One - The Basics

Welcome to Part One in a series of business tips.

The Basics

I asked a question on Facebook a couple of weeks ago asking whether anyone would be interested in business tips to help you set up and run a business.

I was quite overwhelmed by the response I received.  I was going to do just one simple blog post but given the messages I received, I started writing lists of things I need to cover and realised its going to be far better to split the topics over several blog posts.  I also realised from the responses I received that I am going to have to start right at the beginning with simple basics working my way through how to grow your business.

I still feel quite new and completely inexperienced to the self employed world and for the majority of time just muddle through armed with plenty of cups of tea, biscuits, bars of chocolate and giant slices of cake hoping that I am doing something right!

I am certainly no expert and I am quite sure that most people won’t want or need my advice.  However, I do believe we need to try and help and support our small independent traders by ensuring that they are running their business as efficiently as they can and that we all try to buy local where and when we can.

I am based in the UK so all the links and forms detailed in these blog posts are aimed at UK residents as other countries will have other rules and regulations.

Hobby Vs Business

I have read many a debate mainly via Facebook over the last few weeks on some of the networking pages and there seems to be some confusion about when to register a business.  I’ve seen a lot of “but it’s only a hobby” statements.

If you make for pleasure, make gifts for friends and family then yes I do believe this is considered a hobby and long may you enjoy it.  However, I think that once you make something with the intention of selling it in return for money (albeit a bit of pocket money) then I do believe this is classed as a business and should be registered.  I would much rather register and know I’m keeping the tax man happy than risk being reported and face a hefty fine!  And guess what?  It is so easy to register with a simple form and if you don’t earn much you don’t have to pay any tax or national insurance contributions anyway so there’s no reason not to register.  I think perhaps a lot of people fear registering their little bit of pocket money income because they think it will all be taken back off them by the tax man!

Registering Your Business with HMRC

This link will take you to the government website to enable you to register your business.  Towards the bottom of the page there is a table and you need to choose what type of business you are starting which will take you to the correct set of questions – I am guessing that the majority of people reading this will fall into the first category of “New Sole Trader”.  You basically need to follow the on screen prompts where they will ask you your email address, personal details such as name, address etc and your national insurance number. 

AFTER you have registered for self assessment you can then apply for an online account.  I would definitely recommend this.  It is far easier doing everything online than faffing with paperwork, it is much quicker and you also get much longer to file a tax return each year.

You can also register for an online account at the end of the link provided above.  Bear in mind that it takes 7 days to register because HMRC need to send you out an activation code in the post.  Once you have this it is all really easy with online step by step instructions on how to set up.  When you do get this activation code – keep it safe as you will need it to log in each time.

National Insurance Contributions

I first started a business some 8 years ago selling greetings cards and designing wedding stationery.  I was young, only 19, new to it all, done it all myself and didn’t have a clue.  I ended up paying around 4 years worth of national insurance contributions when I didn’t need to because I didn’t know that there was a form you could fill in to be exempt from this if your earnings are low. 

If you earn under £5,595.00 (current rate taken from HMRC website in Jan 2013) from your self employed work you can fill out a form so that you are exempt from paying.  Once they have received this they will send you a “Small Earnings Exception Certificate” which should cover you for a period of 3 years.

This is the link you need for this: -

Something to bear in mind

I registered to be exempt from paying my National Insurance Contributions because I already pay enough contributions through my part time day job.  If you currently do not work and plan on registering as self employed as your only job, even though you may feel that your earnings are too low you may still consider to pay the national insurance contributions voluntarily to keep your entitlement to State Pension.

If you have children you may still be entitled to tax credits.  Do ring them to have a chat.  I did and I am still eligible for the child care element of tax credits (the same as I was before registering as self employed) because my business is not yet making a profit.  They told me that once I was making a profit it would depend on how much for it to affect my payments.  Everyone’s personal circumstances are different so please do give them a ring.  They are very helpful and it will put your mind to rest. 

I have no idea how it will affect any other benefits you may currently receive because I have never personally been in receipt of any other benefits.  If someone else reading this does have experience of this and would like to help and share any information you have on it then you would be most welcome to.

What Next?

Once you have successfully registered as self employed you may want to think about insurance.

I have insurance for several reasons. 

  1. It’s professional.  I want to put myself out there as a proper business who cares what it does and who cares about its customers.

  1. For peace of mind.  I traded without insurance for around 6 months initially (as its not a legal requirement) until doing craft fairs became a regular thing and the venues I was attending started asking for copies of my insurance certificate.  There is nothing more embarrassing than turning up to an event to set up, being asked for your table fee and a copy of your insurance certificate then hanging your head in shame because you haven’t got it and being turned away!  It was a great deal of weight lifted off my shoulders once I got mine sorted.

  1. Customers can feel more comfortable dealing with you knowing you are a registered business that has insurance because they know that when they buy from you and things go wrong, you and them are covered.

  1. I can turn up to events and not look like the fool I once did!

How do you get insurance? 

It is really very simple.  Last year I was in a panic about not having any insurance and needing it quick so I went with the first company I found which gave me exactly what I wanted and I had my insurance certificate the next day.  However, although I had a perfect service, because I was in a panic about getting it pronto I hadn't shopped around and ended up spending far more than I needed to.

This year I have had more time to think about it and have found what I believe to be one of the cheapest around for better cover than I had last year!

I have found insurance which covers me for both public and product liability up to £5,000,000 for just £48.00 per year.  Last year I paid over £100.00 for just £1,000,000 cover so it really does pay to shop around. 

And guess what?  I am happy to share the link to the company I had it from so you can benefit too: -

Combined Market Traders Insurance Association

I spoke with them and emailed them before sending off my form and payment and they have been very helpful.  I sent my application off last Monday and I had my certificate through the post by Friday so a good service so far for good cover. 

That is the end of Part One.  Well done if you made it this far.  I do hope it’s not been too mind numbing, I've added a few pretty pics from my collection to soften the blow!

 What’s Coming Up In Future Instalments

Part Two
How to Keep Records
Methods of Selling including how to set up a Facebook Business Page
Time Keeping where you will each get your very own time management sheet to work out how to make more hours in the day.

Part Three
Products, Branding, Pricing

Part Four
Taking photographs

Part Five
Craft Fairs
What you need, how to set up, do’s and don’ts

Part Six
Suppliers, Networking, Advertising

Part Seven Onwards
To be confirmed – depends on what else you lovely lot want me to cover.

Sunday, 6 January 2013

A Belated Happy New Year!!

Happy New Year to you all!

Yes, I realise I'm a little late.  Why does time go so fast the older you get?  I swear the fairies come in daily to change the hands on the clock when I'm not looking.

Button heart detail on a cushion for an order.  LOVE the bright colours

 Did you all have a nice Christmas?  Ours was very enjoyable and it was so lovely to have a rest.

Our Christmas!

I've had several 3am finishes the last couple of nights to try and sift through my sewing pile but I don't seem to be getting anywhere.

The lead up to Christmas was just so manic with orders, preparations, school activities etc that I think I've had a bit of a slump and now I need a kick up the bum to get going again.  It doesn't help that I've eaten my body weight in mince pies and selection boxes!

Bright colourful details on a tote bag I made for an order

What I have managed to do over the Christmas break was to get my website back fully functioning.  It has been down for maintenance for far longer than I anticipated.  Here is the link.  I would love to know your views: -

I have several things in my sewing pile this New Year which is all good.  I have finished two cushions which have already gone to new homes.  I have a pile of flags to turn into bunting for a baby's nursery to finish, several hearts for Valentines and Mother's Day, two door stops and an apron.  Plenty to keep me going.

I finished this cushion yesterday.  I am in love with its fresh summary feel.  Plus its big and squishy so very comfy.  It's not been added to the website but its for sale over on Facebook or I am happy to take enquiries via email ( if anyone is interested in giving it a home.

I have had to rethink some of my prices over Christmas again.  I have sat down with a list of my products, worked out the cost of materials etc and I have had to raise them slightly on some products.  I have started using better quality fabrics (I have a stash of Liberty fabrics on its way) and I'm using lots of vintage, ceramic, mother of pearl buttons etc lots more which of course cost me more.  I have introduced a flat rate of postage to £3.00 per parcel.  This is based on the fact that the majority of my parcels cost me £2.70 to post Royal Mail 1st class post and I've added on a small extra (very small) to account for tissue paper and packaging.  I'm still making a loss on packing materials but I don't think I can justify charging any more than this for postage as I don't want to put people off!  Why does pricing have to be such a minefield?  I've been having nightmares about it.

I have also been having a little think about craft fairs, events etc.  I done quite a lot last year.  I am hoping to purchase new stands to make my stall look a little different this year although I think I need to be a little more selective with which events I do now.  Because of my type of product I don't know if I quite fit in with many of them any more.  Why does the general public still feel they have to connect craft fair with cheap old fashioned products?  Why are they not thinking modern day craft using high quality materials and great skill? I don't think a lot of folk realise that craft fairs are not usually the place for hobbyists any more, there are real businesses there trying to earn a living...

I shall get off my soapbox now before I start one of my rants I am often well known for...

I hope to be blogging lots more.  I am hoping to make more time for it as I do miss it.  But I am off to do some more sewing and get ready to go back to the day job tomorrow - UGH!