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?
Insurance

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.

16 comments:

  1. Well you've already helped me with this post - I knew there was an exemption from National Insurance somewhere but couldn't find it for love nor money, thank you! Blog is very well written and love the layout, well done :-)

    Paula
    2 Crafty Birds

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    1. Thank you ever so much for your kind response. I am so pleased its been of some help :-) x

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  2. Fab post, looking forward to reading the next installments.

    Hugs, Estelle xx

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  3. Told you not to worry - the post is great, really thorough and helpful!! I also used CMTIA for my insurance and found them really helpful and prompt. Looking forward to the next instalments xx

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  4. A brilliant blog and so very useful. I have been selling for a while but have no insurance and am not registered as I haven't been making much recently due to family circumstances but have just started again so will be taking your advice! I am so looking forward to the next installment xx

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  5. Thank you so much for this. I am still in the hobby and learning phase but would hope to be able to seel by the end of the year. I thought the whole thing would be really confusing and intimidating so this is such a help. x

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  6. This is awesome advice, so well explained and makes very good sense.

    Thank you, am looking forward to reading the other installments!

    Hugs, Rhi x x

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  7. Great advice! The one thing i would say is be careful with your insurers as I did look at the company you went with and at the time i spoke to them they only covered items sold at markets and fairs, not online sales - so make sure you ask ALL the questions - better to ask and feel like a ninny than not have your bottom covered as it were! Looking forward to the next installment :)

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  8. Saw this on Twitter via the Sewing Boutique and I'm glad I did. I set up albeit very slowly last year and this blog is extremely helpful as I need to do things properly this year.
    Very much looking forward to the next piece :)

    Sarah x

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  9. Very well explained..such a good idea to cover this on a blog! Well done. Have commented on yr fbook pg too! :-)

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  10. What a great and informative post! I am just making little things as a hobby at moment but will read your posts with interest just in case ever needed. Mandy x

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  11. Really useful and 'idiot friendly', thank you!

    Can I ask a novice question - If you chose to have a facebook page and a name for your business, do you have to register this name, and if so how do you go about this? Thanks, Wendy x

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  12. Found out about you via Hike Those Likes on Facebook and this is such a well laid out and easy to understand post. Thank you for taking the time to do it :)
    And I love your blog :)

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  13. Woowee.... Thank you so much. xx
    I've been worried about all this tax stuff - I work, my hubby's self-employed & I claim working tax credit so I was very confused as to how it effected all of that. After reading this & knowing full well that I earn nothing like £5595 from my crafting I will defo look into it & not be worried about the outcome.
    Looking forward to the next installment.......
    Jo

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  14. Hi, Thank so much for an informative post on business tips as well as declaring tax.
    I have joined your blog only because I have just seen your lovely work and quite enjoyed reading blog to.
    take care now. Julie. C

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  15. Great tips! Have passed onto my friend! I was just thinking about other things you could cover.. Do you have any tips on getting over copyright issues?
    Thank you for the tips and I look forward to seeing more,
    M @ hummingbird-sing.blogspot.co.uk

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Your comments are always welcome and most appreciated x