If you are wondering if you can start your own business while you are still employed, then we have some very useful information to share with you. There is absolutely nothing stopping you from starting your own business on the side of being in employment – in fact, there are many solo-entrepreneurs and sole traders that do this as a fall-back option against the risks of them losing their paid job should their employer decide to wind up the business or relocate it to another part of the country or even overseas.
Many people start up a very lucrative sideline to supplement the money they get from their full-time job. In this way, they get to keep all of the benefits of having a regular salary, holiday entitlement and other benefits that come with being employed, but they gain some extra cash to put towards life’s little luxuries, such as a nice holiday each year, updating their home or buying a new car.
If you are in a position where you have a stable job that you can manage well and still afford some time to dedicate to your own business, then you can get the best of both worlds. Whether or not you choose to keep your business small and manageable while you carry on working, or you choose to grow your sideline until it reaches a point where it could deliver a greater income than your regular job, there is no risk in trying out your business idea. You can give it a year and then reassess your situation.
Let’s take a look at some points to consider before you take the plunge into starting up your own business while still being employed. Remember that there is no great rush to kick-start your business, so don’t let yourself become overwhelmed with the process.
Keeping it small
No matter how enthusiastic you are about your new business, try to keep it running as a small part-time project alongside your paid employment. Keep your business activity steady and sustainable over the long-term to slowly build your business from strong foundations. This way you will avoid making any mistakes by rushing in too soon and not giving yourself enough time to consider each move you take.
There are obvious benefits from slowly building yourself a business on the side, as already mentioned above. The extra coming in from your business on top of a regular and dependable wage will help you feel more secure about your future and allow you to test your ideas and make any changes needed without risking your income.
Of course, keeping your paid job while building your business will also mean you will be free from worrying about paying your bills or draining your savings to keep your family supported.
Avoid conflict with your employer
Depending on what you actually do for a living, you may have certain disclosure rules written into your employment contract that you have to be mindful of. For example, if you are working in research and development you will be required to keep quiet about any product developments, inventions and respect the intellectual property rights associated with them.
Even if you have put your heart and soul into developing something during company time and used company equipment and property to develop it, it still remains the property of your company. You could find yourself in some serious breaches of contract if you take an idea you have developed while working for a company and decide to use it to set up your own business.
You really need to come up with a workable idea for your side business that you can guarantee has no links with your paid employment. There is nothing wrong with using your own skills to research and develop your own ideas, but you must be able to prove the work was your own with evidence and be able to show that it was developed independently outside of your paid employment.
Save your side income to re-invest
While the idea of bringing in some extra cash to your household from your side business, it would pay you to save a good proportion of your earnings to re-invest back into your business.
Being able to save a regular slice of your side business income can show you that your business is a success and is proving to be profitable. This can not only reassure you that you have a solid business idea to grow and develop further but showing a healthy income and bank balance from your project will also convince others that your business is viable and is a going concern.
This will make it much easier for you to attract and secure financial support in the future should you decide to jump in with both feet and leave your paid employment to grow your business. Banks and business finance lenders are more inclined to approve loans at more favourable interest rates and flexible repayment terms when you can demonstrate a healthy savings account and regular income from your business activities.
Ensure yourself a good work/life balance
Working a full-time job as well as a part-time business places a lot of pressure on your time. You need to consider the needs of any family that depend on your time too!
You need to sit down and discuss with your loved ones what is important and where you should prioritise your time. Set regular breaks to share family time and be prepared to adjust and adapt your schedule to fit in with the needs of your family responsibilities.
Prepare to Go-Pro!
By taking the plunge into self-employment, you will need to register yourself with HMRC as a sole trader once your business is up and running. You need to do this within three months of officially starting your business and receiving any income from your business activities. While it is fine to let your business tick over for a while in your own name as a sole trader, there will come a point in the future where you will need to take your business to a higher level.
If you want your business to be taken seriously by your prospective customers or clients, then you will need to ensure that you cultivate a professional image and a feeling of trust and dependability around your business name and brand.
While you should never feel pressured to leave your day job, you also need to ensure that your side business feels just as important to you as your paid work. By making a commitment to your business and turning it from a lucrative side-line into a professional registered company, you will be ensuring that your business can be trusted and respected as a company in its own right.
Going professional and registering your business as a limited company also means that you are protecting yourself and your assets from risks further down the line should anything negative happen to your business in the future.
By turning your business from a sideline that you are completely financially liable for into a stand-alone company in its own right, you will be taking the right steps to protect everything you have worked hard for from harm, such as your home, car, personal finances and other personal assets. As a registered limited company, your business will have limited liability depending on the type of company you form.
These are the three most popular types of company formation:
Once you have proved that there is a clear demand for your business solution and you have achieved a sustainable income from your business idea, the next natural step is to take your business on to a more professional level by going through the company formation process and creating your own limited company.
The actual process of registering your company with Companies House can be pretty daunting. You need to make sure that you fill out your registration correctly as Companies House will reject your application should there be any mistakes or incomplete details discovered on your submission.
At this stage is it wise to seek the help of a professional company formation service to do this on your behalf. Your Company Formations can take the pressure off your shoulders here with our swift, accurate and highly precise service. We have been forming professional companies from our offices in London for many years, so we know exactly what information Companies House need from you to get your business successfully registered as a limited company without a hitch.
With over 100 years of collective business experience in company formations, we can make registering your new company really easy! Why not take a look at our comprehensive formation packages to find the right fit for you.
Do not hesitate to contact one of our friendly team members if you need some expert help or guidance about which of our packages is the right one for you.