I have been self employed with an online business my blog now for nearly three years. I would really recommend it to anyone taking the plunge. But be aware that there is so much to consider , here are the most important things from experience.
Consider sales tax connex
If you have an online business you have to consider sales tax nexus and try and get your head round the challenging and confusing aspect of it. One of the most common confusions is applying income tax nexus rules to sales tax nexus. Sales tax has a much lower threshold for nexus creation than income tax. The Wayfair nexus case and sales tax act really did open the flood gates with regards to this. Sales tax compliance is so important to any business.
Set up a business bank account
This is a must as keeps and records all of your business finances separately and in one place. Most banks offer business accounts so it’s best to do this asap.
Sources of income
You need to plan where your sources of income will come from , do you have savings ? Will you take out a business overdraft or get a business loan? Whichever you decide it has to be the right choice to suit your business needs and finances.
Get a process in place for recording your business activity
You need to record your profits and have evidence of your business expenses. It s best to have all of this in one place on a spreadsheet and have all paper work etc in a folder ans all together. This will make it much easier when it comes to gathering sales tax etc.
Check with your landlord if you rent and are working from home
If you are working from home you need to check your tenancy agreement or mortgage agreement to make sure you’re not breaking any terms. You may need to let your landlord or mortgage lender know.
Ensure that you have sorted out your insurance. Professional indemnity insurance and public liability insurance are the two main types of business insurance to think about. There are many small business insurance options to choose from.
Think about your pension as you are not going to be paying in to a work pension scheme it’s good to get on in place for yourself. There are many private pension options you can look at and ones that will suit you.
Being self-employed and getting a mortgage
One of the down falls of being self-employed is that it can be harder to get a mortgage, but it’s not impossible. When you apply for a mortgage and you’re employed by someone the lender will ask you to prove income by asking for payslips and bank statements. When you’re self-employed you will have to provide 3 years of business accounts and a copy of your self-assessment tax return forms.
As you can see there is so much to take in / learn but it’s well worth the risks.
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