The media aren’t afraid of telling us that the state of the economy is fragile at best for the time being, and this has led to a lot of big companies going out of business.
Based on this, one might think that the typical person would have been well and truly put off from starting their own enterprise. As it turns out, thankfully, this isn’t the case.
The number of people going it alone is only going one way, and this means that entrepreneurship has never been as fashionable. Of course, it’s still as risky as it ever was, and there is a lot of groundwork that needs laying beforehand. Today’s post is all about going over this, and making sure you satisfy the following three points before you commit to your company on a full-time basis.
Do you have any backup funds?
First and foremost, let’s start with the financials. One of the biggest things holding most people back is the fact that you should have some backup funds before taking the plunge with your new company. Without these, you are risking your livelihood. You are expecting everything to work out as planned in the first month and if it doesn’t, well, who knows.
Some people recommend that you save at least six months’ worth of your typical expenses, but if you can manage more then it’s definitely worthwhile. The longer you give yourself, the less you have to compromise your business later down the line as you bid to make quick profits.
Will you take any annual leave?
This next point is something that a lot of people never even contemplate. Annual leave is something that we almost take for granted in the world of employment – it’s a legal entitlement. Then, when it comes to your own business, it’s something that you look after yourself.
What does this mean? Strictly speaking it’s not paid. For some businesses, this might mean that they don’t receive a penny for the time they take off work as no work will be carried out. This is something you have to budget for throughout the year.
Who is going to look after your tax affairs?
Finally, let’s end with one of the more mundane issues. Like it or not, tax is a pretty big issue to contend with.
If you are entering the self-employed world after being in employment, this can be a shock to the system. After all, the only money that hits your bank account when you are employed is the income after tax.
When it comes to your self-employed journey, everything enters your bank account. It means that you need to do the math, whether it’s through an accountant (one who has been making tax digital solutions with BTC) or the DIY approach. Either way, it’s essential and as well as satisfying everything from a paperwork perspective, you need to make sure that you are putting enough money to one side so that you can actually afford your end-of-year tax bill.
