Well, I'm still staring redundancy in the face but since I ws first told I'm 'at risk' 3 weeks ago I've heard nothing. Not surprised by this at all but I gave them an awful lot of questions to answer and thought that they may have got back to me on some of the points by now…

Anyhow, to my point.
I'm thinking about setting myself up as a one man company and working for myself.
There are no jobs around just now as engineering seems to be dead on it's feet here in and around Glasgow (and everywhere else too). So I thought I would try to go it alone, there is the possibility of some work but I couldn't guarantee how steady this will be? Every week could vary.
But this could allow me to do smaller jobs for other people – might ba able to fill a small hole here…..

So, I'm currently still working but I thought I should get this all set up so I'm not caught short.
As I'm working and in the PAYE tax system would my current employer ever find out through said system? i.e. my pay slip states how much I have paid to date – would it show any other work I've done through my own potential business?
They have an 'exlusivity' clause in their contract so I need to avoid them finding out.

However, I know what they are like and I could be turfed out any day. In order for me to deal with this I need to be able to get out there ASAP and start working again to keep a roof over my families head and food on our table…

I could do weekend work now which would give me good standing for when the inevitable happens but I need to be careful here and make sure they don't know.

I'm sure I'll think of more quetions very soon about this….

Nervous but this could be a big step forwards…

The exclusivity clauses are very rarely enforceable.

The cases where the employer is successful usually involve the employee also stealing contact data or proprietary knowledge.

Usually it is a case of someone leaving, then setting up on their own, or leaving for a competitor.

I expect actually doing business with their clients on the side whilst you are still employed by them would be a very bad idea. Really, a very bad idea. Wait until you've finished your gardening leave.

Edit: Double post.

You can ask HMRC they are unbiased and the experts plus confidencial.
Or put another way do you believe anything you read on the internet, or the pish that folk slever here.
Also on the jobs front have a look on jobsite
http://www.jobsite.co.uk/
use the keyword box for location or any other keyword and leave the location box empty to search, surprising what does come up.

No, your payslip will not show any self-employed earnings. You just need to keep reasonable records, prepare some sort of income/expenditure account and enter the details on your tax return that you will complete in January 2012.

I second this:

The exclusivity clauses are very rarely enforceable.

When I was made redundant I checked this out and as your employer is effectively ceasing your contract the terms of the contract can't be enforced. The only point to watch out for is if you approach previous customers and your employer can PROVE that you did so using information or data from your previous employment. In this day and age with the interweb the details we're talking about are easily found so it's unlikely they'd win a court case.

Go for it.

Setting up as sole trader is very easy – there is nothing you need to formally file, but you will want to have traceability for your next tax return.

Might be worth talking to your bank about setting up a business account – I find it the easiest way to track business income and costs without having to keep great records!

Ditto above though – avoid your employer's customers or working for competitors until you are well clear of your employment contract. Other than (any assuming you are still delivering work for them!) they will not have a problem with you having another income.

Good luck – it can be a little daunting, but not having a boss is great – get out on the bike when there isn't work on or when the weather demands it!

+1 the company bank account, as my last accountant told me not to pay anyone into their personal bank account, unless they are an employee

I've been a sole trader for 2 months now, i'm amazed at the regular work i've got, i totally love it.

I should have done it years ago, the freedom is mega 😉

Go for it.

theres a subtle difference between self employed and setting up a company – think of the company having it own identity, and to take funds from it it will either be salary or dividend, and they're taxed differently in your hands, and in the company.

Don't assume a company is the right structure – a limited liability partnership offers similar, but not identical levels of liability protection from creditors, but offers tax advantages (particularly if you anticipate making losses initially (with LLPs you can set these losses against your employmnet income earned previously, effectively getting you back some of your PAYE tax already paid.

Companies and LLPs both need to be incorporated though and need regular filings with Companies House. For an LLP you do need more than one partner, who could be your wife/partner.

If you go down the LLP route or straight self employed you will need to register as self employed with HMRC within 3 months of starting out, otherwise you risk a £100 fine.

You will need to start preparing tax returns, so get a good cheap tax accoutant, and get familiar with SAGE software.

Be careful of starting to compete against your current employer before leaving – otherwise they may use it as a means to restrict any redundancy payments.

Have a look at the HMRC website, which is quite user friendly. Also have a look at http://www.fool.co.uk, which has lots of useful info and good discussions boards with people in very similar situations to you – on the redundancy side and also setting up and running a business.

Good luck and enjoy it!! I don't know many/any people who have regretted going it alone, even if it was forced on them by circumstances.

Wow! Thanks for the help.

I need to make one thing clear though – the new client (and any further potential clients) is nothing to do with the company I work with at the moment. They couldn't be further apart – completely different industries. So I won't be treading on anyone's toes.

Whilst I've been treated pretty badly I am looking at this as a way out. It's unfortunate the state of engineering at the moment but as I'm going to be made redundant I see this as a great opportunity.
Not sure if it will work out or not but the way I see it is that it's better than being on the dole.
I'm quite interested in the whole work for myself thing and everything that goes with it such as the harder I work the more I physically make (rather than being salaried with no incentives etc).

It's risky maybe but I know if I don;t give it a go I'll look back and really regret not giving it a go and wodering what if?…

Can anyone recomend a good business bank account?

Cheers

Without going into too many details I'll be working on my own, I have no start-up costs as I already have everything I need. I basically just need to do the work and then I'd invoice for hours & expenses.

I had been told that being a sole trader would be good for me as it's only me and my income won't be very high in the grand scheme of things – although I hope this changes and I become a multi millionaire with my own Thunderbirds style island lol.

But that's why I'm asking on here as I don't know too much about it but figured why should I be just sitting waiting on the bullet and then getting thrown into the unknown when I could be actively setting this up just now. I know there a few self employed people on here and it's always been a brilliant place for all sorts of info.

working with quite a lot of engineers, they're saying that the clients are really pushing on contract terms nowadays, particularly on liability exposure – commercial liability is valuable (think that your house is essentially on the line). Even if you aren't at fault, could they include you as a party to any action if your just a small contractor? just a thought…

Thanks bitangman. I'll not be working on sites, I'd be based in an office. Would I still need the liability insurance?

I'm not sure, sorry – I was think more about office based work though – could a client sue you over advice/consultancy work you provide? – rather than something happening on site.

Would I still need the liability insurance?

Better to have and not need, than to need and not have..

Yes get some in the grand scale of things its not much. I've been a sole trader for a few years now not earning much but enough to pay for luxuries such as new bikes and bits 😉

Best advice I would give is get a good accountant, some might say its not work it for a sole trader, but his advice is well worth his fee.

B

I have no start-up costs as I already have everything I need. I basically just need to do the work and then I'd invoice for hours & expenses.

There are always start up costs. Even the working capital to tide you over until your first invoices get paid up and basic marketing (ie, taking potential customers for a cup of tea and a bun).

If redundancy is looking likely, hang on until it happens. Gardening leave will pay you to sit at home for a month whilst you sort out your business plan (do one even if you aren't borrowing money, do a proper financial plan and work out what impact pricing changes etc. have on the bottom line). If you get a redundancy package, you've got some seed capital / something to fall back on.

If it's consultancy, I believe it's professional indemnity insurance you'll be wanting.

The act of becoming self employed takes about 2 mins on the internet (HMRC site) and you'll also need to set up a DD (or pay the invoices) for class 2 NI payments which are somthing like £2.10 a week. Then at the tax year end you'll just have to say what your "profits" are (income less relevant expenses) on which your income tax and NI will be based – you'll also have to give details of your employemnt income the year too (if applicable).

If your income is likely to be low and relatively simple (eg handful of invoices a month) it should be pretty simple to keep your own records and do your tax return without paying an accountant to do it for you, also remember to save some cash to pay the tax man!

Therefore until you start earning any cash/work there's no real point registering as self employed, you can also just trade under your own name etc… as you won't be a registered company although can also use a company name if you so wish.

However all the above related to being a one man band sole trader as opposed to setting up a company or LLP which is discussed above. Also there are VAT consequences but believe your turnover needs to exceed about £70k.

Hope that helps clear the basics of SE…?!

Would I still need the liability insurance?

We didn't until a client demanded it, as a part of the contract – so we have it now.

Also there are VAT consequences but believe your turnover needs to exceed about £70k.

Been VAT registered is more about the clients you deal with, and not to be feared now you can go fixed-rate VAT scheme.

Thanks again. I looked into the insurance and got a quote and it's not that expensive so would have no problem with that side of things.

Not sure wether to go sole trader or as a company? I'd love to be turning over more than 70k but I think that's a long long way off… Off to research that now….

Need a company name now….. hmmm…

The exclusivity clauses are very rarely enforceable

!!! Stop – do not proceed further. !!!

Restraint of trade and exclusivity clauses in employment contracts are hard to enforce after employment has terminated, which is the situation leftyboy refers to. It is a different situation where the employee is still employed by the employer which is the OP's situation at the moment – correct me if I am wrong, OP.

I used to investigate this sort of thing. The most basic **** people made were: making a website that spelled everything out, using the employer's phone (they can get call logs), using the employer's laptop (they can image it), using the employer's fax/post (you're getting the trend here) and telling people at the office about it. :facepalm: x 1000

Also don't forget that if you a director of a UK company, then that information is public record.

I set up on my own this time last year zd and, apart from holidays, I've had no down time. Once you start looking, it's amazing the amount of work out there. Good luck.

For a business bank account go and see your own bank. I'm with Royal Bank of Scotland and they set me a business account up in minutes. Free banking for 2 years and I got a business Visa account with a £2000 limit thrown in as well.

Are you talking about moonlighting or working after redundancy?

You'll get away with either tbh, I employ people as freelances who have similar terms in their regular job contracts – it's kept between them and their accountant/HMRC.

Second the advice to call HMRC, I've always found them really good and helpful.

I think the only thing you HAVE to do is phone HMRC and let them know you are self employed. Then they'll send you a tax return.

You may need some public liability insurance depending on what you're doing.

I don't think anything will show up in the tax system until you submit a tax return, which doesn't need to be for a year anyway.

I would be looking at a LTD company, also sign up for VAT, and if your only supplying your services then opt straight to the flat rate scheme, its an earner. google it.

HSBC have been good as a buisness account, I have no complaints but also nothing to judge them against.

All this has no bearing on you working PAYE currently and the employer will only know if you tell them.

check insurances required, I was told, so the following may be inacurrate, to go LTD company, as when it gets sued, it gets sued for everything IT owns. When a sole trader gets sued THEY get sued for everything THEY own.

You will possibly/probably need professiuonal indemnity insurance – if you cock something up professionally, poss third party liability sort of ins – ie an office worker trips over your bike in the office and sues you, and poss your own liability – ie you trip over a cable and sue…… – as you're not an employee…..

Get some adive in this would be my tip

Should be no problem with earning other money while still employed – subject to all the other stuff ^^^^ you been talking about. Am just in the process of reducing FT job hours and taking on freelance work, will wait to see what cash comes in and then inform HRMC, fill in tax return at the end of the year. You can have as many 'other' jobs as you want, your current employer doesn't need to know and it isn't reflect in your PAYE. HRMC will just look at your self employed figures whem they come in and calculate what tax you need to pay. As someone said remember to set aside a proportion of your earnings for tax. Go for it. I'm being a bit chicken about this at the moment, but ideally if freelancing takes off with ditch my job like a shot. Good luck. 😀

Oh, and give Hiscox a bell regarding liability insurance. Very reasonable and nice to deal with.

Thanks for all the advice everyone.

To be clear on the point konabunny brought up. Yes I am still working at the moment.
However, the work I will be doing for myself is not connected to my current work. Also, when I'm at work I only work for them. I would never do my own work in their time. If I start this then I'll do it in the evenings and weekends until I'm made redundant and then I'll go 'full time' for mself.

Interesting points about going Ltd. Definitely something I'm looking into very closely.

And I'm glad so many are positive about it. I'm thinking this could be the best thing to happen to me workwise, quite looking forward to it…..

dont forget to look into the VAT thing.. search, flat rate scheme.