Having a Day Job and Running a Business
Two weeks ago I blogged on running more than one business but I have also had some questions about having a day job and running a business and considerations for this.
Lots of businesses start out as a side venture to the day job (be that full time or part time) with the dream being that one day you can step away from employment and run the business full time. So, what should you be thinking about?
Tax is going to be the driving decision on this. If your business is going to have high initial costs and be loss making to start with then actually being self employed is beneficial as you can offset these losses against your employment income and potentially get a tax refund!
If your business is going to be profitable from the off, then it will be more tax efficient to run as a limited company as corporation tax rates are lower than income tax rates and you will only be taxed personally on any income you take out of the business which would be at the prevailing dividend tax rates.
Where do you see your business in 1, 3, 5 years’ time? Do you have a plan in place for how you are going to grow and develop it and how you want to manage this alongside your employment? Knowing your goals and targets will help you to plan for the big decisions you will need to make in the future.
KNOW YOUR NUMBERS
Knowing what numbers you need to be able to take the step to reduce your hours or to hand in your notice will be key, setting these at the start is important so that you have these targets as it is very easy to get swept up in growing the business and not taking the leap and step that financially you could afford to do.
Time has featured a lot in my blogs recently - there are only so many hours in the day and you can't work all of them without burning yourself out. So, work out the logistics of being employed and running a business so that it works for you.