Thinking About Becoming Self-Employed But Not Sure Where to Begin?

Whether you’re ready to take the leap into self-employment or have already started earning some extra income on the side, the process of officially setting up a business can feel overwhelming with all the jargon and tasks involved.

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In this guide, I’ll walk you through the steps needed to lay down the essential foundations for your business. We’ll cover the tax, financial, and planning aspects so you can focus on making money in 2024 with confidence.

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Is 2024 Your Year to Become Self-Employed?

As of December 2023, there were approximately 4.37 million self-employed workers in the UK, according to Statista. If you’re planning to join this growing community of people earning a living doing what they love, whether for the first time or by turning your side hustle into something official, you’re in good company.

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There’s no denying that self-employment can be challenging, and while the rewards often outweigh the difficulties, it’s not always smooth sailing.

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After nearly a decade of running my own business, I’ve learned from my mistakes. While I can’t go back and tell my younger self everything I wish I’d known, I can share those insights with you now.

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This guide won’t cover everything needed to run a successful business—that would be impossible in one post. Instead, it focuses on the first steps of your self-employment journey, including setting up the basics and addressing key questions about taxes and finances. By the end, you’ll be ready to start working for yourself with more clarity and confidence.

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Inside this guide, you’ll find actionable steps and additional resources to help you along the way. Since there’s a lot to take in, focus on one task at a time to avoid feeling overwhelmed. Be sure to bookmark this post so you can easily return to it as you work through each step.

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Have Any Questions?

If you have questions, I’d love to help! Feel free to ask in my group,  ‘The Self-Employed Club‘

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Start with Some Initial Research

One of the first steps is to spend a little time researching your business idea. It’s easy to get caught up in the excitement of going self-employed and want to jump straight in—I’ve been there. However, a bit of research and planning at this stage can save you from making costly mistakes later.

Begin by learning more about your potential business and keeping some informal notes. This is all about getting a feel for what running your business might look like.

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Action Steps:

• Follow relevant social media accounts, including your competitors.

• Join relevant Facebook groups.

• Research licenses, permits, software, and associated costs you might need.

• Explore what customers might be willing to pay for your product or service.

• Start brainstorming ideas for attracting clients or customers.

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Set a Start Date

Before moving forward, establish a realistic start date for completing your business setup and officially becoming self-employed.

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The setup phase is crucial, and setting a target date will keep you focused and on track. Of course, one of the perks of being your own boss is the flexibility to adjust deadlines if needed. But try to stick to something realistic to maintain your momentum.

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Action Steps:

• Consider how much time you have available for setting up your business.

• Account for any external factors that might influence your launch date.

• Set your start date and mark it in your calendar.

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Clarify Your Business Idea

At this point, your dreams of being your own boss should start feeling within reach. Now it’s time to define your business idea clearly.

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This phase involves getting specific about what you’re offering and who your target audience is. A common challenge many self-employed individuals face is struggling to generate sales. Often, this stems from a lack of clarity about what they’re selling and to whom. By defining these aspects now, you’ll set a solid foundation for your business’s success.

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Action Steps:

• Briefly describe what your business offers.

• Define your ideal client and understand their needs and frustrations.

• Identify what makes your business unique compared to competitors.

• Write down your motivation for going self-employed.

• Craft your mission statement and keep it handy.

• Develop a basic product or service plan.

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Determine How You’ll Fund Your Business

It’s great to hear stories of businesses starting with little to no investment, but most ventures require some level of initial funding. Even with careful budgeting and finding deals, there are likely to be some costs before you start making money.

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Your next step is to estimate your start-up costs and figure out how you’ll cover them. A start-up budget can help you outline these expenses, whether it’s through savings, a personal loan, or other funding options.

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Action Steps:

• List one-off setup costs.

• Estimate how long it might take to start generating a steady income.

• Calculate total start-up costs.

• Decide how you’ll fund these initial expenses.

Read More: [Simple Start-Up Budget Template for the Self-Employed]

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Map Out Your 12-Month Business Plan

A common question new business owners ask is whether they need a detailed business plan. While traditional business plans have their place, especially for those seeking investment or loans, they can be overwhelming and time-consuming for solo entrepreneurs.

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Instead, focus on a 12-month game plan that outlines achievable goals and guides your actions. This plan will help you stay focused and productive while leaving room for adjustments as your business evolves.

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Action Steps:

• Identify 3-5 business goals for the next 12 months.

• Break down the tasks needed to achieve each goal.

• Create quarterly goals.

• Develop a basic 12-month marketing plan.

• Include targets, metrics, and deadlines wherever possible.

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Choose a Legal Structure

Now that you have a clearer picture of your business, it’s time to decide on a legal structure. Contrary to popular belief, you don’t need to form a limited company to run a business—there are other structures that might suit your needs better. The main UK options are:

• Self-employed (sole trader)

• Limited company

• Partnership

• Limited liability partnership

Each structure has its own setup requirements, offers different levels of personal liability protection, and follows distinct tax rules.

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Read More: [UK Business Structures Explained]
Read More: [Is it Worth Setting Up a Limited Company?]

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Remember, you can earn up to £1,000 in income (not profit) before needing to register as self-employed with HMRC, thanks to the trading income allowance.

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Read More: [How the £1,000 Trading Allowance Works]
Read More: [How to Register as Self-Employed with HMRC (2024)]

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Action Steps:

• Create a financial plan to assess your expected profits.

• Research the pros and cons of each business structure.

• Choose the structure that best suits your situation.

• Register your business if necessary.

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Choose a Business Name

The right business name plays an important role in your brand identity and how customers perceive you. If you’re a sole trader, your business name will legally be your own name, but you can also choose a trading name. For limited companies, the name must be registered with Companies House.

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Read More: [How to Choose the Perfect Self-Employed Business Name]

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Action Steps:

• Create a shortlist of potential business names.

• Check the availability of company names at Companies House.

• Ensure the domain name and social media handles are available.

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Create Your Branding

With your business name chosen, it’s time to work on your branding. This is the step where everything starts feeling real and exciting as you bring your brand to life.

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Action Steps:

• Decide on the brand assets you’ll need.

• Choose your color palette and font suite.

• Design your logo and other brand visuals.

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Get to Grips with Money & Tax

Understanding the financial side of self-employment can be one of the trickiest parts, especially if you’re used to having it handled by an employer. Now that you’re responsible for tracking income, expenses, and managing taxes, it’s important to start getting comfortable with these tasks.

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Read More: [Self-Employed Tax: An Easy Guide for Beginners]
Read More: [How to Do Your Own Accounts When You’re Self-Employed]
Read More: [How to Pay Yourself as a Sole Trader]

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Action Steps:

• Familiarize yourself with the taxes you’ll need to pay.

• Develop a system for tracking your income and expenses.

• Plan how you’ll save for future tax payments.

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Set Up Your Business Infrastructure

You’re getting closer to launching! Now’s the time to put all the essential tools and systems in place so you’re ready to start promoting and running your business smoothly.

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Action Steps:

• Set up your tools and software.

• Prepare any templates, resources, or freebies.

• Keep track of subscriptions, costs, and passwords.

• Review your budget to make sure everything is within your estimates.

Start Making Money
Congratulations—you’re ready to start making money! You’ve laid the groundwork and can now focus on growing your business. Stay committed to the plan you created earlier and take the next steps confidently.

Want More Resources on Becoming Self-Employed?
If you enjoyed this post, here are some more of my popular articles on self-employment:

• How to Stop Procrastinating and Finally Launch Your Online Business

• 9 Profitable Online Business Ideas for Self-Employment in 2023

• Should You Tell Your Boss About Your Side Hustle?

Have Questions?
I’m here to help! Feel free to join The Self-Employed Club and ask your questions.