Notes from the outplacement seminar: Self-employment

Last week we spent 90 minutes at a seminar run by outplacement and career coaching company Fairplace on the virtues or not of choosing to be self-employed.

Present were former employees of, among others, UBS, JPMorgan and Lehman Brothers. Here, for your benefit, is the digested version of what was imparted.

1. You must want to be self-employed for the right reasons

It is no good wanting to be self-employed because you don't like getting up at 5.30am, or being told what to do. Self-employment is not a magic wand.

2. You must know what you want out of self-employment

How will you define self-employed success? Are you only interested in monetary reward or would better work life balance also be nice?

3. You should visit your local tax office before you get started

They will usually run free seminars about setting up a business. They will also tell you all about tax, including allowances to be claimed if you work from home, book keeping requirements and typical profit margins in your chosen field.

4. You should make use of organizations like Business Link .

Formerly known as the Training and Enterprise Council, it will offer you free advice on setting up in business, and may provide free mentoring too.

5. You should bear in mind that a company needs three elements to be successful

These are:

- Getting the work (sales and marketing)

- Doing the work to the requisite standard

- Getting paid for the work (pricing correctly and getting the money in)

Most newly self-employed people achieve point two and apparently fail on points one and three. If you become a contractor, points two and three will be catered for by an agency.

6. If you become a contractor, you should run your accounts yourself

Many agencies will offer to run your accounts for you. This is unadvisable because you will then be tied to a particular agency. You are better off employing your own accountant.

7. If you set up a limited company, you should not register it at your own home

If you do, you may be liable to pay business rates and other unexpected tax penalties.

8. You should beware being reclassified as an employee

You may think you're self-employed, but if the government deems that you are an employee it is able to deduct tax from you on that basis. It can also recoup employee-related taxes that you would have paid, but didn't, for the previous six years or more. For information on how the Inland Revenue determines whether you are self employed, click here.

Previous course attendees have investigated setting up in business as everything from sex shop owners to T-shirt printers. Most, however, go on to become contractors doing much the same as in they did in their former jobs.