Experiences, Employed to Self-Emp / Business Owner ?

[WindsorRob]

Just looking for anyones experiences to be honest. I've been full time emplyed for 20+ years and have gone from 16 year old office junior to a reasonable position in a FTSE 30 company. However, I feel like I'm at a crossroads, work is becoming less rewarding both at a satisfaction and financial level. As many will know when you earn a reasonable amount via PAYE you lose a lot on deductions and the scope for significant pay rise in the future is becoming more limited. The level of autonomy in my role seems to reduce as well, which has always been important to me.

I sense that the opportunity to leave with a pay off is possible, roughly a years money. I don't have to worry about future pension, it's sorted and I have roughly 20 years working life left. Hence, the crossroads ! I do need to maintain an income as like most of us I have commitments and I dont want to significantly downsize etc...

So, any good people here taken the step ? I am working on a business concept, but this is not really about advice on the concept, more about advice and hopefully inspiration to do something a little more brave than just stick the job out. Essentially, if I do go from my current employer, I'd have a significant sum to either use as working capital on a business, or look to purchase a business. So who has taken the plunge and how did it go ?

[trickywoo]

I have but it was a case of be involved in a management buyout or find another job.

In many ways I think this is one of the best ways to get into business ownership as you are dealing with a known quantity and in exchange for more responsibility you get autonomy - to a degree.

One of the main things to consider with setting up a business is that HMRC assume you've done so for the sole reason of paying them tax. Depending on your turnover you may be collecting VAT for them with quarterly returns and there is no getting away from corporation tax. Currently 20% on all profits and unlike personal income there is no tax free allowance i.e. if you make £10k profit you are paying £2k tax. There have also been recent changes to dividend tax making company owership much less attractive.

I think it boils down to how much hassle you want. Employing people is a pain as well as expensive as can be having a business partner(s). On the other hand if its just you working you have hiolidays / illness etc to worry about plus its just you doing the accounts, IT actual work etc.

[monoloco]

go for it! I went from 'employed' to setting up my own business 20 years ago and have loved (nearly) every minute of it. No more having to put up with some tw*t of a boss telling you what to do, how to do and when to do something you know more about than they do. Ltd Co or Sole Trader? Your choice and down to turnover etc. Despite the recent changes to dividend tax etc that Trickywoo mentions above, its still tax-efficient to work through your own Ltd Co -the big saving is National Insurance so although you pay corporation tax and dividend tax you don't pay any NI ( up to a certain limit).

[21TonyK]

I've been self employed several times over my working life, some 28 years now. On both occasions the biggest problem I had was employing people.

I am now in the public sector and although I don't employ personally I still have to deal with staff issues but ultimately I have an HR manager who can take over if needs be. That, I think is the key.

If I was doing it again I would make sure the business was large enough to support a good HR manager and a very good accountant. As already mentioned running a business is like collecting money for HMRC, they let you keep a bit, just enough to keep you interested.

I will be going back to self employment eventually, maybe in anther 10 years when I hit semi-retirement and do a few days a month consultancy or something. But it will just be me on my own, keep it under the VAT thresh hold and no complications.

Or, if you have the desire and the finances just buy the best people you can, sit back and steer the ship.

[Vixpy1]

13 years now, would never go back, there have been highs and lows, but toally worth it

[Trophy Husband]

Done all 3.

Employed. Hated it. There's no escaping the idiots.
Self-employed. Loved it. Earned 40% more freelance (Construction PM), paid much less tax. There's plenty of ways of escaping the idiots. Move on.
Business Owner. Love it. Now the only idiot is me and I can cope with that.

[loafer123]

I did this in January after 25 years working for others.

Certainly nerve wracking, but I am enjoying it alot and am finding alot of goodwill from all the people I met along the way.

I created a partnership with another guy with complimentary skills, splitting all revenues 50:50 and this seems to be working well.

[trickywoo]

loafer123 said:

I created a partnership with another guy with complimentary skills, splitting all revenues 50:50 and this seems to be working well.

Until one of you wants out and a wedge of cash.

[WindsorRob]

Just to say, thanks for all comments and mostly encouragement. Some great food for thought ! Interesting comments re biggest issue is employees, in my experience some can be the biggest and asset, others the biggest drawback !

[All that jazz]

WindsorRob said:

Just to say, thanks for all comments and mostly encouragement. Some great food for thought ! Interesting comments re biggest issue is employees, in my experience some can be the biggest and asset, others the biggest drawback !

Don't underestimate the hassle you'll be creating for yourself if you're looking at having employees. My brother runs a very successful IT network solutions company and it reached the point where he needed to take on some folks for general sales, admin, support roles. Despite offering above market average money he's had no end of hassle with the vast majority of them being completely useless despite having a whole raft of alleged experience and glowing references from former employers. Seems to be the case these days that simply not turning up for work isn't seen to be an issue to them, or if they do turn up at all it's perfectly fine to roll in 30-60 mins late because <insert pathetic reason here>. Also responding to personal texts and updating social media status is more important than answering the office phone and is completely fine to leave it ringing out. On top of all that you have all the extra bullst and hassle that comes with being an employer, such as payroll, tax/NI, H&S compliance etc which isn't an issue if you're a 1 man band.

Personally, I went from employed to s/e about 15 years ago and it was the best work related thing I ever did. Some time later I set up a ltd co and also registered for flat rate VAT as some companies were getting twitchy dealing with s/e traders over non-payment of tax. I only provide services (no products) but I have seen ~ 100% increase in my disposable income overall, mainly through having a good solid reputation and also my willingness to work Sats and Suns where I can charge a small fortune due to the unwillingness of others wanting to work those days. Being able to keep half of the VAT I charge means that pays the majority of my CT bill at the end of the year. Even with the recent CT and dividend changes I'm still significantly better off than I would be as an employee. I particularly enjoy the fact I can take weeks or even months out at a time without having to worry about stuff nor answer to anyone; that is worth a lot to me and the thought of being restricted to 4 weeks set holidays that you often have to "book" 12 months in advance fills me with dread.

Is there the opportunity to go contracting in the sector you're working in currently? That would be your best option if you are good at what you do and are very knowledgeable in it as well. Your reputation and skill at what you do are your 2 most important things when contracting or working s/e. Master those 2 and your phone will always ring first with work.