Making a Success of Working for Yourself
Carlo Pandian blogs about small business, technology and marketing covering everything from the best use of social media tools to tutorials on QuickBooks online bookkeeping software. When he’s not online Carlo enjoys getting out and about on his bike and enjoying great food.
When you’ve finally given up on the endless and thankless task that is early twenty first century job hunting, it’s time to consider employing yourself. In Canada increasing numbers of individuals are taking this route; it’s not that they are unemployable but simply that the number of jobs out there and the number of people interested in taking them doesn’t match. You may be eminently employable – but so are a lot of other people! Besides, it makes sense to make a profit from your talents, rather than let an employer take the profits from hard work. When you first come to the realization that you might well be better off running your own firm or working for yourself it is an exciting, but daunting prospect. Getting the basics right can help.
Decide on your company structure. There are four options in Canada; sole proprietorship, partnerships, corporations and cooperatives. The last is rare and generally used by not-for-profit organizations. The main differences between the remaining three are simple.
- Incorporating a firm creates it as a separate legal identity. Effectively the incorporation documents are like a birth certificate; the company can do most things that an individual can, open bank accounts, take payments and pay tax! A corporation structure also means that the firm is solely responsible for its liabilities and the owners (you) are not personally responsible.
- As this structure involves the highest set up costs, most self-employed people will choose either the partnership structure, if working with others, or sole proprietorship if working alone. Both are simpler to set up and run, the main difference being that in these structures liability remains with the individual or individuals.
- In terms of registration different provinces have different rules; incorporation can be done at either provincial or federal level, although the latter does not preclude provincial registration in all cases. In all provinces, with the exception of Newfoundland and Labrador, sole proprietors will be required to register at provincial level only.
Playing to your Skills
In the case of the self-employed, running a business doesn’t just mean doing the day job. It also means doing everything else. At the planning stage you should identify your strengths and weaknesses; for example you may be a great baker of cakes, but not have a clue when it comes to accounting. Computing skills will be essential for nearly all businesses, while management skills will be required in many cases. List your skills, identify gaps in knowledge or expertise and consider how to fill these. Some tasks may be delegated to friends of family, if they are willing. You may decide to train in some important areas or consider outsourcing some tasks. Planning on this level may seem unnecessary; but if you can play to your strengths from the start you’ll stand a much greater chance of success.
Computing and accounting systems are essential for most small businesses. Unless you are setting up as an IT consultant or an accountant, you’ll probably only have limited skills in these areas. Cloud computing applications are sensible choices for those with limited computer skills, offering simple and flexible software applications that are stored, backed up and maintained elsewhere (by people who know what they’re doing). Cloud computing can also protect against disastrous loss of data or records, which can be a real saving grace! Hiring an accountant from the start and using appropriate software is a sensible approach. Simple cloud accounting software or online invoicing software makes managing your income and outgoings simple. Cloud versions also save money as they are instantly available to your accountant, which saves time.
Careful planning may seem like the last thing that you want to do when considering setting up on your own for the first time. However, as in many areas of life, the devil is in the detail when it comes to running your own firm. Working for yourself is probably the most rewarding way of working – we spend most of our lives earning a living. It can offer great freedom; getting it right in the early days and having the tools to hand that you will need, can make all the difference between success and failure.