Starting a part-time business

When you set up a part-time business you need to register it with HM Revenue & Customs (HMRC).

You also need to maintain accurate financial records.

These requirements are the same whether you're starting a full or part-time business but there are other issues to consider which are specific to part-time businesses.

Continuing in paid work?

If you continue in paid work when you're running your business, you have to decide whether to tell your employer. Your contract of employment may require you to tell your employer if you have another income source. In addition, if your new venture is likely to compete with your employer, you have a conflict of interest which could cause problems.

You must be very careful about separating your personal business activities from those of your employer. Taking phone calls, sending emails, and writing letters that relate to your business may constitute a breach of contract, unless you have permission to do so. You should also not make use of your employer's supplies, materials or intellectual property.

If you discuss your plans with your employer, they could become a source of encouragement or work, especially if you are a valued employee.

Just running the business?

If you don't have other paid employment - eg you might be a parent or carer with family responsibilities - you still need to tell HMRC and, if appropriate, register with Companies House. If you were previously unwaged and had been receiving benefits, you will need to check whether your new venture affects that income, and report it to HMRC if necessary.

If you're working from home, you are likely to need to consider insurance and health and safety issues.

There are a number of issues to consider when you start your own business, even if it is only on a part-time basis.

Are you ready to start up?

It can be very beneficial to assess your own skills and where you might need some extra development or support - for example, looking after the business' finances. You should might also think carefully about the product or service that you want to sell, the audience you're selling to and what you have that makes you stand out from the crowd. It pays to be ready to face the challenges and pressures on yourself and your finances.

What legal structure?

You will need a formal legal structure for your business. This can take the form of anything from a sole trader to a limited company.

What about premises?

You may have decided to run your business from home; however, there may still be implications for this regarding tax, health, safety and security. You might find that separating your work area from your living area will maximise efficiency.

If you decide not to work from home, read our guide on how to choose the right premises for your business.

Money matters

Your business will start out small and will still need funding for both its set-up and development to help it grow. Creative thinking and planning your finances might make it less costly to start your own business.

Professional advice

Depending on the scale of your business, you may choose to consider professional advice or assistance, which can range from accountancy and bookkeeping through to marketing and IT support.

There are a number of organisations which can give you support and advice on starting a part-time business.

Mentoring can help you develop business skills.

Your local Chamber of Commerce offers support and advice and may organise networking meetings for businesses of a similar size and in similar business sectors.

You might find it helpful to join the trade association for your business sector, where you will be able to interact with peer businesses for advice and information.

Business Gateway can provide you with support to help you start up your business. You can contact Business Gateway on 0300 013 4753.

Pros:

• you can stay in paid work and have the security of a regular income until the business is up and running
• you can use skills you have learned working for an employer to start and build your own business
• if you have obligations such as caring for dependents, it is a way of having an income
• you can test whether there is a market for your products or services without a major financial commitment
• if you have a hobby that you would spend time on outside work anyway, you may be able to make money from your interests

Cons:

• finding the time to run a business can be difficult and it may take up more time than you have available
• you may find it hard to concentrate on paid work if the business has a problem
• you may have to put in long hours, which can cause stress
• it might take a long time for the new business to develop and become viable
• if you stay in work, you'll have to pay tax on both sets of income, which may mean the business is not financially viable

Starting a business from home might be a viable option for a part-time business. Read our guide on starting a business from home.