Choosing to leave a nine-to-five office job and transferring those skills into a solo business venture as a limited company contractor can be both an exciting and daunting prospect at the same time.
Contracting brings with it greater flexibility with regards to working hours, allowing contractors to reap the benefits of a healthier work-life balance.
Yet a new report from business development consultancy Sandler Training has revealed the most common pitfalls of new start-ups and limited companies, following the questioning of some 2,000 small business owners. All participants had successfully run a company for at least five years prior to the survey.
It was found that 27 per cent of new small firms believed IT issues to be their biggest initial hindrance, while 23 per cent said it was problems with pricing their product or service that caused the most problems for them during their first year in business.
In addition, 18 per cent of respondents reported that personnel-related struggles affected them most adversely when they first started out on their own and strived to make sure they had access to the right skills they needed to grow and develop their company.
Chief executive officer of Sandler Training UK Shaun Thomson commented: "Business skills are not innate. By trying to do it all, you can stall the growth of your business, and, worse, make some very costly mistakes.
"It's best that you focus on your strengths and outsource the areas of weakness - whether it's IT, marketing, sales or accounting."
What's more, the survey also discovered that almost half (47 per cent) of small business owners wish they'd started their own company a year before they actually did, suggesting that individuals should not be too hesitant when it comes to setting out on their own, as they will be able to learn on the job.
With this in mind, we at PayStream have compiled some advice for those setting up a limited company for the first time.
The importance of proper records
All workers - whether they are employed by a major business or work for themselves as a contractor - need to make sure they are remaining compliant with HMRC at all times.
Therefore, it is vital that a limited company contractor keeps proper records of all their incomings, outgoings, and tax and national insurance contributions.
This can involve a lot of paperwork, but PayStream's limited company services are here to help.
Signing up to our My PSC service provides contractors with access to a team of accounting experts, who can provide help and advice on all of your limited company admin, leaving you to get on with what you do best.
Even with PayStream's help it is still vital that limited company contractors are managing their company finances as effectively as possible to minimise risk and avoid falling at the first hurdle.
This is another area that keeping accurate records can assist with. It allows contractors to see what they should hold back for taxes and what is available to withdraw. PayStream's limited company service My PSC provides an online portal called PSC Insight which provides 24/7 access to up to date company information such as a tax timeline, a to-do list with actions from your accounts team and an at-a-glance account summary, ensuring that you always stay on top of the things that matter.
When first starting out as a limited company contractor, it can be challenging for individuals to maintain a healthy work-life balance, particularly if their workplace is also their home.
Therefore, it is important for individuals to give themselves a set time each day when they will stop working and spend time with their family, relaxing or socialising instead, to prevent the new business from becoming too overwhelming and taking over every aspect of their lives.
Time out from work may even provide a new burst of inspiration, while helping the contractor to see things more clearly when they get back to business.