Need a bit more money or just want to start something on the side? Whatever the reason for starting a passion project, getting up and running can be daunting, especially if you’re juggling a full-time job and life.
At Mettle, we want to give you the freedom to run your business and if that means starting your own passion project we want to help you get there. We’ve put together a step-by-step guide to help you jump through the hoops of starting your own business as well as tips you might not have thought of.
A few things to consider first…
Are you allowed to start a passion project alongside your full-time job?
Check your contract. Most businesses tend not to have a policy on this if it does not affect your full-time role, but it’s always best to check. If there are any parts of your contract that say you can’t start another business, it’s probably best not to do so, as it could lead to losing your full-time job or even being sued by the company for violating your contract. Even if it is not explicitly outlined in your contract, it’s probably best to make sure that your passion project doesn’t affect your full-time job.
Your company may also encourage employees to start a passion project and do other things for their career outside of work. It’s a great way to build morale and also encourage the learning of new skills and sharing of knowledge.
Are you prepared to put in the time?
Starting a passion project is a great idea, but doing it alongside a full-time job means that it will need to be done in those hours of the day (or at weekends) you would usually spend relaxing and hanging out with loved ones. If you’re really passionate about doing it and are prepared to say ‘no’ to a few things, then maybe it’s time to get started on that passion project!
Starting a passion project
Step 1: Choose a name (if you haven’t already)
The fun bit. Once you’ve figured out what your passion project is going to do, you’re going to want to choose the perfect name. It’s the thing people will remember you by, and if you get it right, it could become a household name.
However, there are a few things to consider, such as is it available as a website domain or social handle? Is it easy to remember? If you only work in one city, should it include that in the name?
Do some searching for what’s already out there. You can also search Companies House to see what business names have already been registered so that you don’t come up against any unnecessary battles with other companies with the same name you really wanted for your company.
Step 2: Type of business ownership
Figuring out which type of business ownership your company falls under or is best suited to can be difficult. Some of the most common in the UK are:
To be classed as a sole trader, you need to run your own business as an individual and be classed as self-employed.
As a sole trader, you can keep all the profits your business makes, once you’ve paid tax on them, but you’re also legally liable for any losses your business makes.
A limited company differs from a sole trader or partnership as it’s owned by the shareholders and run by appointed directors.
The limited company must be registered with Companies House and is classed as its own legal entity. This means that the company's finances and legalities are separate to that of the owners. Any profit made is the property of the company (after any taxes are paid) and only then can they be paid out to shareholders.
Think of doctor’s surgeries, solicitors, hairdressers and the likes. Companies where you have a group of skilled people who band together to start their own business or practice.
When you set up a partnership, there is generally a document called ‘Deed of Partnership’ that is put together to show how much each person has invested, how any profits or losses will be split and who from the partnership is responsible for things like bookkeeping etc.
The gig economy. Another form of self-employment. Freelancers tend to be people highly skilled in their chosen area who don’t want to take on a permanent full-time role, for whatever reason.
Being a freelancer gives you the freedom to choose when and who you work for, but also set their work rates. Freelancing has been a more common type of work for a number of industries over the last few years and doesn’t seem to be slowing.
Step 3: Registering as self-employed
You have to register as self-employed with HMRC as soon as you’re making money from your passion project. Once you start making more than £1,000 from a passion project is when it becomes taxable by HMRC, and you have until October after the tax year ends to get registered for tax or you may face a fine.
If you’d like some more information on getting registered as a sole trader or limited company, you can check out our other blogs on figuring out your type of business ownership and getting registered.