Why set up your own business?
Most interior designers begin by working for a design firm and then striking out on their own once they have accumulated experience and built up a list of industry contacts. However, if you are a self-taught designer or are not in a position to work regular office hours, you may wish to set up your own business at the beginning of your career. In this module, you will discover the practical considerations you need to take into account when starting your own business. You must adhere to a number of rules and regulations with regards to registering your business, filing tax returns, hiring other people and following health and safety legislation. Once you have set up your business, you will also need to devise ways of attracting clients. Self-employment requires determination and a lot of forward planning, but it is feasible.
Fact: There are over four million self-employed people in the UK.
Source: Office of National Statistics
Before you even begin the process, ask yourself the following questions:
Am I suitably-qualified and do I have sufficient confidence in my abilities? You may be eager to start your business as soon as possible, but if you are to succeed and grow a good reputation, you need to be both competent and confident. If a client approached you tomorrow, would you know precisely how to begin the project and how to oversee it to completion? Do you know how to source materials, how to work within a budget and how to put together a coherent style? If not, you need to undertake further training.
Activity: Questions to Ask Yourself Before Setting Up Your Business
(Time: 10 Minutes)
Aside from your qualifications and experience, what else do you need to think about before setting up an interior design business? As a starting point, think about the day to day life of an interior designer. You should also think about the administrative side of running a business.
What are the exact nature of the services that I intend to offer? The terms “decorator”, “interior designer” and “interior architect” are sometimes used interchangeably, but they each entail a distinct set of duties. A decorator is someone who undertakes the practical work involved in changing the interior of a space, such as painting walls and ceilings. An interior designer works to create a comprehensive vision for the aesthetics of a space, from the overall colour scheme to the accessories. An interior architect is someone with the skills and knowledge to contract and oversee structural changes within a space. Most interior designers work with a pre-existing structure. If you would like to undertake complete home or workplace renovations as part of your job – for example, altering the layout of a space by removing existing walls or overseeing the construction of new partitions – you will need to develop a sound knowledge of how buildings are constructed and be comfortable in working closely with architects and builders.
How much money can I invest in this business? The start-up costs required for an interior design business are relatively modest, but you will still need to structure a sensible budget that will launch your venture. Make sure you have enough to cover the cost of the following: A desk and chair, drawing tools, computer software, filing cabinets and files, business cards, a means of transportation, insurance, accounting software, a diary, a drafting board, tools required for interior decorating such as a set of brushes and a sewing machine if you plan to create your own textile-based accessories.
Activity: Start-up Costs for a New Interior Design Business
(Time: 5-10 Minutes)
What will you need to buy or pay for before embarking on your first projects? Think about the tools you will use, the office furniture you might need, how you intend to market yourself and how you will travel between your clients’ homes or places of business.
How much time can I dedicate to my business? If you are currently employed, you will need to think carefully about how you intend to strike a balance between your regular job and your new enterprise. Start gradually. Take on one project at a time and be realistic when estimating how many hours, days, or even weeks it will take you. Don’t forget that you will need time to maintain other commitments, including rest and a social life!
Do I know where to go for help? However well prepared you may be, you are bound to come up against some difficulties when starting your own business. For example, you may be uncertain as to what kind of insurance policy to take out, or how to work with contractors such as builders and decorators. Make a list of issues and questions that may come up for you in the first few weeks and months. Now note down who might be able to help you. Starting a new business is exciting, but can be stressful and even overwhelming at times. Who will you be able to turn to when you have questions? Bookmark some useful websites aimed at self-employed people and think about people already in your social circle who can share their advice and experience. Perhaps you know someone else who works as a freelancer, another who has some accountancy experience and so on. Don’t be afraid to ask for their help – most people like to share their expertise. They may even connect you with clients, at a later date!
Am I psychologically ready for self-employment? There are no guarantees when you start a business. Even if you put a lot of effort into furthering your knowledge, advertising your services and networking with potential clients, there is always an element of luck involved. Do not put yourself under financial pressure by leaving a secure job and hoping that your interior design work will immediately provide you with an adequate source of income. If you do decide to make the leap into full-time freelance work, you should have at least three months’ worth of expenses saved up. You should also continue to maintain relationships with others in the working world, so that if you need to seek out employment in the future, you will have the option to do so.
Choosing the right space and obtaining all the necessary equipment
Most freelance interior designers work from home, when they are not consulting with their clients. Ideally, you will be able to set aside a room in which you can set up a desk and chair. However, this may not be a realistic option for everyone. Draw on your interior design skills and set up a space that works for you. This may entail erecting a corner desk in the living room, or installing a new kitchen table that allows you adequate space to work on a laptop and use a drafting board. You also need to make sure that you have all of the equipment you can reasonably expect to use on the kinds of projects you will undertake and that you have the space to store them safely and securely. If you are intending to use a room in your home as an office, you need to be aware that in some cases, business rates will apply in addition to your council tax. However, as long as you can show that the room is not exclusively for business – for example, by including a TV that is used for leisure purposes – you will be able to avoid these extra payments. See https://www.gov.uk/run-business-from-home for more information.
Registering as self-employed
When you decide to work for yourself, you must register as self-employed. To do this, you will need to visit https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed and complete the registration process. Once you have done this, you will then complete tax returns every year online and pay Class 2 National Insurance. Filing a tax return when you work for yourself is referred to as “Self-Assessment”. You must register by the 5th of October in your business’ second year, otherwise you may face a fine. If and when your business turnover exceeds £85,000, you will also have to register for VAT. Most freelancers set themselves up as “sole traders”. This is the simplest option, if you do not hire anyone else.
However, there are other business structures that you can use when working for yourself. The first option is to run your business as a private limited company. The implications of this are as follows: The company is separate, in legal terms, from the person or people who run it. It can keep all profits after tax. The company has separate accounts that are distinguished from those of the person or people who run it. In order to set up a private limited company, you must notify Companies House. This process is referred to as “incorporation”. You will be asked to provide the following pieces of information: The name of the company, the address of the company, the name of at least one director, the details of the company’s shares and the name of at least one shareholder and an SIC code. “SIC” means “Standard Industrial Classification of Economic Activities”. At http://resources.companieshouse.gov.uk/sic/, you can find a comprehensive list of SIC codes and choose the one that best describes your business activities. The SIC code for an interior design company is 74.1, as the scope of the business falls under “Specialised design activities”.
You will also be asked to create a company and set of agreed-upon rules, which are officially known as “memorandum and articles of association”. Finally, Companies House will also require personal details of all people who have the right to control any areas of the company. Any individuals who have voting rights or who own more than 25% of the shares must be recorded. Another option is to form a business partnership. In this setup, you and your business partner(s) share a personal responsibility for the business. Partners divide up the profits between themselves and they each pay income tax on their own income from the business. If you want to set up a partnership, you need to choose a name and a nominated partner and then register with HMRC. The nominated partner is the individual who agrees to take primary responsibility for filing the partnership’s tax returns, keeping the correct records and maintaining all related paperwork.