Have you ever dreamed of being your own boss but felt constrained by the security of your full-time job? You’re not alone. Running a business while working full-time is increasingly popular, with many people seeking the flexibility and fulfilment of entrepreneurship without giving up their steady income.
Balancing a full-time job with a small business is challenging, but it’s achievable with the right strategy and business plan. This guide covers essential aspects such as creating a solid business plan, managing national insurance contributions, and leveraging social media to promote your business ideas. You’ll find practical tips as to help you successfully juggle both roles.
Understanding legal considerations for running a business while working full-time is crucial. Key aspects such as employment contracts and your obligations at your current job, is crucial. By planning effectively and staying organized, you can build a thriving side business and prepare for the possibility of full-time entrepreneurship in the future.
The rise of the side hustle
Gone are the days when having a single job was the norm. Today, many professionals are embracing the concept of a “side hustle” – a business venture pursued alongside traditional employment. This trend isn’t just about making extra cash; it’s about pursuing passions, developing new skills, and creating long-term financial freedom.
Research from the Academy of Management Journal suggests that “hybrid entrepreneurs” – those who start businesses while still working full-time – are more likely to succeed in getting their ventures off the ground compared to those who dive straight into full-time entrepreneurship. This is because it allows them to test their business idea without risking their financial stability.
Running a business while working full-time lets you gradually build your customer base and refine your offering. Not to mention, you can learn valuable business skills while still having a steady income and on off days, you would also get ample time to learn about the nitty gritty of company formation and work on that company idea you envision. You may even find that you’re happier and healthier than in your 9-to-5 alone.
Legal considerations
Before you dive into running a business while working full-time, it’s crucial to understand the legal landscape. Here are some key points to consider:
Check your employment contract
First things first: review your current employment contract. Some companies include non-compete agreements that could restrict your ability to start a business in a similar field.
While the FTC has recently issued a non-compete ban, many countries still allow these clauses. It’s essential to understand your obligations before you start working in your free time.
Choose your business structure
Deciding how to structure your business is a crucial step. In the UK, you have several options:
If you’re setting up as a sole trader, you’ll need to register with HMRC if you’re going to earn more than £1,000 a year in sales (before expenses).
For a limited company, you’ll need to register with Companies House. This can be done directly, through an accountant, or via a formation agent.
Tax implications
Running a business while working full-time can have significant tax implications. You may end up paying higher income tax rates depending on your total annual earnings from both your job and your business.
Helpful guide: Tax on Second Job
If you’re employed by your own limited company, you’ll also pay class 1 employees’ NI contributions on your wages from that company. This happens once you earn above the primary threshold. Filing tax returns accurately is essential, so consider getting professional accounting help to ensure you’re complying with all tax regulations.
Time management strategies
One of the biggest challenges of running a business while working full-time is finding the time to do it all. Here are some strategies to help you manage your time effectively:
Create a strict schedule
Successful entrepreneurs often work to very strict schedules. Set aside specific hours for your business, whether it’s early mornings, evenings, or weekends. Make sure to stick to this schedule religiously.
Prioritise ruthlessly
When you’re juggling a full-time job and a business, you need to be ruthless about prioritizing tasks. Your working time is precious, so spend it wisely. Focus on activities that directly contribute to your business growth and revenue.
Use your lunch breaks wisely
Your lunch break can be a valuable chunk of time for your business. Use it to make calls, respond to emails, or work on small tasks.
Leverage technology
Use productivity tools and apps to streamline your workflows. Automation can be a game-changer when you’re short on time.
Learn to say no
You can’t do everything. Learn to say no to non-essential commitments that don’t align with your goals. You will quickly learn that watching TV is not as important as it once was.
Building your business strategically
When running a business while working full-time, it’s crucial to be strategic about how you build and grow your venture. Here are some key considerations:
Start with a Minimum Viable Product (MVP)
Focus on creating a minimum viable product – the simplest version of your product or service that can still provide value to customers. This allows you to test your idea and get feedback without investing too much time or resources upfront.
Leverage your existing skills
When choosing your business idea, consider how you can leverage the skills and experience from your day job. This can give you a competitive edge and make it easier to manage both roles. Content creation is an excellent example of this as you can usually find industries that overlap with what you already do.
Build a support network
Running a business while working full-time can be isolating. Build a network of fellow entrepreneurs, mentors, and supporters who can offer advice and encouragement.
Plan for growth
While it’s important to start small, always have an eye on the future. Planning ahead can save you hours in execution and help you make strategic decisions about when and how to scale your business.
Balancing work and business
Maintaining a balance between your job and your business is crucial for long-term success. Here are some tips:
Be transparent with your employer
If your business doesn’t conflict with your job, consider being open with your employer about your venture. Some companies are supportive of employees’ side projects and may even offer resources or flexibility.
Keep your business and job separate
Never work on your business during company time or use company resources for your venture. This could lead to legal issues and damage your professional reputation.
Take care of your health
Running a business while working full-time can be stressful. Prioritize your physical and mental health by getting enough sleep, exercising regularly, and taking time to relax.
Set realistic expectations
Remember, building a business takes time. According to BalanceSMB, it can take anywhere from six months to several years for a business to turn its first profit. Be patient and persistent, it takes months to become an overnight success.
When to make the leap
Eventually, you may reach a point where you’re ready to leave your job and focus on your business full-time. Here are some signs it might be time:
- Your business is consistently profitable.
- You have a solid customer base and steady income.
- You’ve saved enough to cover living expenses for at least 6-12 months.
- Your business is demanding more time than you can give while working full-time.
- You’re passionate about your business and confident in its potential for growth.
Remember, many major brands started small, with founders working other jobs while building their businesses. There’s no shame in taking your time to build a solid foundation.
How LTD Companies can help
We provide cost-efficient and hassle-free services to help you start your business. These services include business registration, registered office address, accounting, tax compliance and more!
Everything we provide is tailored to your unique needs. With over 450,000 SMEs successfully assisted, our team ensures your limited company is set-up efficiently and correctly.
If you’re planning on running a business while being employed, a professional advisor can help you maximise your tax return, and ensure everything is handled in a timely and compliant manner. When all is said and done, having a trusted partnership with a company like ours ensures you’re free to focus on growing your business, without worrying about deadlines, accounting, confirmation statements, and more.
Conclusion
Running a business while working full-time is no small feat, but it’s an increasingly popular path to entrepreneurship. It offers the best of both worlds and also offers a safety net: the security of a steady paycheck and the excitement of building something of your own.
Whether you choose a business model as sole traders or a limited company, careful planning and strict time management are crucial. With careful planning, strict time management, and a clear understanding of the legal and financial implications, you can successfully navigate the challenges of being a “hybrid entrepreneur”.
Every successful business started somewhere, often as a side hustle. Your online business or small venture today could be your full-time passion tomorrow. So if you’re considering running a business while working full-time, take that first step. Embrace the journey of being a hybrid entrepreneur and see where it might lead you.
FAQs about running a business while working full-time
Can you work full-time and run a business?
Yes, you can work full-time and run a business. Many entrepreneurs start their ventures while maintaining their day jobs. It requires careful time management, dedication, and often sacrificing some personal time, but it’s entirely possible.
This can be a great way to test your business idea without risking your financial stability. You will find that the work/life balance can be difficult but it is achievable.
How is owning a business and working full-time taxed?
When you own a business and work full-time, you’ll need to pay taxes on both income streams. Depending on your total earnings, you may end up in a higher tax bracket.
If you’re a sole trader, you’ll need to register for Self Assessment and file a business tax return. If you’ve set up a limited company, you’ll need to pay Corporation Tax on company profits and personal income tax on any salary or dividends you take from the company. It’s advisable to consult with a tax professional to ensure you’re meeting all your tax obligations.
Do I need to tell my employer if I start a business?
Whether you need to tell your employer about your business depends on your employment contract and company policies. Some contracts have clauses that require you to disclose any other business activities.
Even if it’s not required, it can be beneficial to be transparent with your employer if your business doesn’t conflict with your job duties. However, if your business could be seen as competition or a conflict of interest, you may need to tread carefully. Always review your employment contract and consider seeking legal advice if you’re unsure.
Can you be self-employed while working full-time?
Yes, you can be self-employed while working full-time. This is often referred to as having a “side hustle” or being a “hybrid entrepreneur”. Many people start their self-employment journey this way, gradually building their business while maintaining the security of a regular paycheck.
However, you need to ensure that your self-employment doesn’t conflict with your full-time job or violate any terms of your employment contract. You’ll also need to manage your time effectively and be prepared for the additional administrative tasks that come with self-employment, such as bookkeeping and tax returns.
