Myself and my partner have been thinking of creating our own web design business. However, we are unsure of what route to take. While looking around these parts of the forum, i have noticed people talk about Businesses and Freelancing, but what difference is there really?.

 

Myself and my partner hope to create our own website, with our own logo and offer our services to potiential clients. What would be the best route for us?, Business or Freelancing?.

 

I also have a few questions.

If we Freelance, do we have to pay tax?

If we Freelance, can we create a contract?

What are the downsides to Freelancing?

What are the downsides to a Business?

How do i go about creating a Business in the UK?

Thank you for taking the time to look, any replies will be much appriciated.

1. If we Freelance, do we have to pay tax?

- yes

 

2. If we Freelance, can we create a contract?

- yes

 

3. What are the downsides to Freelancing?

- you never know where the next work is coming from, or when

- long hours sometimes

- the buck stops with you

 

4. What are the downsides to a Business?

- ditto to above

 

5. How do i go about creating a Business in the UK?

- www.businesslink.gov.uk/

Thanks for the reply, but am still puzzled as to what the differences are between a business and freelancing. If you still have to pay tax on both, and can create a contract on both....then whats the difference?

 

Sorry probably a thick question, but i'm new to all this and wanna learn everything i can.

Nothing. They are one in the same, although Freelancing is generally seen as a sole designer/developer where as a business is seen as 2 or more people providing a service.

 

Both need to be set up the same way and run the same way, except if you have more than 2 people, you need to sort out other "business" stuff.

 

I think people prefer the term freelance to make themselves seem as though they have a bit more freedom rather than being confined in a business, but if you are the head of the business it makes no difference at all.

 

Good thing is you don't need to charge for VAT unless you are earning more than £65,000 a year.

Thanks, that post definatly explained alot to me.

 

Am i right in saying that for the first year, we don't have to pay tax for a new business?. And is there anything else that i need to know about starting a business?

You have to pay tax in the first year.

 

What you will want to do is register as self employed.

 

Then set up your partner as an employee.

 

You can use your existing bank account or you can get a business account which allows people to pay you via a business name rather than your personal name.

 

Once you are self employed (only takes 1 phonecall) you will get national insurance contributions every 3 months, mine comes to about £27 for 3 months.

 

Then you are ready to do business. You can register your company officially, but I don't know about all that as I am just self employed and that is all.

 

If you go to one of your local banks ask to see the local small business manager and they will be able to get a lot of information on what you need to do etc.

 

If you do go around the business account route you will need all your headed stantionary etc to show them then they will set you up. They normally start off pretty good deals for the first 6 months to 12 months then you will start to have to pay a small amount towards all transactions.

very useful info there

Thanks for the help, its much appricated.