Are you considering starting a company while employed but need to know if it is right? If so, this piece is a must-read so you can know how to proceed. It discusses the legality of the matter and much more.
Legally, you have the right to start a company whilst employed. So, don’t shy away from starting one because of fear of going against any law of the land. That said and done, adhere to the laid down restrictions and disclosures. They differ from one employment to another hence the need to study yours keenly. Ensure you don’t go against any of them because breaching contracts could get you in trouble.
Here are other details to apply before and during starting a company while employed. Check it out!
Basic Rules When Starting a Company Whilst Employed
As much as employment contracts differ from one employee to another and one employer to another, some clauses are common. They include the following;
People often assume that this clause prevents them from joining the company’s competitor upon resigning. While that’s one of its purposes, it also prevents you from starting a company that directly competes with the company.
Fortunately, this clause expires after a given period. It would also mean quitting the job, but you can build your own company once that time lapses. As long as the period is over, the clause won’t apply.
This clause stops you from using the experience or knowledge gained while building the company’s intellectual property to develop one that uses similar technology. That’s regardless of whether it was your efforts, idea, or knowledge. Since it belongs to the company, you will be going against your contract by duplicating it.
Failure to honour the two clauses and any other clause in the contract is enough to land you legal problems. That’s why one needs to insist more on reading such contracts thoroughly, especially before signing them or starting your own business.
Things to Consider Before Starting a Business Whilst Employed
As you start a company whilst employed, remember the following;
Make Time for Your Business
Your business needs your attention, and that’s regardless of being employed. Therefore, ensure that you find time once the employment hours are over. As you dedicate time to it, factor in other aspects of your life for an excellent balance.
Understand All The Legal Obligations
Remember, the HMRC self-assessment registration immediately after the company registers a profit. You will start paying the tax corresponding to your new income. Since you are also employed, meeting all the requirements in the contract and between you and the employer is also crucial.
Strike A Balance Between Your Life And Work
You have a full-time job and a business to run. That would mean having to deal with a lot of work. Regardless of how demanding such a situation is, you have no choice but to make time for yourself. The “get a life” phrase is the best way to define it. Always find time to rest and relax to boost your productivity. Remember that too much fatigue can do more harm than good.
While the sky is the limit, a small business is a good starting point. You have a job and, on top of that, must navigate a new journey of running your business. Embracing everything right away can transform hard. That’s why you need to start small and adjust the business as you adapt to the situation.
Combining a full-time job and running a business means making more money than you did before. The extra money should make a difference in your life. For instance, since you are already surviving on your salary, you can save the extra money and use it to better your life. Otherwise, your hard work may be a waste of time.
The Importance of Starting a Company Whilst Employed
Whereas starting a company is a wise decision, it is even wiser to know that it is possible to thrive or collapse. People often overlook the latter, but as much as optimism is good, you must look at the bigger picture, especially in such cases.
If you were to factor the two scenarios, the best option would be starting your company and keeping your job. So, you will still have a steady source of money as you wait for the business to pick. If an unforeseen cost comes up, you can also cover it effortlessly and timely.
Starting a company whilst employed takes away time and financial pressure. You have all the time to figure out how to operate the business without worrying about putting food on your table and paying bills. Why not when the salary from your job will cater to it?
However, the case will be different if you quit your job. It becomes critical for you to make a profit as soon as possible. Things turn south if the business fails to kick off as expected. In most cases, you can’t regain your old position and need to start job hunting again. With a failed business and no job, it can be hard to survive, leave alone forge forward.
Final Words: Can You Start a Company Whilst Employed?
No laws are stopping you from starting a company while employed. However, your employer may have included clauses determining how to go about it if you think about the idea. Ensure that you study that contract well and don’t breach any clauses.
Remember the tips shared and use them well before, during, and after starting your company. As tempting as it can be, don’t quit your job until the business operates well. If you can manage running the two concurrently, the better.
Starting a company whilst employed has many benefits. However, you need to balance your work and life. Otherwise, you may soon have no time to live outside work and business.
Last Updated on December 11, 2022 by Michael Bush
Michael is the owner of AccountantFor, which is part of the Bula Media group. As an experienced business owner and investor, Michael wanted to build AccountantFor through his personal experience of his frustration in finding the most suitable accountant for his requirements. In addition to this, we bring a number of expert views from accountancy and financial experts to help small businesses and sole traders.