Wednesday 14 July 2021
Money

How you can make money from your lockdown skills

From cooking to coding, now the new normal beckons, profit from the pandemic-induced activities you’ve grown to love

<p>Golden touch: many things to consider when using your talent to generate dough</p>

Golden touch: many things to consider when using your talent to generate dough

(Alamy)
Rebecca Goodman

Lockdown gave millions of us the opportunity to start new hobbies, from coding to learning a new language.

Either through boredom or necessity, 810,316 new companies were registered at Companies House in the year to March, a 21.8 per cent rise on the previous year.

Web-design and arts and crafts businesses were the most common to have started this year, according to research from Direct Line, and nearly a quarter of us have either started or are planning to set up a business.

But once you have an idea and a product to sell, you then need to tackle the administration of owning a business including the funding, insurance, tax and marketing.

More than three quarters of entrepreneurs say they needed more support than planned, according to research from Virgin Money, and 36 per cent are worried about what financial support is available.

Naomi Boles, 29, from Buckinghamshire set up Boles Bakery while on furlough in lockdown.

She started selling baked goods in a local food market and then launched postal deliveries. She says it’s important for new business owners to manage their time carefully.

She says: “During the pandemic when everyone was furloughed it was easier to focus on a new business but as everyone returns to work and normal life it’s easy to get caught in the cycle of side hustles and the grinding 24/7 which leads to burnout.”

As a food business, she has an extra layer of administration to negotiate including her insurance, registering with the local environmental health department and completing her food hygiene certificate.

She says: “Home insurance was a bit of minefield as I had to look at my home insurance to make sure that setting up my own business from home didn’t invalidate it, then I also had to take out insurance for my business and then public liability insurance of £5m so I could trade at markets.”

When you set up a business, one of the first things to think about is your tax situation.

Everyone in the UK has a personal allowance of £12,500 and tax is due on anything you earn over this limit.

You can also earn £1,000 a year if your income is from either property or trading (or £2,000 if you earn income from each) and you don’t need to declare this income or tell HMRC.

There are different ways of setting yourself up when starting a business depending upon the amount of money you make, the nature of the business, and if you employ anyone else.

The most common is registering as a sole trader with HM Revenue & Customs (HMRC) and filing a tax return or setting up a limited company and registering with Companies House.

Insurance also needs to be considered to cover you, the products you’re making, any employees you have (it’s a legal requirement to have employer’s liability cover if you do) and damage to any third party.

Simon McGinn, spokesperson for Allianz Insurance, explains: “Public liability insurance covers you for damages claimed if you cause an injury to a member of the public or public property, for example if you were selling items at a market.

“Professional indemnity insurance gives protection against claims made for any damage caused by professional negligence.

“However, if you’re setting up a business from home, speak to your insurer about your home insurance cover. Depending on the type of business, your cover may need to be extended.”

There are several specific business banking accounts to choose from, which offer a range of benefits and usually come with a small fee.

Naomi uses Starling bank’s business account and pays £7 for an extra bundle to help with running her business.

She says: “It automatically allocates your expenses and revenue to the right categories for your self-assessment and you just upload photos of your receipts via the app.

“It also gives an estimate of the tax you have to pay so that made sorting out my tax so much easier.

“It’s cheaper than a bookkeeper and so worth it – don’t bother trying to do it yourself on Excel etc.”

On top of the paperwork side of things, there’s also funding to think about and how you’ll pay for the start-up and the everyday running costs.

Isabel Mohan, 40, from London, set up Discoco.co.uk, a website curating online courses, in lockdown with her friend and she advises figuring out the budget first and incorporating a buffer for extra costs such as web domains and post and packaging.

She says: “Figure out early on what stuff is worth paying for and outsourcing and what can be done yourself or by calling on favours or swapping skills with people in your network. There are lots of brilliant and affordable online courses for stuff like doing your own PR, basic web design and social media skills.

“I’d also advise joining online communities of people doing similar things to you, it’s great for sharing knowledge and finding people who are going to be interested in your business and potentially becoming a customer or even investing.”