Thinking of starting a part-time business? | Companies House

Taken from the Business Support Helpline Facebook page - information provided by Companies House

Working for someone else usually means regular holidays, limited responsibility and a guaranteed income. On paper, sticking to paid employment might look like the sensible option. Starting your own business can bring long hours, irregular income and greater responsibility.

Before taking the plunge, it can make sense to try it on a part-time basis. This way you can continue to have a regular income and test the water before you dive in. Some well-known companies began their lives as side-projects, nurtured in bedrooms and garages during evenings and weekends.

Although holding down two jobs can be stressful and difficult to balance, it will give you a clear indication as to whether you have the determination to succeed.


It’s advisable to read your current employment contract before making the decision to start a part-time business. Are there any clauses in your contract that state you’re unable to start your own business? Are there restrictions on the type of business or timescales? What about a conflict of interest?

Many organisations now use restrictive covenants. These prohibit you from competing with your ex-employer for a certain period after you have left the business. They can also prevent you from dealing with customers of the business by using knowledge gained during your employment. If your new venture is totally unrelated to your current role this shouldn’t be a problem, but it’s best to read those clauses carefully before you proceed.

Owning up

Next, you should decide whether to tell your employer or colleagues. It can be difficult to stop those Chinese whispers. News travels fast and the knowledge that you’re running your own business or thinking of moving on can sour relations. This can make your last few months at work uncomfortable. If you choose to discuss your plans with your employer, they could become a source of encouragement or work. It depends on your circumstances and it’s your decision.

Business structure

Most businesses will start out as either a sole trader, a limited company or a partnership. Each structure will have its own unique properties and benefits. Seeking professional advice to decide which is right for you is an important consideration. It’s possible to start off with one structure and move to another one. For example, a sole trader can change to a limited company.

Starting out as a sole trader is a popular choice because it’s quick and easy to start and set up, with minimal costs. Many businesses change their structure as they expand and grow. Starting or becoming a limited company can bring increased tax-efficiency, as well as limited liability. Another key benefit of starting or becoming a limited company is the image in the eyes of your customers. Incorporation may give you more of a professional edge by showing everyone that you have a legitimate setup.

Dormant Company

If you choose to become a limited company, you might not want to start trading straight away. With that in mind, you can set up a dormant company so you will be ready to trade at short notice. A dormant company is one that has been registered with Companies House but is not carrying out any kind of business activity or receiving any form of income.

A company can remain dormant for any length of time, but you have some statutory obligations to keep the company active. This includes submitting annual filings and dormant accounts. You must also report changes to company details and keep records up-to-date and available for public inspection. You can set up a company a few months or even years before you intend to trade.

You can find out more about setting up a limited company and director’s responsibilities below.

Setting up a limited company: step by step guide

Being a company director

Starting small

These days, you can operate a business from just about anywhere. All you need is a great idea, a WiFi connection and determination. Many well-known companies started out as concepts, conjured up in the minds of their founders. Figments of imagination turned into reality.

Tristram Mayhew was working in communications for General Electric. On holiday in the Auvergne with his wife and six-month old baby, they came across a French family swinging through the trees. Already thinking about stepping off the corporate ladder, Tristram saw an opportunity to start a business in tune with their own values. Planning the venture for some months, they seized the moment, quit their London jobs and started Go Ape.

Pippa Murray developed her company Pip & Nut by making the all-natural nut butter in her kitchen and selling at market stalls on the weekend. Working as a project manager for the Science Museum, she thought of the concept for Pip & Nut whilst training for a marathon.

Another successful small business-owner is Karen Riddick. The creator of Second Nature, based in Dumfries, Scotland. Karen left her day job after 16 years of employment with the Scottish Environmental Protection Agency, when her FairTrade home furnishings company started to take off.

When is the right time to quit your job and go full time on your new venture? It’s probably once you’ve proven that you can deliver a product or service that customers want.


Gary Townley

Companies House