Starting your own business

21 February 2021

Jo Marshall MCIPPdip, freelance payroll trainer and consultant, Yorkshire Payroll Services Ltd, outlines the formative events when surrendering the comfort of employment and the crucial issues faced in working for herself

I often ask delegates how they got into payroll. Probably 95% of the time, the answer is always the same: they fell into it. This answer probably best explains how I ended up setting up my own business.

Let me take you back to the start of 2016. I was working for a software company that provided a human resources and payroll solution. I’d worked there for ten years and was one of the few team members who had been there at the start, helping to build the business, believing in the product, wanting to help clients and colleagues. They were great times; we were a family; we genuinely cared. During those ten years, I worked as a consultant, project manager, payroll quality manager, all the way to head of payroll bureau services. But as with all good things, they come to an end. The business was sold, and within just a couple of years things had started to change, so a move was required.

One of the tasks for which I was responsible was organising the company’s user groups. One of the changes I made was to have a payroll user group session, once a year, just before the start of the tax year. This was an opportunity to discuss the changes in the software and to also invite CIPP to discuss the new tax year changes – which is how I got to know the team at CIPP. So, when I decided a move was required, it was to the CIPP that I turned.

...for the first time, in a long time, I felt excited about this opportunity...

At the time, CIPP were recruiting for payroll trainers to deliver their public training courses. I submitted my CV and was invited to a meeting at the head office in Birmingham, where I met the training manager. Everything sounds perfect so far, but unfortunately the role was not a contract of employment – the public trainer was a self-employed role.

And so, this is where my story begins. With my twenty years of payroll experience this was my dream job, my opportunity to give something back to the payroll industry, to pass on my knowledge, and to help train the current and next generation of payroll professionals. The only snag was I had to be self-employed. Making the decision was the scary bit: go for your dream job and give up the security of receiving a monthly salary, knowing it covers your mortgage and bills, and having to give all of that up.

How did I decide? It dawned on me that for the first time, in a long time, I felt excited about this opportunity, the enthusiasm and passion for payroll, something that I had not felt for so long. I jumped. I went for it, full steam ahead.

Following several conversations, with various people, I made the decision to set up a limited company, rather than being self-employed. By doing this, I felt it opened the door for more opportunities to work with other businesses, for example, offering consultancy with payroll implementations. This was fairly easy to do: I registered online at Companies House and paid the registration fee. Remember though, by setting up a limited company you agree to all the duties required as director of that company, including the confirmation statement every year.

Next was the PAYE (pay as you earn) reference; again, all online and probably something that most payroll professionals have had to deal with. For the first year of trading I processed my payroll using HMRC’s Basic PAYE Tool. Not the best product I had ever used, but it did the job of submitting PAYE data to HMRC.

I had several meetings with different accountants, which was an interesting exercise, as I gained so much information from these free initial meetings. Eventually I settled on one accountant, who I still work with today; but more about that later.

...still doing my dream job training payroll professionals, and I’m delighted to say my clients are still with me...

Next was indemnity insurance. Depending on what services your company offers, will dictate the price you pay for this cover. Offering training/consultancy can be fairly reasonable, but it’s worth asking for quotes before offering any other type of services.

Last but far from least was to become VAT registered, again all online. I registered for the flat rate scheme, which back in 2016 was really good.

Following all of this, there I was, no job security, agreeing to every training day that CIPP offered. Luckily, I was introduced to Colin Jackson who headed up the consultancy side of CIPP at the time, which included the Payroll Assurance Scheme (PAS). This brought in extra and much needed work, but I quickly realised that I needed to bring in more work.

I looked back over my CV and highlighted all the skills I had gained throughout my working career. Although payroll was obviously the most dominant, I had started my working life in accounts, so could I offer bookkeeping and payroll services? I’d experienced a huge learning curve already running my own business, could I help others like me? I started putting the word out, would anyone want this service?

Most accountancy practices offer bookkeeping and payroll services, but they often come with a high price tag, which for a small business can be tough to swallow. Although I could undercut on cost, I felt it was also important to offer a personal service, getting to know each client and understanding their business, helping them manage their accounts and guiding them through what can be complex areas. This becomes the unique selling point: you genuinely care and want to help your clients.

Through word of mouth, I quickly gained a client: an IT company, a single director limited company. He’d got himself into a bit of a mess with his accounts, and so I spent several weeks bringing his accounts up to date, all on spreadsheet. I very quickly realised that I would need a good bookkeeping solution that ideally had a payroll offering too.

I settled upon QuickBooks which is a browser-based solution, everything is in the cloud. They offer a ‘pro advisor’ program, and better still a licence for ten databases at a fraction of the usual costs. I then needed to register with HMRC to become an agent. I selected PAYE and VAT, allowing me to deal with these areas on behalf of my clients. After using the payroll solution for about a year, and growing the business to take on more clients, I switched payroll solutions, and moved to BrightPay, a nice little payroll system and reasonably priced.

This is where the indemnity insurance raises its head; paying a few hundred pounds a year for training and consultancy but now offering payroll processing increased my indemnity to nearly a thousand pounds a year. Again, get quotes before offering additional services to clients!

Along with all of this, I also had to register with the Information Commissioner’s Office for data protection. Again, all online and a yearly fee to pay, which can be set up via direct debit. My certificate hangs proudly in my office.

Earlier I mentioned my accountant, and it is here where I bring him back into the picture. Barry was a godsend. He encouraged me when I doubted myself, and he agreed to complete my clients’ financial year end accounts at a fraction of the price of other accountants. He sends me new clients, I send him new clients; we work well together, and during the furlough claims we supported each other.

And so, here I am, four and half years later and still going strong. I’m still doing my dream job training payroll professionals, and I’m delighted to say my clients are still with me, even the IT company, whose accounts are in perfect order – and I was able to claim the job retention scheme for him, too.

Don’t get me wrong, it is tough going it alone. There have been a number of times, even now, when I work out the income for the month and then divide that by how many hours I have worked and realise I’ve earned less than the minimum wage. These are the low times – but try and stay strong.

Would I change anything? No. If I hadn’t experienced the highs and the lows, I wouldn’t be where I am today.

What will the future bring? Well, IR35/off payroll working, which has been live in the public sector since 2017, is planned to go live in the private sector in April this year following a one-year postponement due to the pandemic. This could impact future consultancy work, but I am determined to keep going!

Starting your own business
This article is the first in a short series featuring the views and experiences of a few of those in the industry who have pursued a career as their own boss.