The Intricacies of being your own boss

This was taken from adviceguide.com, the details that cant be overlooked before starting business:

How to trade
If you are considering self-employment, you will need to discuss with one of the organisations listed under heading Who can give further advice the different ways of trading and which would be most appropriate for your business. The business could take one of three legal forms:-
a sole trader. This is the simplest way of starting a business
a partnership. This is similar to a sole trader except that two or more people run the business
a limited company. This gives the business a completely separate identity from the people who run the business. It is more complicated to set up.
In addition to one of the above legal forms, self-employment can also involve one of the following trading practices:-
a co-operative. This is a business which is collectively owned and controlled by the people who work in it. At least two people must be involved
a franchise. A franchise is an agreement which allows the person buying the franchise the right to run a branch of a business that someone else has set up.
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Finance
As a self-employed person, you will need enough money to live on as well as money to start up the business and keep it going. You may be able to get money from the following sources:-
family or friends
grants from charities or trusts
loans from banks and building societies.
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Book-keeping and accounting
It is extremely important that accurate and detailed records of the business are kept. You may be able to keep your own books or employ a bookkeeper or accountant, but if you are trading as a limited company you will need the help of an accountant.
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Income tax
As a self employed person, you will be taxed differently to an employee. You will be responsible for paying income tax on your earnings and will usually need the help of an accountant. There are special tax reliefs and allowances which self-employed people can claim. If you are newly self-employed, you should register with HM Revenue and Customs by calling the helpline for the Newly Self-Employed. The helpline number is: 08459 154515.
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Value Added Tax
Value Added Tax (VAT) is a tax on goods and services which is paid to HM Revenue and Customs. Whether or not a self-employed person has to pay, and in some cases has the right to choose to pay, VAT depends on the type of business and how much the business sells.
You can get more information about VAT from the website of HM Revenue and Customs at: www.hmrc.gov.uk.
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Premises
You could consider trading in the following ways:-
from home. This has the advantage of low costs but you will need to make sure that the tenancy agreement, mortgage agreement or title deeds of the property do not place any restrictions on business use. You may also need to get local authority planning permission
from premises you have bought or rented. You should consider how much space you need as well as heating, lighting and ventilation requirements. You need to make sure the property has been approved for business use. Planning permission may also be necessary. If you are considering buying or renting premises you should see a solicitor
from a market stall. The local authority will have details of where and when these are available and how much local markets charge
at craft fairs. The local authority will be able to give details of where and when these are held.
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Business rates
Business rates have to be paid to the local authority on most business premises. These include shops, offices, warehouses and factories. In some cases, for example, in a property which contains a shop and a flat, or if you work from home, you may have to pay both business rates and council tax. Some types of business premises are exempt from rates, for example, agricultural land. For more information about business rates in England, see the government's Business Link website.
For more information about business rates in Wales, see the website produced jointly by the Valuation Office Agency (VOA) and the Welsh Assembly Government at: www.mybusinessrates.gov.uk.
For more information about business rates in Northern Ireland, see the website of the Land and Property Services at: www.lpsni.gov.uk.
For more about business rates in Scotland, see Non domestic rates – a guide.
For more information in England, Wales and Scotland about council tax, see Council tax.
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Health and safety
As a self-employed person you have a duty to make sure that your business premises and working environment meet health and safety requirements. Further information about health and safety requirements is available from the local health and safety executive or environmental health department of the local authority. In Scotland, local authority refers to the District and Islands Council.
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Insurance
Depending on the business and how you trade, you will be required by law to take out certain types of insurance. Other types of insurance are not compulsory but it is important to consider which ones are appropriate. The types of insurance you may need are:-
employer’s liability insurance. If you employ other people you must have this insurance. It provides cover for claims made by employees who are injured or become ill as a result of their employment
vehicles insurance. Vehicles used for business purposes must be insured even if already insured for private use
public liability insurance. This provides cover against claims by members of the public who have been injured or had property damaged as a result of carelessness at work by you or your employees
premises insurance. Insurance will be necessary for the premises you work from, even if you work from home and there is already a policy. This is because the insurance will usually only cover residential use
contents, stock and materials insurance. This insurance will be necessary to cover the replacement costs of stock, materials and the contents of the premises even if is work is being done from home and there is already a home contents insurance policy
health and accident insurance. These will pay a regular income or lump sum if you are unable to work because of an accident or sickness.
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Pensions
As a self-employed person you will get state retirement pension if you have met the contribution conditions.
For more information about Retirement Pension, see Benefits for people over sixty.
You could also consider getting a private personal pension.
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Immigration status
Setting up in business may affect your immigration status and you should therefore consult an experienced adviser before doing so. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
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Employing other people
If you employ other people you will be responsible for paying wages, tax, national insurance contributions and Working Tax Credit where relevant. You will have to meet the requirements of employment law and health and safety regulations.
For more information on the responsibilities of employers, see Basic rights at work.
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National insurance contributions
As a self-employed person you may have to pay national insurance contributions for yourself and any employees. Whether you have to pay contributions for yourself, and if so what type, depends on how much you earn. Whether contributions have to be paid for any employees depends on what they earn. The payment of contributions will affect the benefits a person can claim in the future. You can contact a telephone helpline for information about national insurance contributions, statutory sick pay and statutory maternity pay on 0845 714 3143.
For more information about national insurance contributions, see National insurance - contributions and benefits.
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Benefits and Tax Credits
As a self-employed person you may be able to claim benefits or tax credits, depending on your income and other circumstances.
To check what benefits or tax credits may be available, see Benefits and tax credits for people in work.
If you are self-employed you should consult an experienced adviser, for example, a Citizens Advice Bureau, for help in working out how much benefit or tax credit you are entitled to. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
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Trading names and licences
You need to consider whether you wish to use a trading name for the business. If so, there are restrictions on the names businesses can use. You may also need to get a licence depending on the type of business. For organisations that can advise on trading names and licences see under heading Who can give further advice.