Self-Employment

It doesn’t happen overnight

The idea of working for yourself and being your own boss might sound like an attractive proposal for many individuals looking for their next career move. But, for the majority of successful self-employed people, it does not happen overnight. It is often years before they are able to save enough money to start up on their own, having developed the skills and experience needed from working for a number of different employers. If you are wet behind the ears, you are less likely to achieve success. 

If you think you might be ready to go down the route of self-employment, the first thing you need before taking the leap is a business idea. How do you plan to earn money? Perhaps you have learnt a trade or and would now like to start up on your own, or maybe you have a product that you think there is a market for? Ensure your business is as efficient as possible to allow you to focus on making it a success. This might mean working from home in the first instance, or working long hours singlehandedly to get it off the ground.

Financial Costs

The financial costs of becoming self-employed and running your own business can vary significantly. If you require a workspace or specialist equipment, it can be expensive for those starting out. If you would benefit from a business loan, it is worth speaking to a personal business advisor at your chosen bank. They will also be able to point you in the right direction for specialist banking products including current accounts and credit cards. Business banking can come at a cost, so make sure you shop around for the best deal before choosing your provider.

Business Insurance

You will also need to consider the level of insurance you need as a self-employed person. Everyone from beauty therapists to builders requires some kind of business liability insurance to cover you and your business for business-related accidents. Keeping on track of your finances is a necessary evil for every self-employed person – some people hire an accountant while others learn basic bookkeeping in order to cut down on costs. When you start making money, you will need to do your tax returns. The HMRC website offers plenty of help to self-employed people needing to complete them.

Visit the HMRC Website

It is estimated that around five million people in the UK now work for themselves, which is the highest level of self-employment in Britain since records began. You are classified as self-employed whether you choose to operate as a sole trader or limited company, an independent contractor, or if you carry out work for other businesses and people on a freelance basis. If you are starting a limited company, there are certain things you need to do including registering your business, drawing up a memorandum of association and paying corporation tax. If you are going self-employed as a sole trader, you will need to inform HMRC and be sure on the differences between sole traders and limited companies. Again, the HMRC website offers lots of advice.

The Positives

With so many people now classified as self-employed, what are the main benefits? One of the biggest advantages is being able to choose your own hours to fit around your family life. If you like to go for a morning round of golf or have to make a dentist appointment, you no longer need to worry about taking time off. The freedom to be able to choose your workplace and the projects you are working on means you also tend to get more job satisfaction from working for yourself, knowing that you will personally reap the rewards from all the hard work you are doing. Self-employed workers also have access to benefits, allowances and reliefs that can help them to reduce their tax bills, as well as the potential to earn more money, as day rates for self-employed freelancers tend to be higher than salaries.

The Negatives

However, despite the positives, there are disadvantages to being self-employed too. There are no employee benefits such as employer pension contributions, a company car, sick leave or paid holidays, and it is the responsibility of the self-employed person to ensure a steady stream of work and a regular income. This can be extremely stressful during quieter periods. Furthermore, managing every aspect of the business and balancing the books can be tough and time-consuming, so you may end up working longer hours with a less than healthy work/life balance. 

Funding

There is certainly a lot to weigh up if you are considering going self-employed. Self-employed grants and funding opportunities are out there to help get self-employed workers up and running, while government-backed advice services around the UK will help with everything from creating a business plan and researching the market, to finding finance and recruiting staff. It is important to remember that serious planning is needed to make a success out of any new venture, as well as a lot of hard work in turning your business dreams into a reality.