The Pros And Cons Of Going Self-EmployedWednesday, January 18, 2017
If you’re thinking of going freelance or setting up a business, there may be a few considerations worth making before taking the plunge and coming off the pay roll. Certainly, not having a boss is a great freedom, but being your own boss also comes with a new set of responsibilities. Here are some of the major factors to take into account to help you decide whether going self-employed is the right choice for you.
Handing Your Finances
A perk to being employed by someone else is not having to calculate your own taxes and deal with HMRC directly. Most employers deduct your tax from your weekly or monthly wage automatically. As a self-employed person you will have to handle all this yourself. You must register as self-employed with HMRC and pay an annual tax return. Some people will employ the help of an accountant to help calculate tax and expenses as this can be arduous work. Whether or not you have an accountant, you should keep a tight record of your earnings and spendings. Setting up a business account to separate work and home costs may be handy for some – helpful for expenses. Expenses are somewhat of a benefit as you can save money on your taxes you wouldn’t otherwise be able to working for someone else. Basically any money you spend on your business can be claimed back from your tax as an expense. This can include obvious things like office hire and equipment, but may also cover objects with dual purposes such as phone contracts that are partially used for business as well as a percentage of your house’s rent if you work from home. Of course, being in charge of your own finances can also mean being able to set your own rates (unless you’re freelance doing work for various companies for a set price). Busy periods allow you to take in more money as you’re not stuck to a set wage. However, quiet periods have the reverse effect.
Choosing Your Own Hours
Flexible hours are also a bonus when going self-employed. You can choose to work whenever you want, setting your own hours. Of course, you will still be tied to client appointments and deadlines, but if you own the business you can effectively not show up to the office one day. That said, you’re also never off the clock. If you have staff, they will try to contact you at all hours regarding queries, holiday requests and complaints. Even if you are freelance, you will constantly be marketing yourself. You could go out to the pub and run into someone who requires your services, in which case you’ll have to enter sales mode, no matter how many drinks you’ve had. The reputation of your business also follows you everywhere – so be careful what you get up to in your private life.
Working From Home VS Getting An Office
Another flexibility you will have is the choice to work wherever you like. For all your admin, you can either hire and office or work from home. An office gives you a place to separate your work life from your home life, allowing you to invite clients in and hire staff without them having to see your home. It is however more expensive than working from home. There are options for working from home such as hiring staff remotely and meeting clients in coffee bars. Some even do most of their work in coffee bars – a trend that has coined the word ‘coffice’. Another half-way method meanwhile is to rent a space at a co-working office. Here you will be sharing space with other businesses and freelancers, giving you the chance to get out the house and still have the office camaraderie, whilst paying less for a private office.
Being self-employed gives you the option to hire staff. Employees can help lighten the load, as well as allowing you to take on more business and expand. You will have to responsible for them, ensuring they are regularly paid and have enough work, ensuring that your business provides them with adequate working rights and training them up to an acceptable standard. On top of wages, you will have to ensure their taxes are paid. You will have to maintain a professional level whilst also being a counsellor for them. It may be worth taking on an employee assistance programme that can help your staff with personal issues. There are many other schemes that you can invest in to protect them, including insurance schemes.
Sorting Out Insurance
Becoming self-employed can involve a multitude of different insurance schemes. On top of your own national insurance, you will have to ensure your employee’s national insurance is paid. Taking on staff also entails compulsory employee liability insurance. Any business vehicles you take out will also have to be insured. There are a number of other optional insurance schemes that you can take out including property insurance (for your office), product liability insurance, data breach insurance and professional indemnity insurance. Some companies can offer multiple types of insurance under one business insurance package, which may be worth looking into to save costs.
On top of all this, you will have to market yourself and your company in order to get more business. Having a website and business cards are most useful things you can have giving you online presence and a way of offering contact details professionally in person. From here you can then start pursuing all kinds of marketing strategies from SEO to leafleting to joining a local business society. Every moment should be an opportunity to network whether you’re at the barbers getting your hair cut or in a restaurant. Research your market and find a way of making yourself stand out. You have to be in charge of your brand. This is one of the greatest freedoms of being self-employed – you get to decide how to brand your business and the kind of clientele you want. The more you market, the quicker your business will grow.