Do you have an idea or skill which could make you money, but don’t want to join an existing business or become someone else’s employee? Then self-employment is probably the right path for you.
The rise and rise of self-employment
Figures from the Office of National Statistics show that the growing self-employment trend continues. The self-employed made up 12% of the UK’s labour force in 2001, a proportion which has risen to over 15% today. So, why are so many people continuing to leave the world of employed work behind and become self-employed?
The benefits of being your own boss
A separate report from the ONS suggests that the main reason people choose this route is to gain more time to spend as they wish. Family commitments, flexibility in schedule or simply wanting to decide for yourself how and when you work were the main reason given for becoming self-employed. Also, many reported a greater sense of job satisfaction when they became self-employed. Perhaps most surprising of all, those who transition to self-employment tended to enjoy a higher hourly rate compared to their employed earnings.
What do you need to know before making the leap?
Getting off on the right foot
Self-employment has many benefits, but it does come with its own unique set of challenges. First of all, you will need to register with the government and be prepared to complete an annual self=assessment in order to make sure you are paying the correct amount of tax. You will have to make the choice of whether to do this yourself or employ an accountant. You might want to check out online guides to setting up or visit the government’s own website.
Keeping track of your hard-earned money
Crucial to the success and legality of your own business is record-keeping. Unless you are able to keep precise track of all the money coming in and out, invoices, refunds, expenses, etc. you will never be able to properly run your own business. To make your life easier, banks offer accounting options to help manage this important aspect. In this case, you will need to set up a sole trader bank account. Aside from keeping your business account separate from your personal one, banking products such as these offer helpful ways to manage your finances, and can even help you if your credit history is holding you back from opening such an account with a high street bank.
The Tax Man
Anything you earn above the tax free allowance is taxed, starting from 20%, and you will also need to set aside around half that again for NICs (National Insurance Contributions). This can be confusing, and a challenge when you’re starting out as you’ll need to ensure you have these funds ready for the January self-assessment deadline. It’s always best to save as you go, instead of hoping you’ll find the money somehow later on.
Being your own boss
If you think that this could be for you, make a careful note of the links found here, take a good look at your finances and see if you could be your own boss.