Thinking of working for yourself or expand your side business alongside your salaried job? We’ve got you covered with tips to get you started, weighing up the pro and cons and helping you understand your tax and benefits when self employed
What is Self-Employment?
A self employed person will be paid direct from customers without tax and paye deductions, leaving them responsible for organising their work and paying over their correct Income Tax and National Insurance cobtributions on their self assesments (submitted no later than 31st January each year)
Whilst being self-employed means, you’ll get to ‘be your own boss’ and have that greater flexibility with your work hours (you may even have other people working for you) there are downsides too.
We’ve compiled a checklist along with some pros and cons below to help you consider if being self-employed is right for you.
Being self-employed – is it right for me?
Being able to create your own income is indeed rewarding, but when weigh up if now is the correct time for you to go self-employed there is a lot to consider, such as;
- How are you gaining new customers and clients?
- Do you have the funds to set yourself up?
- How long can you cope without money from clients?
- Do you feel confident on understanding cashflow, keeping compete records to help complete your tax returns?
- Have you considered losing your employee benefits? i.e. holiday & sick pay, pension contributions from your employer etc
- Would you miss working with your current colleagues?
- Do you have all tools, equipment and space needed for the work ahead?
- Do you have any major life events coming up? E.g. house move, wedding, baby, etc
The advantages of being self-employed
Whilst this isn’t an exhaustive list, here are some benefits of being self employed
- Having more flexibility and control of your hours, so you can work around other commitments, i.e. looking after relatives, childcare
- Having a varied and exciting workload, being able to take on multiple different projects at the same time
- Testing your creative and entrepreneurial side, as you being to create something new into the world
- Gaining the ability to deduct certain costs – e.g. travel and utility bills – from your income that you cannot as an employee
- Accessing the potential of higher income from being an independent consultant/freelancer
- If working from home, lowers your travel time and allows you to work in a more relaxing environment
- You will have become a strong independent individual, leaving your brand on the marketplace
The disadvantages of being self-employed
As will all things, it is important to consider the rough and smooth sides of setting up your own business, in particular the risks and costs of doing so, such as;
- The initial start-up costs (i.e. new equipment, laptops, insurance)
- Your income is not guaranteed, which can make your monthly payments harder to make – rent/mortgage, loans, living expenses etc.
- You are the business, it’s success or failure lies on you, and you may not have back up if things go wrong
- Bank holidays and sick days means you won’t get paid
- Gaining finance for a mortgage, rent or loan will be more difficult
- Separating home from work can be challenging – having the balance is always important
- The admin falls upon you, keeping good bookkeeping records and regulation compliance falls upon you
These are some of the things to consider before starting this journey and we will be here to help you where we can.
You can reach us at enquiries@jd-accountancy.com and can read our steps on signing up to HMRC here
