Self Employment

As I am thinking about what I want to do in the future I am thinking of all aspects of business I could work in. Self employment is one possibility but I don't know a lot about it and I don't actually know whether it would be suitable for me so I have researched into it to see whether it is for me. My mum is self employed and has been for a fair few years and she enjoys it so I might like it to. The first thing I thought I should research was the difference between and freelancer and self employed if there is any.

Whats the difference between being freelance and self employed?

Freelancer

Freelancers are self employed who typically tend to work from home or their own business if they have it. They normally have several clients who they work for at once who have different projects or different work for them to complete. Someone working freelance is more common in the creative and media industries so writers, designers, photographers and web developers are likely to be freelance. Accountants and tutors can also be freelance. Being freelance isn't a formal legal status it's how someone describes how they work. Tax related freelancers do come under the self employed bracket so they have to register with HMRC as self employed, they all have to complete a self assessment tax return each year.

Self employed

Also known as contractors, they they complete self assessment tax returns and are responsible for sorting out their own tax bills and National Insurance contributions just like someone who is freelance. Tax wise there's no real difference between freelance and self employed. In work they do work a little different. Self employed people usually work for one client full time in the clients place of work for a set period. The IT industry is quite popular for having self employed people as they're normally brought in for around six months to fill temporary gap.

https://www.simplybusiness.co.uk/knowledge/articles/2016/05/difference-between-freelancer-and-contractor/

Is self employment right for me?

Benefits of self employment:

• I can create my own perfect job based on what interests me and what I am most passionate about.

• I don't have to answer to anyone as I am my own boss

• I can work any hours that I want to fit in around my lifestyle

• I don't necessarily have to commute

• I don't have to ask anyone for time off

• I can turn down work if I just don't want to do it or if I don't have the time to do it

• My earning capacity would increase as I would have no employer taking a cut of what I earn

• I can offset work expenses against tax meaning I would pa less tax and keep more of what I earn

As good as self employment sounds to people there are a lot of things to consider before deciding to become self employed.

• Lifestyle aspects

Working more hours is quite likely as it's harder to turn down work as when you're self employed you don't know when the next project will be coming through. On the weekend or on days off emails will probably still be checked just in case there's a job coming through that you don't want to miss out on, which is possible if they don't get a response soon enough. Even though there's no boss as such being self employed means that in a way your clients are your boss as you have to produce work for them to their demand.

• Financial aspects

Finance is probably the one thing which will be the decider as to whether you go self employed. Being self employed is a gamble that hopefully pays off but that sometimes doesn't. When in a job employed by someone else you have a set pay date and a set salary that you receive each month but with self employment you have to create your own invoice but when the client pays it is their decision but hopefully its only a couple of days after the invoice is given. One month you could earn a lot of money and the next month you could earn a lot less so knowing your income is very hard on a regular basis. No sick or holiday pay is received either along with no employer pension contributions. If a holiday is booked it could mean work needs to be completed before the holiday begins so that the client has it before the holiday which could mean staying up and working all hours under the sun. It's harder to get mortgages when you're self employed, you'll need two years of self employed accounts to show to the right people.

Questions for thought:

• Do you have any savings to tide you over in the beginning, and longer term?

• Does the thought of not knowing how much you’ll earn from one month to the next make you anxious?

• How will you cope with your monthly outgoings – mortgage/rent, bills and so on – in the leaner months?

• You won't just be doing the work you specialise in

If I was to become self employed in photography I wouldn't just be responsible for photography I would have to run all aspects of the business, from sales and marketing to project management and accounting. It will be hard at first to learn to juggle everything.

• You're on your own

It can be lonely unless employees are being hired to work with you. Invoices will have to be chased or difficult clients will all have to be dealt with by yourself.

• Are you cut out for working alone with no support?

There's so much information on this website that it's too much to put on here but I've read through all of the information and it's really helped me to think about whether this is what I want to do and right now it's not because I personally don't think I've got enough experience in the industry to go out on my own but I know a lot of graduates do go out on their own. I also have first hand experience and information on self employment from my mum as well if ever I want to re consider it in the future. Another website that will be really useful for self employed people is the GOV.UK website as well

https://www.theukdomain.uk/get-online/how-to-become-self-employed/

https://www.gov.uk/working-for-yourself