People become self-employed for all sorts of reasons. Perhaps they want more freedom and want to fit their work around their lives more, perhaps it’s just the best option available, or maybe they feel ready to take on the challenge of doing it all themselves.
Either way, more people than ever are taking the leap into self-employment. According to the Office for National Statistics, 4.53 million people in the UK are self-employed, out of a total of just over 30m in work, with 1.67 million taking the plunge in the past five years alone.
Whether you’re a plumber, a film editor or setting time aside to write that great novel, working for yourself is something many people find increasingly attractive as they get older. In fact, the average age of someone self-employed is 47, compared to 40 for those in ‘employed’ work*.
It is also interesting to note that almost 4 in 5 of those in work over 65 are self-employed, which perhaps speaks volumes about the employment world’s attitude to ageing at a time when people are living longer and healthier.
Whichever path you choose, there are a few tips if you are going freelance. It’s something this writer has tried – and learned a lot of lessons from.
- Do your research – Is it something you can do from home? If you’re a creative, find out and only approach the publications, editors and so on that you’re best suited to. And if you’re opening a shop, are there already plenty in the area?
- Sort out your finances – Most people will be using their own money to get started and will probably have to live on a reduced wage while you get things going. Before you set up on your own, it’s important to make sure that you have enough money put aside and that your finances are in shape. Checking your Experian Credit Report and Score can give you an indication of what kind of loan you might get, in case you need to apply for credit at some point. Usually, a higher score means you’re seen as lower risk – meaning you’re more likely to get credit, and at better rates.
- Get the basics right – Sole traders have to keep a close record of all their income and expenses, and fill out an HMRC self-assessment form at the end of the tax year. Setting up as a limited company can be beneficial from a tax point of view but would lead to increased set-up, administrative and accounting costs. Many self-employed people – journalists and plumbers for example – start off as sole traders but as their documentation becomes more complicated, move to becoming limited companies.
- Get the right people around you – While freelancing allows you to be in charge, you can’t always do everything yourself. Accountants can help you keep your finances in place, and web designers and photographers can help give your venture the professional presentation that makes it stand out.
- Spread the word – Networking becomes even more important when you’re no longer perhaps part of a large organisation, so contacts, networking groups and simple word of mouth recommendation can be very useful, as well as social media, for targeting the right people that you think will like what it is that you are doing.
To summarise – it’s about using the resources available to you and putting in as much planning as possible. And remember, there’s plenty of free advice available from your bank, business advice centres or websites such as Citizens Advice and www.gov.uk.
*ONS research ‘Self-employed workers in the UK – 2014’, Aug 2014