12.12.19

4 Things You Need To Think About When You're Self-Employed


One of the main benefits of becoming self-employed is the ease in which you can start up and run your own business. And sometimes from your own home, depending on what you're going to be doing, that is. To help you understand some of the most important issues that there might be, and things you'll need to do, here are 4 tips for going self-employed and things you need to think about when doing so.

Save Before Start
Ditching that day job, and losing that guaranteed monthly income can be a big step for some people, especially if you like the small things in life, like being able to pay rent and eat. And don't forget, you can become self-employed whilst working as an employee, so if you just want to test the waters, you don't need the leave employment to do so.

Having some savings in place first is so important as it means you can sort out any unexpected costs straight away. And once your business is up and running, you can take out self-employed loans to help you along the way in getting any expensive items you may need for your work.

Look Before You Leap
Many workers have a side hustle when it comes to their job. This is basically a job on the side of their main job. Something that gives them a little extra cash on the side of their main income. This is actually a great way to start your self-employed status, if you can do this. Getting to pay day and not having that guaranteed income can be a shock, if you're self-employed, so starting out small can be the ideal way to get into it, without having to struggle financially. 

Register With HMRC
Once you set up your idea and get it in motion, you will be responsible for paying your own income tax and National Insurance (NICs), so it is important to tell the HMRC and register as self-employed as soon as your start earning. 

Paying taxes can become a little daunting when you first start, especially when the tax year works different to a normal year. A tax year runs from 6 April to 5 April of the following year. You also need to factor in that you need to sort your accounts by a certain date, and pay any tax owed in a timely manner. My advice would be to keep aside around 25% of any earnings you make, and this means you'll have a good chunk to cover income tax and National Insurance when the bill comes in. 

Keep accurate and up-to-date financial records
This is so important, and one that I think many struggle with sometimes. You are obliged to keep clear records of all your business transactions, whether this be money coming in, or going out. And to be honest, this not only keeps the HMRC happy, but it will also make life easier if you are organised. 

I would also make sure you set up a separate bank account for your business. This means that you don't mix up personal and business funds, and can easily see in-goings and outgoings without getting utilities and shopping mixed up. 

And most importantly when it comes to things you need to consider, know your worth. Choose a rate  that you are happy with and stick to it. This is even more important to do in the early days when work may feel hard to come by and people might try it on a little. 

3 comments:

  1. I was self-employed most of my working life, and I can confirm that keeping accurate and up-to-date financial records is very important!
    I also kept the equivalent of one years earnings in a savings account for emergencies and in case of recessions etc.

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  2. Another post with very sensible content!
    I smiled when I read your comment 'especially if you like the small things in life, like being able to pay rent and eat.'

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