Understanding tax and benefits of being self-employed.
First of all, look at becoming self-employed as an opportunity to learn and prepare for the real world. An opportunity to learn how to live, grow and win in the capitalist world, for a better future and promise of freedom, excitement, comfort and the right people to share it with.
Questions to ask before becoming self-employed:
Is self-employment right for me?
There are pros and cons to being self-employed, and when you’re thinking about being self-employed versus being an employee, there are some things that you need to consider: -
- Are you clear about how you would acquire clients or customers? (Worksity and other gig economy platforms are working hard to satisfy that need for you).
- Do you have money to set yourself up? Depending on the specific service you offer, all you require is insurance and self-employment registration. Finding clients and promotion is our job. (Add all the costs to set up as self-employed)
- Would you be able to cope with periods of little or no income? By tailoring and providing article links to create a good profile and promoting yourself in a professional manner, we guarantee you work. However, we will still provide you support and face to face consultation, and our team will find you projects tailored to your skills.
- Do you feel confident about managing your own business, for example, managing cash-flow (add an explanation, like Wikipedia), keeping thorough records and completing tax returns (add an explanation like Wikipedia)(Through your stripe account, you can manage your total revenue and earnings).
- Have you thought about the impact of losing employee benefits, for example, holiday pay, sick pay and employer pension contributions? Would you rather have a safety net or freedom?
- If you were self-employed, would you miss working alongside colleagues?
- Do you have space where you’d be able to work and any equipment you need, and do you have the budget to buy it? (Remember, you have access to all the tools and space through university).
- Do you have any life-changing events to take into account, for example, an upcoming house move, mortgage, wedding or a new baby?
The advantages of being self-employed.
There are plenty of perks to being self-employed, including: -
- You have more flexibility and control, so it maybe easier to fit your work around other commitments and responsibilities, including your university studies - freedom.
- Your work can be more varied, as you may be working on several different projects for different clients at any one time -freedom.
- You can explore your creative and entrepreneurial side as you build your own business - excitement and growth.
- You can deduct certain costs from your income when you’re calculating your tax liability, such as travel and some utility bills - the opportunity to discover hidden treasures and riches.
- You may have the potential to earn more money, as day rates for self-employed consultants and freelancers tend to be much higher than salaries - create comfort with more money!
- You should be able to ditch your commute, as you’re likely to work from home or while you’re travelling from one place to another - freedom to move.
The disadvantages of being self-employed
We are working hard at Worksity to cut out all disadvantages for a better chance of a smooth journey toward self-employment. However, it’s important to take into account the disadvantages of being self-employed, in particular, the risks and costs that come with self-employment, for example: -
- Finding a route to market or acquiring clients can initially be challenging. Although, Worksity works effectively and efficiently to provide you with endless job opportunities to choose from your local community.
- There are likely to be some start-up costs, so you may need money to get started, however, you must acknowledge that we do promote you, provide you with the clients, and you do have access to the up to date tools of your industry through university and up-to-date knowledge of the industry through your lecturers, as well as the knowledge you will find here to reduce your start-up costs to as little as possible. For-example, to start an eco car wash business in your local area will cost around £70!
- Your income isn’t guaranteed, which can sometimes make it hard to keep up with rent or mortgage payments, loan payments and living expenses.
- You take responsibility for the failure or success of the business, so you don’t have much back-up if things go wrong. Please remember that how hard you work, how committed you are to the subject you are studying at university, in addition to how enthusiastic you are about the service you are providing, accurately defines how successful your business will become. Worksity works hard to provide you with guidelines and as much support we can possibly give to make this path as easy and as smooth as possible. Our mission is to enhance your prosperity.
- If you take a holiday or can’t work because you’re unwell, you won’t get paid. Look at holidays as a business trip, as long as you have your tools to work whilst you’re enjoying varying scenery, and you’re focused enough to provide a satisfactory service to your customers, our mission is to provide you with projects, in any region you travel.
- It can be more difficult to get approval for renting a property, taking out a mortgage or getting a loan.
- It can be challenging to separate your home life from your work life - when you love what you’re doing, it doesn’t count as work!
- If you’re working on your own a lot, it can be isolating.
- You need to deal with the administration side of your business, which involves bookkeeping and complying with regulations.
Going self-employed but working for a company
If you’re both self-employed and continuing to work fora company, this means you’ll pay tax through both PAYE and self-assessment.
You could also be self-employed and only work for one company (for example if you have a single major client), but HMRC will be keen to make sure that the company isn’t simply giving you the title ‘self-employed’ to avoid paying National Insurance contributions and giving you employment rights all at the same time.
To count as self-employed you usually need to have a choice over when and where you work, and you’ll usually get paid when you issue invoices - check the government’s website or speak to an accountant if you’re not sure.