Working for yourself

What does working for myself involve?

Being self-employed means being your own boss, but it also means a lot of hard work and dedication. If you’re considering becoming self-employed, make sure you do plenty of research and understand what is involved first.

If you do decide to become self-employed you’ll be responsible for paying your own tax and national insurance contributions. You will need to keep business records and details of your income so you can fill in an annual Self-Assessment tax return. You might also need to register for VAT.

Why work for myself?

Being self-employed isn’t for everyone. Although it means you’re your own boss, it also means that no one’s going to give you holiday or sick pay. It’s all down to you to make sure you earn enough to keep you going throughout the year, at times when you can’t work or want to take a break from work.

I want to become self-employed

Do some research and investigate your choices as much as possible before making the decision to become self-employed. Speak to people who are self-employed, your careers adviser and your local Connexions Adviser.

Make sure you research your business idea if you’re thinking of setting up your own business. What’s the competition like? What will you need to do to stand out from the crowd? The same applies if you’re thinking of becoming a freelancer in a specific profession.

If you become self-employed you’ll need to know how to sort out your own taxes and national insurance contributions. Find out what you need to do by visiting DirectGov – tax for the self-employed.

I want to start my own business

If you want to start your own business then you’ll need more than just a good idea. You’ll need funding, time and lots of dedication.

The Prince’s Trust helps 18-30 year olds who want to start a business by offering low interest loans, business mentoring and other support. You can find out more by taking a look at our article: ‘So you want to start your own business?’.

Business Link is a free service offering support, advice and information for small and medium businesses, available online and through local advisers. Visit Business Link online to find out more about starting up.

What about freelancing?

Rather than setting up your own business you might decide to sell a ‘skill’, by working as a freelancer, contractor or consultant.

Freelance work often covers creative professions such as writing, designing, photography and illustrating, as well as professions such as childcare, interpreting, translating and many more.

If you’re planning to become a freelancer then you’ll need to build up a decent portfolio of work. This might mean doing work placements from university or college at a media agency, for example, if you want to be a creative freelancer. You can use these experiences to build up working relationships with people who will hopefully go on to use you as a freelancer.

By its very nature, freelance work means there’s never a guarantee of constant work. You might take on a three month job, but then find you’ve got nothing for a few months. It’s up to you to make sure you budget sensibly so you have enough money to see you through the quiet times.

It’s the same with contracting and consultancy, but be aware that people rarely just decide to ‘become’ something like a management consultant; it’s something that they’ve built up the skills and experience to do after years of doing it for someone else.

How do I sort out my tax and NI contributions?

You need to let HM Revenue and Customs (HMRC) know that you are self-employed as soon as possible. If you don’t tell them within three months after the end of your first month in business, you could face a penalty.

Once you are registered you’ll have to fill in a tax return each year and give details of all your earnings and income. You’ll have to sort out your own national insurance contributions, which are usually taken directly out of employee’s wages by their employer.

If your business turnover is more than the VAT threshold you will normally have to register for VAT. Even if your turnover’s below the threshold it might benefit your business to register voluntarily.

Who can help?

You can find out how to pay your taxes and national insurance if you’re self-employed by visiting DirectGov – tax for the self-employed.

The Prince’s Trust is a charitable organisation for 18-30 year olds who want to start a business. Visit their site at www.princes-trust.org.uk/.

The ADP (Association of Disabled Professionals) runs a project called the Disabled Entrepreneurs Network (DEN). It aims to provide networking opportunities and information services for self-employed disabled people as well as being a source of specialist advice to help you get into self-employment. Visit their website at www.disabled-entrepreneurs.net/.

For support and advice if you are thinking of starting up a new business, visit www.businesslink.gov.uk – a free service which offers information for small and medium businesses online and through local advisers.

Advertisements