What do I need to know about being self employed?

[RobertClementHughes]

I have been an employee for large companies for 23 years. I am considering making a change to do similar sorts of work on a contract basis- probably under an umbrella company.

Mainly because I am so effing bored where I am but my salary is pretty good for this area, and I'd struggle to find an employed role with similar salary.

I'm trying to decide whether to stay here until retirement (v stable industry and unless I knife the boss- tempting as that may be- I am pretty much guaranteed a job for life, I'm just feeling my soul shrivel at the idea. I'm 45) or whether to take the risk and get more interesting work.

If you are a contractor, either inside or outside IR35, what should I consider?

I have an employed role part of the week, then in my spare time do self-employed work for other people via a limited company.

The limited company works well for me due to my personal financial circumstances.

Umbrella companies aren't used in my field of work.

When I set my company up I found my accountant very helpful - have you already got an accountant? If not, it would be worth a preliminary chat with one.

Get an accountant
Mine gave me some spreadsheets to work out monthly income, NI, expenses, VAzt when necessary etc
KEEP ALL RECEIPTS and do a monthly expenses spreadsheet - petrol, train fare, parking, if you get lunch etc, and any expenses and do them monthly RELIGIOUSLY! I didn't for the first year and got in a right mess!
We met f2f once a year to agree and sign accounts which you need to keep for 7 years
Good luck!

Thanks both. I have emailed an accountant contact to arrange a preliminary chat- will see what she says!

I'm wondering too about what the pitfalls are from peoples own experiences. Or the unexpected positive aspects?

Dh is self employed and works on his own...has been for thirty years or so.

The pros are that he has been able to work around our children when needed...school pick ups and drop offs, concerts etc.

He has taken the kids to work with him on the odd days when we have been stuck for childcare in the holidays.

He enjoys his job.

He doesn't have to answer to a boss!

The cons are though that if he doesn't work, he makes no money.

We barely have holidays because he can't afford to be away from work both in financial terms, and in the volume of work to catch up on when he returns.

He finishes his working day then has to come home and do the paperwork side of it.

There is no sick pay.

COVID hit hard.... for a while we were struggling financially and we're nervous about the future of his business and his stress levels were sky high.

You need years of financial 'evidence' to apply for a loan or mortgage which you don't get until you've been going for a while (obviously!).

He can only make a limited amount of money because of the volume of work he can complete without taking on a member of staff...once you do that it becomes a lot more complicated as far as I understand.

I would say that overall, it's been a positive experience, but not without its downsides.

What is your gut feeling about becoming self employed? Life is short... do what feels right. Good luck!

One of the huge benefits of being SE (and working in a 2 man band) which always strikes me about my husband is he only does his actual job, none of the other shite that comes with work - meetings, pointless paperwork, additional volunteering etc. This saves him loads of time. He also has lots of flexibility if one of our cars breaks down or if he needs to go to a medical appointment.

For us, I'm glad I'm PAYE with a public sector pension as that makes me feel more secure - benefits of him being SE but spreading the risks a bit. I also find it hugely frustrating that the general public has no idea about how much money SE people have to make to have the equivalent of an employed wage, taking into account no sick pay, pension contributions, holiday pay etc. It depends on your industry but I get sick of hearing about how much people like my husband charge by friends who expect to command high salaries for their own jobs, with similar education levels to my husband.

I freelance through my own limited company. I don’t contract so it is a bit different.
Pros

• freedom to pick and choose your work (but I end up saying yes to anything I have the skills to do)
• not having to manage people or be managed by others
• not having to spend loads of time in meetings etc
• knowing that I am still doing a job I enjoy - in my field the more senior you get the less time you spend doing the real job
• freedom to choose working hours and fit in all the stuff that needs to de bone during the working day (but sometimes that’s a con)!

Cons

• you are entirely dependent on yourself for salary and benefits incl training
• I miss having colleagues and find I doubt myself more so I pay for a coach. It can be lonely
• You can’t really have a bad day - you are judged on the quality of your work and that’s it so I tend to put more pressure on myself than I did when I was not self employed.

Advice:

• get an accountant to advise you on decisions like company set-up, VAT registration etc
• set your day rate at the right level - make sure you consider tax (corporation, personal, NI), pension contributions, holidays etc
• talk to other people who do the same thing - you could learn a lot from them
• someone said to me at the start ‘freelance life is a constant cycle of feast and famine - learn to enjoy the famine’ that took me a long time - I am now pretty established and definitely enjoy (and actively plan for) a month or two when I don’t have that much on.

There are often free business courses run by adult education. Worth doing to find out the basics and then you can do more research from there.
I’ve been self employed for years and don’t have an accountant because it wouldn’t help in anyway if I get stuck with my tax return, unusual but happened this year with the covid grants, I ring HMRC and they sort it out.

Speak to an accountant. IR35 is a big thing currently and a lot of companies are appearing to take a more low risk approach rather than looking at the roles in a detailed fashion. This means more are falling within IR35.

I'm sure it will settle down over time and be easier to help on here, but in the meantime take individual advice.

I'm self employed and run my own business.

Benefits:

• setting your own days and hours.
• choosing which clients you want to work with and declining the ones that are too much hassle
• only having to worry about one person and not a whole team of staff or employees.
• if I have (say) a dentist appointment I can plan it easily around my job and I don't need to worry about making up hours of TOIL etc.

Cons:

• no sick pay, no holiday pay - so I need to set my rates to cover all of those things.
• it's hard to say no to jobs when you know you need the money. Letting down clients (I'm a dog walker) can be really difficult as they take it really personally.
• if I can't work I don't get paid. I am insured for time off due to sickness or injury on the job but it's not much and doesn't last a huge amount of time.
• if I'm sick or can't work there's nobody to cover for me. That can be really tough sometimes.

But overall I absolutely love what I do and I wouldn't go back to being employed for the foreseeable future. However I don't think I'll be doing dog walking in my fifties or sixties so I'm going to need another way to work or make money that's not quite as physical

Also it is advisable to get professional insurances - I worked in NHS IT and my contracts required me to be covered for up to 1million pounds