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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To ask what you wish you'd known before becoming self employed?

61 replies

nearlynermal · 07/01/2020 12:18

I'm looking to set up a freelance business after many years of full time employment. Is there anything you would have done differently when you were starting out?

OP posts:
LonnyVonnyWilsonFrickett · 07/01/2020 14:20

Cash flow is king, as pps have said. Put aside time EVERY WEEK to invoice and chase money.

Don't set your rates low 'to get a foot in the door' - you'll never get them up again. Equally, people in large corporate businesses will act like you are taking food out of their children's mouths when you quote a perfectly acceptable rate. Shrug it off. Learn to not fill the silence when they try to negotiate you down.

Understand how your rate works. It might seem like a brilliant idea to discount for a significant amount of work but actually work the percentages. If you're committing to 30 days work at 50% of your normal rate, you only need to do 15 days at your normal rate to be in exactly the same position! So you could have 15 more days to sell, or some time off... Ofc you need to balance this against the likelihood that you'll sell 15 days in the first place against the guaranteed 30 days in the hand - but clients will always assume that lots of work is more beneficial to you, and often it isn't.

And YES YES YES to the tax in advance when you do your first return. Calculate roughly how much tax you'll pay on every invoice and tuck it away somewhere safe (preferably interest gaining). It's not a nest egg, it's not free money, it's your tax.

LonnyVonnyWilsonFrickett · 07/01/2020 14:22

Also, you may not need an accountant long term. My business is very simple. I spoke to an accountant for my first couple of tax returns, and I should probably do so again soon to check I'm still doing everything right, but the tax return is pretty simple as long as you're organised.

Kazzyhoward · 07/01/2020 14:32

Also, you may not need an accountant long term. My business is very simple. I spoke to an accountant for my first couple of tax returns, and I should probably do so again soon to check I'm still doing everything right, but the tax return is pretty simple as long as you're organised.

That depends on how much of your own research you do each year to keep yourself updated with the ever changing tax rules/allowances etc.

There've been some pretty fundamental changes over the past few years, even affecting the smallest/simplest of tax returns. For example, for property lettings the rules have changed on if/how you claim tax relief on kitchen white goods, not to mention the new rules on mortgage interest relief. For all small businesses, there's the relatively new "cash basis" and changes to the use of home allowances etc. For all businesses, the limits for capital allowances have changed several times over the past few years. Capital allowances on cars change almost every year. VAT flat rate scheme has changed detrimentally for businesses who don't buy much in the way of "goods", i.e. contractors etc. IR35 is changing again this year. Employement status seems to change almost monthly.

I've had my fair share of new clients coming to me for what they think is a simple "sanity check" of their accounts/tax returns which they've been doing for years thinking they were OK. Many times, they've been a car crash with much being wrong, not just non compliance with rule changes but also missed opportunities for tax planning/reliefs, etc.

Like I say, fine if you're affairs are simple and you keep yourself up to date with the rule/law changes, but you certainly can't just copy what happened last year without checking things havn't changed.

goodnessidontknow · 07/01/2020 14:35

YY to get a good accountant and be religious with your record keeping. It's tempting to let the admin slide but it's so much easier if you keep on top of it regularly.

Don't price too low, when you have decided on a price never discount and don't be tempted to justify your prices if someone questions you.

You should already have explained the value of your product or service before price comes up, if you need to explain further or reassure a prospect of the value fair enough but if you feel you have to justify the price either you've got it wrong (which you will sometimes!) Or more often, they are buying on price alone and will be a pain in the arse!

Build in time for R&R, it's too easy to burn out when you're trying to get something going and as a pp said, expect it to take 2-3 years before you feel like you're getting somewhere.

It's a hard slog and you need to be really disciplined but absolutely worth it 😁

YasssKween · 07/01/2020 14:36

Ooh I agree with @Kazzyhoward on retaining an accountant if you can, I couldn't believe how much policy changes each year and keep on top of all the filing dates etc especially once LTD company and vat registered. And payroll once I had staff.

Blood pressure is going up just thinking about it!

Once you can afford to outsource something you aren't good at / takes you longer in hours than it costs to pay them / you hate and it ruins your working life... outsource it!

Also put 25% away for tax. Tax is a cunt. So much tax.

Disquieted1 · 07/01/2020 14:46
  1. Have an exit strategy. Decide that you'll do it till you reach a certain age, or have achieved xyz or can sell the business on or whatever.
  1. Most people worry about tax and shareholder dividends etc. Don't. That's what you pay your accountant for. Spend your time doing what you're good at.
  1. You know more than the customers do. But remember - it's their ball and their game. If a customer wants you to paint their house green, shrug your shoulders and get on with it. I've had to bite my tongue countless times!
  1. You will never be able to go back and work for a corporation again. After running your own show, you will never adapt to being shoehorned into a box.
  1. Never start work or order materials without a purchase order. Large companies WILL talk a lot about what they want, but unless it's on a purchase order treat it as waffle.
nearlynermal · 07/01/2020 14:47

Kazzy yeah, I suspect I'm going to have to shell out quite a bit for software, and yes, am looking for printer recommendations...

Blaue good shout on the tickets. I wonder if there's an app for that sort of thing, that keeps everything in one place?

Hummus I have never heard the term before, and for all I know it's a typo, but "That can eat a bag of dicks" is my new favourite expression. I may use it as my company name [big grin]

OP posts:
MaudesMum · 07/01/2020 15:20

Make time in your working week to do your admin, whether it's updating your expenses spreadsheet or refreshing your website.

If you're working for a number of clients at the same time, consider a time sheet, so you can accurately track the time you spend working for each. Even if you don't charge clients by the hour, it's really useful to track how long a particular contract is taking you and you can then use it to negotiate future contracts.

Have some sort of spreadsheet where you monitor income commitments as well as actuals so you can easily see whether you're on track to earn what you've planned to earn over the year.
I also use mine as a sort of basic sales ledger, eg to confirm when I've issued invoices, and when those invoices have been paid. Even if you're not very financially literate and want to pass over tax returns and accounting to an accountant, it is really helpful to have something you can refer to.

nearlynermal · 07/01/2020 15:36

Lonny and goodness the pricing is going to be a huge challenge. I'm just going to talk to everyone I know that can give me a steer. I'm not a natural negotiator, and remember how my mother used to undercharge dreadfully for the work she did in her small business, so that's a real risk to think about.

Disquieted great points, thank you. Hadn't even started thinking about purchase orders etc.

OP posts:
Allthepinkunicorns · 07/01/2020 15:37

I wish I had known how hard it is to switch off from work mode. I run my business from home and I'm constantly doing something. I have to make a conscious effort to take time away from the computer and not reply to customers after set time's otherwise you burn out. I only had two weeks off last year and I'm knackered.

yolofish · 07/01/2020 15:42

that it can be awfully lonely...!

myohmywhatawonderfulday · 07/01/2020 15:49

Invoice to go - its a the app we use. DH is self employed one man band outfit.

Separate bank account and credit card for work expenses.

Don't work for friends or family....DH had to at the start but as soon as he could he binned them off. This is a boundary thing and everyone wants mates rates and you need to make a living.

People are really weird and don't take their weirdness personally.

Sweetbabycheezits · 07/01/2020 15:51

Today is my first day in self employment, so I can't believe this thread came up today!
I'm working in a very niche area (can't really say as it's outing), but a lot of this has helped tremendously. The part I'm really struggling with is my consultancy fee... I am working with clients who don't have massive budgets, so I feel almost apologetic for charging what I do (but I'm totally worth it! Grin I know I need to get better at that bit.
I'm still trying to figure out so many logistics, but I was happier today than I have been for a while!

delilahbucket · 07/01/2020 15:54

Sometimes you have to take the work when it comes. Unfortunately that means foregoing family time, social time, and any time off.
It is a lonely place to be. Lots of people say how great it must be to work from home all day. You quickly miss colleagues, even annoying ones!

wonkylegs · 07/01/2020 15:56

How much paperwork and admin there is
Insurance, accounts, fee agreements, professional memberships, CPD, websites, bills urgh so much stuff that goes on in the background and now it's all mine to sort out.

As much as I'd love to think my clients / contractors etc are all honest and lovely - they don't all turn out that way.
Some people will do anything not to pay and really don't value your time or expertise
Keep records of everything (phone calls, emails, letters, discussions) and don't give your work away for free - payment 1st!
It can be lonely - join a local business group or your professional organisation and keep in touch with other people doing similar stuff it can save your sanity.

Calic0 · 07/01/2020 15:57

I work in tax and have seen business records that are unbelievable. Literally, people think a carrier bag full of receipts and scraps of paper is an acceptable way to run a business. It isn’t. You need meticulous record keeping. If you do get an HMRC check you will be asked about this and about cash handling so be very scrupulous with regards to accounting for any physical cash.

Also, YY to the person upthread who mentioned separate accounts for business and personal. Also, separate credit cards and, if you plan to use PayPal, I would recommend not using your personal PayPal account. As soon as you use any personal accounts for business expenditure or to receive business cash they become part of your business records and HMRC is entitled to see them.

BlaueLagune · 07/01/2020 15:58

You're paying tax for LAST year and a further half towards the current year (when you're 10 months into it) with a further half for the current year 4 months after it ends. So, you're still paying after you've made the profits, not "in advance" at all. Basically, you've always had the profit before you pay tax on it

True, although when I have done a tax return I've not left it until the end of Jan as I don't like having things hanging over me. I will do it in April, so I will end up paying it only just in the new tax year so it will be before I've earned the bulk of it. I know I could wait until January but I don't like having money which isn't really mine. It's bad enough knowing there's a big bill coming my way as it is and having to make sure I don't spend the money!

museumum · 07/01/2020 16:00

The importance of reliable IT. At first I wanted to use free software for everything but now I pay for office 365 and for FreeAgent and cloud storage and antivirus and web hosting. It’s worth every penny when your business relies on it.

SallyLovesCheese · 07/01/2020 16:02

@nearlynermal - I do admin for a small business and the boss uses Xero as an app to track receipts etc. - you can photograph the receipt and attach it or attach a pdf invoice or whatever. Then you connect it to your bank account and reconcile receipts or invoices with transactions to/from your account. You can use it online and on your phone. I've found it quite user-friendly.

TabbyStar · 07/01/2020 16:02

How difficult it can be to switch off. You always have to be at the top of your game, I rarely now have a night out on a weekday. Don't price too low as people will think you're crap. Have a designated work space. Set up a routine about when you start and stop work. Pay yourself a set salary each month from a separate account. Build up a cash cushion to cope with peaks and troughs. Find someone you can delegate work to when you can afford it or if you get a lot of work in. Having too much work can almost feel worse than having too little. Trust your intuition about what to say no to and get rid of a client where it's not working for you. Pay into a pension.

Pompei36 · 07/01/2020 16:04

That you’ll work atleast 3-4 years without taking a holiday

BlaueLagune · 07/01/2020 16:04

Literally, people think a carrier bag full of receipts and scraps of paper is an acceptable way to run a business. It isn’t

I wonder if there's an app for that sort of thing, that keeps everything in one place

I use Wave for all my receipts and tickets. A friend uses an app which tracks her driving so she can say whether a journey is private or business, but I don't travel much for work and when I do it's generally by train.

undercoveraessedai · 07/01/2020 16:09

Pricing yourself properly, believing in your worth and not falling into the comparison trap. Being your actual self in your business. Having some kind of cushion as the first year or two are glorious freedom and bewildering terror combined Grin

Welcome to the other side!

milliefiori · 07/01/2020 16:12

If the work you do makes this possible, get payment before you hand over the work. I give a quote, have it accepted, do the work then tell them it's ready and they'll receive it on receipt of payment. I never have to chase invoices these days.

eatyourcake · 07/01/2020 16:20

That to have proper stress free holidays, I have to tell clients I am away 4-5 days earlier than I actually am, and tell them well in advance, because urgent and last minute work happens every time, and I ended up having to do all-nighters before holiday or having to take my equipment with me (it's more than just a laptop). Clients think that asking for work a day before I leave on holiday is ok, like I have nothing else to do (um, packing?) !!! That's it, last 2 trips have been stress free, even left my laptop at home Grin