DH Thinking of going self employed...advice please

[MumOfMadTwo]

My dh is thinking of going self employed as an IT Project Manager. He is in permanent work at the moment. We have no savings as such to act as a buffer should he not walk into a contract or have dry periods. I wouldn't be happy for him to quit his job if we have little funds for us to fall back on. Is anyone in this situation at the moment, how do you find it, advice please?

I wouldn't do it without savings tbh - even if he is lucky and gets steady work, companies can be very slow to pay freelancers. DH has been SE for ten years and there have been times when he's been owed thousands but not been paid for three months. So could you pay the mortgage on just your income in that case?

Also my no.1 self-employment tip is make sure you put away enough to pay your tax bill!

Nope I'm a sahm and don't plan to return to work in the near future. He thinks we can save the 'buffer' and then he is thinking of taking the plunge. I'm not keen myself. Thanks for your reply.

I think you need to save a very big buffer. Ime, it's not just lack of work, it's trying to get the buggers to pay once you've done it that's the problem.

DH has been a IT contractor on and off for years.
The pros: it pays well and he's always managed to walk from one contract to the next.
To an extent he can pick and choose, and if he's not enjoying a contract he knows he's only signed up for 3 months and doesn't have to renew.
The payment issue hasn't really been an issue because we've always made sure our contract with the customer states that payment is within 2 weeks of the date of our invoice. I do have to chase sometimes.

The cons:
No sick pay, no holiday pay. You need to stash a fair bit away to cover this, and a fair bit to cover out of work periods.
You have to stash away a fair bit for Corporation Tax.
You'll need extras like Professional Indemnity Insurance to cover you if your DH makes some hideous error at work.
You need to be good at book-keeping/record-keeping/paying VAT etc etc (DH is crap, and I do it all).
Last but not least - the contracts can be anywhere. DH currently works in the NW while we live in East Anglia - he's away every week Monday to Thursday or Friday. It's hard, but that's contracting - you go where the jobs are.

I'm surprised they have not made him go down the Ltd Co IR 35 route.
There are LOTS of contractors around chasing a decreasing number of vacancies. Your DH will need to be VERY clear about what differentiates him
you NEED a buffer - we have four months money put aside ...