We all might dream of being self-employed one day: the escape from the nine-to-five routine, the distinct lack of office politics, and the increased levels of freedom. Increasing numbers of people are taking the leap and giving self-employment a shot. But why would anyone choose to forgo job security for the rocky road of being self-employed?
The perks of being self-employed…
The first thing everyone jumps at is the chance to “be your own boss”. You don’t have to work for anyone else, and as you get more successful and established, you might even have the luxury of picking and choosing work. Wearing the trousers in the work relationship also allows you a degree of flexibility.
You can decide when you work, how long you work for and how much you’ll charge. Although, it isn’t quite as liberating as it seems on paper. Particularly when you start out, you probably won’t be able to pick and choose. In fact, in the beginning you might find yourself working harder, and for longer hours.
Another benefit is that many self-employed people work from home. That means no more long hours of your life spent commuting, or heavy portions of your wages being frittered on getting to work. Better still, if you play your cards right, you might end up taking home more money than you would do as a permanent employee.
Self-employed tax deductions…
Why? Because you can claim business expenses. If you work from home, you might be able to claim a proportion of costs, such as lighting, heating, insurance, council tax and mortgage interest, as business expenditure.
You’ll also be able to claim back tax on things like office supplies, transport (when used for business purposes) and total running expenses. Essentially, claiming allowances and tax relief can help you maximise your income.
The disadvantages of being self-employed…
On the downside, you won’t receive the same benefits that permanent employees of a company might receive, such as sick pay, holiday pay or a pension plan. Your income tax isn’t paid automatically either.
You’ll need to fill out a self-assessment tax return, keep a check on your finances and arrange your own pension plan. It can involve quite a bit of paperwork. Of course, you can always get an accountant to help you out with that though.
You’ll also have to contend with far less job security. It can be stressful not knowing where your next paycheck will come from. You might want to make sure you have a financial buffer to support you in your first few months, as starting out can be tough financially.
It’s up to you to figure out whether being self-employed is the right move for you, but for many people it’s the best choice they ever made.