There’s no business like your own business… Novamarketplace.com
You’re welcome! Working for yourself might seem like an appealing option, but it isn’t right for everyone. Whether you’re considering freelancing, consultancy, or you want to start a brand new business, there are many factors to consider before branching out on your own. We will try to help you discover if self-employment is right fo you.
To make sure you make an informed decision on what’s best for you, here’s everything you need to know about self-employment:
What is self-employment?
Self-employment is when a person works for themselves instead of an employer.
This could involve anything from running and managing a business, through to selling goods or services regularly (for a profit) as a trader.
Instead of being paid a salary or wage by an organisation, a self-employed person earns their income directly through the profits made by their own business or trades.
What type of business can I run self-employed?
There are many opportunities available for those wanting to become self-employed – but your legal responsibilities will differ depending on the type of business you run.
Here are a few options to consider:
- Sole trader – your business would be owned and managed by you alone. This means that all debts and profits would go directly to you.
- Partnership – this type of business would follow the same format as sole trading, but would involve two or more people combining their expertise.
- Limited company – a limited company has its own legal rights and obligations. Whether it’s registered as private or public, ownership will be divided into shares and split between shareholders – meaning the actual owners may not be involved in running the business.
- Freelance or consultancy – if you worked as a freelancer or a consultant, you’d be using your expertise to work on a casual basis – usually from home, for a range of companies.
- Franchise – these types of businesses are already established, and are owned by a franchisor. They can then sell a franchisee the right to use their business model, meaning they’re able to manage a tried and tested business with limited start-up costs.
- Social enterprise – these businesses benefit society or the environment, and their profits contribute towards the economy. Examples include cooperatives, credit unions, development trusts, housing associations, and trading arms of charities.
- Charities – income from these businesses is made through grants and donations, rather than trade. Its purpose is purely charitable, and although charities get tax breaks and reduced business rates, they must show complete transparency.
There are many jobs in a variety of sectors that you can do on a self-employed basis, although they’ll need to fall into at least one of the above categories in order to be a viable option.
Popular self-employed jobs include:
- Fitness Trainer
What qualities and skills do I need to become self-employed?
Although your level of success will be based on the power of your product or service, knowing how to drive it in the right direction is equally key.
Essential skills for self-employed people include:
- Time management
- Realism, and objectivity
- Good leadership
What are the advantages of being self-employed?
Like any career, self-employment has its benefits – and although they vary from industry to industry, many self-employment positions offer a range of perks aren’t available with other career types.
Here are some of the key advantages of being self-employed:
- You’ll be able to work flexibly
- You’ll create your own success
- You’ll have more control
- You’ll be your own boss
- You’ll have more job satisfaction (no commute, office politics, or dress code)
- You can choose your own team (or work alone)
What are the disadvantages of being self-employed?
If you’re considering self-employment, it’s vital to be aware of the cons as well as the pros. Not only will this ensure you’re making the right choice, it’ll also put your priorities into perspective.
Here are the potential disadvantages of being self-employed:
- No employee benefits (e.g. sick pay, holiday pay)
- Unpredictable income
- Potentially long working hours
- Increased responsibility and pressure
- Lack of structure
- Potential for loss
- More paperwork (tax etc.)
Things to consider before you work for yourself
If you’re using self-employment as a route out of a job you don’t like, or a way to avoid unemployment – you might not be doing it for the right reasons.
To make sure your choice is well-directed, here are a few questions to ask yourself before you make a decision:
- Do you know what you want to do – and are you qualified?
- Can you afford to be self-employed?
- What financial options are available (e.g. grants, bank loans, investors, crowd funding)?
- Do you have a business plan?
- How will it affect your personal life or commitments?
- Have you spoken with your family about their concerns?
- Are you aware of the legalities?
What are the legal issues?
Aside from having to organise your own tax and National Insurance payments for yourself and your employees, self-employment involves abiding by a range of legal obligations that you may not be aware of if you’ve never owned a business.
For example, if you’re working from home, taking out a suitable insurance plan is vital. Not only will you need to cover work materials, you’ll also need to consider your own health and wellbeing.
And, because not all homes have planning permission for business use, checking with your local authority (and your mortgage lender) before using it as a permanent workplace is essential.