Having just filled in my first ever tax return earlier this week for 2015 – 2016 I feel like it’s about time I reflect on a few things I didn’t even realise I needed to think about before going self employed. It’s definitely a lot harder than I first thought it would be and I have found myself tossing and turning at night trying to make ends meet. I’m so blessed I have a brilliant support system where my mum and dad can help me out should I fall short at all. As I’m a single mother I do only work part time so I can be there for my daughter as for me that’s the most important thing in my life however some weeks I don’t even earn enough from that. It does all balance out but it’s not the same as having a constant regular wage.
Of course being self employed is incredibly common these days, due to the lack of jobs or jobs that are suitable for working parents (as the cost of childcare is always rising) most people tend to go self employed to ensure they’re flexible enough or they’re in a area of expertise. Because of this rise there is so much information available to support those who run their own businesses or work for themselves. Be sure to look into it all before walking out of that stable job with a reliable wage! But ultimately, life is short and you do need to do what makes you happiest.
So here are some things that are important to consider before taking the plunge into the world of self employment;
What Are You Going to Offer?
The easiest way to become self employed is to offer a service. For me that’s mainly writing and photography, in particularly photo editing. By identifying the service I’m going to offer, I can market my strengths and make myself appealing for people to hire. It took me a long time to do this. It reminded me a lot of writing my personal statement in school and college however if I want to get work in a competitive job industry I can’t sell myself short.
Where Is Your Work Going to Come From?
In the beginning I thought work is going to just fall into my lap but how wrong was I? Being self employed and making ends meet is hard work, you need to put yourself out there. You need to not short change yourself. I make sure my Linkdin is updated, I keep my media kit up to date with stats and I regularly check People Per Hour for jobs.
How Are You Going to Keep Track of Your Earnings?
As i’ve always been employed by a company all my earnings were automatically kept track of by HMRC and at the end of the year I’d get a letter telling me how much I’d earned and how much I’d paid in tax and NI. When self employed you have keep track of it or pay someone to do this for you. Being freelance rather than running a company I have keep track of this myself as prior to going self employed I took a simple book keeping course! However if you’re running a business you may need help. Thank goodness there is great tools out there to help such as Xero, a service provide by AK Tax.
Xero is a cloud accounting solution which runs straight from your web browser, no files to download and it means any computer can run it. It allows you to keep track of your company’s cash flow and easily update your finacial records from anywhere in the world as long as you’re connected to the internet. Not only this but your Xero accountant will be able to advise you as this form of book keeping works in real time. There are so many features including invoice, payroll and even a handy app so you can use it from your mobile. If you are planning on using an accountant for your business this could be the way to go.
How Is This Going to Affect Your Circumstances?
The final one is for all the parents out there. Nearly every one is entitled to working and child tax credits however how much you get is affected by your income. Single parents also get help with housing and council tax. When I started working for myself I had to work out how everything I received would be affected. Ultimately I am probably worse off as I do only have one income, the system isn’t great at encouraging you to go back to work. But I needed something to keep me busy and over time as I can increase my hours and take on more work I will be better off. And hey, maybe I won’t always have one income!
At the end of the day, if working for yourself is what you need to do to be both mentally and financially secure then I would recommend going for it! Everything does fall to you but as long as you have thought of everything it won’t be a problem in the slightest. After all, who doesn’t like sitting til 2am trying to make their deadline? Haha.