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The Ins and Outs of Being Self-Employed

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Whatever it is that you call yourself, whether it be a private contractor or a freelancer, at the end of the day you are self-employed. And when it comes to being self-employed, there are a whole host of aspects to remember to ensure that you are able to remain financially afloat and to be able to ensure that you stay on the right side of the law.

First of all, if you want to be successfully self-employed, you must be able to cut back on unnecessary costs. This means that you should seek to make sure that all the tech you use every day is a simple and basic as it needs to be. Why shell out thousands of your hard earned cash on a piece of hardware when you could do the exact same job on a something that costs a quarter of the price? If you don’t need a specific hardware or software, then there is simply no point in buying it; for instance, there is no point in paying for a photo editing software, such as Adobe Photoshop, when you only needed to use the software once in the first place. A good alternative to this type of situation is to seek assistance from a friend or colleague who may have the software and may be willing to help.

Another hugely important aspect when it comes to being successfully self-employed is that you have the ability to treat every day as if it were a ‘proper’ day at work and you were in a traditional working environment. It can be say to lose focus throughout the day when you are working for yourself without anybody else around to help push you on, especially if you are working from your home and surrounded by all the distractions in it— despite this, if you want to make a real success of your business or the work that you do, you have to be strict with yourself. You have to be able to remain sufficiently self-motivated during all the hours you’ve dedicated during the day to building your self-employed empire. No, this doesn’t mean you aren’t allowed a break, it just means that you should behave as if you were at work and shouldn’t do things such as leave the work for hours on end or go for a midday nap. And another problem which having your social/home life mixed with your work life is that one can sometimes affect the other, especially if you are also a stay-at-home parent. It’s not just the fact that your child could demand more of your time than you expected on any given day, it’s also the fact that people you work with or for may start to doubt your abilities to be able to focus all of your efforts on the job. A way to stop this from happening is to never let potential clients and customers know about other aspects of your life; for instance, if you have to pick your child up from school don’t tell them that you are doing it and instead say that the reason why you won’t be able to attend to their business at that time is because you will be in a professional meeting.

Seeming bona-fide is one of the most important things a self-employed person and their business has to cover, otherwise they will lost custom to their competitors. A way to do so is to implant what is known as a virtual office system; this system is especially handy for those businesses that are working from and under a residential address as they can provide you with an address in an area that is far more affluent, professional and ‘business like’, such as London. You can have all of your incoming mail sent to an address that is linked to office spaces in these types of areas so that anybody trying to get in contact with you will think that you are based there, when in actual fact, unbeknownst to them, you are working from home. The mail is then forwarded straight to your doorstep, meaning that the customer is none-the-wiser, and you still get your important documents — it’s a win-win. Most importantly, however, you should always make sure you get paid. You have to keep a track of the services your provide for people and make sure to chase them up in regards to any outstanding debts they owe you. A good idea is to document all the work you do and what is owed to you on a spreadsheet, such as Google Sheets.

 

But being successfully self-employed isn’t all down to your work ethic or the ways in which you brand your business: it’s also about staying on the right side of the tracks when it comes to all legal regiments, rules and laws. Because of the fact that it is not a traditional way of working, being self-employed means there are extra headaches involved when it comes to ensuring that you cannot be held accountable for any legal misdemeanours. As soon as you begin your self-employed venture, not matter what type of self-employment that it is, you must seek to register yourself as employed with whatever governing body it is that runs this sector in the country in which you are based; in the UK, for instance, it is the Her Majesty’s Revenue & Customers, otherwise known as the HMRC. You should also seek guidance on whether or not you need to register for VAT: if your business has an annual turnover of £83,000 in the UK, then you must do so.

Huge aspects in regards to this matter are the ones that surround that dreaded world: tax. IR35, otherwise known as the Intermediaries Legislation, is designed to fight tax avoidance and should be a massive concern for all contractors who supply services through a limited company or partnership that they own who are possibly not paying tax as they should be, either knowingly or even unbeknownst to them. Getting on the wrong side of it can cause huge financial fiascos, so it’s important that, if you meet the above criteria of being a contractor, you should seek as much guidance from an IR35 specialist as possible. You need to declare that you are in fact working in business on your own account, and not just claiming to do so in order to avoid paying more on tax. There are legal ways to pay less tax, in fact there are seven, so if you are determined to cut down on your tax expenditure, you should attempt them rather than any tactic that breaks the law in any way. These seven legal ways include: managing your timing of tax deductible expenditures, paying off your mortgage, making an investment, being good at your bookkeeping, making all the claims you’re entitled to make, donating and seeking help from tax advisors.

So, if you want to make a real go of being a self-employed person, then you must be willing to do all you can to ensure that you’re not spending more than you should, you’re working as if you were in a ‘proper’ working environment, you’re paying yourself and you’re paying out on all the legal requirements that are conclusory in your country or area. Not doing any of these things is a surefire way to see your self-employment bubble burst, and may even be a surefire way of getting you in serious trouble with the law.

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