Starting your own business is a life-changing decision. Many people make the leap into self-employment to break free from the constraints of an over-bearing boss or to pursue the dream of making their own business decisions. Whatever your motivation, there are pros and cons of working for yourself.
Managing your Finances
One of the biggest challenges of being self-employed is managing your own finances. To someone not familiar with profit and loss, balance sheets and book keeping, it can be a daunting prospect. However, this should not be a deterrent.
Uncertainty in financial affairs can be overcome by using the expertise of accountants for contractors and small businesses. These financial experts can provide practical advice and accounting services that will keep you on top of your finances.
Being your own boss also provides a certain amount of freedom concerning financial decisions. For example; you are free to set your own level of income, choose whether you will hire additional staff or work with partners and you make the decisions about the suppliers you transact with.
Adhering to Rules and Regulations
It is important you keep good financial records. This is a critical requirement of being self-employed. Other requirements include deciding the legal structure of your business, registering with HM Revenue and Customs, insurance policies and declaring tax. The legal structure of your business relates to how you intend to trade. This can be as a sole trader, partnership, limited company, franchise or a co-operative.
Dealing with HM Revenue and Customs (HMRC) will become a common occurrence. Your first contact will be to register your company. It is important that you decide what legal structure you will trade with as this is one of the first questions HMRC will ask. You will also have to declare how much you have earned and pay the tax owed.
While self-employment brings a great many advantages in how you run your business, the downside is that you tend to pay more tax and must adhere to a greater number of regulations, especially if you are responsible for employees. The type of insurance policies required will depend on the type of business you are running. If you intend to employ additional staff, you will require employer’s liability insurance.
Other insurance policies worth considering are public liability insurance, vehicle insurance, contents insurance and health insurance in the event you cannot work due to accident or sickness.
Making your Own Decisions
Working for yourself means that you are in charge of the hours you work. You can plan your day to fit your personal circumstances. Perhaps you have children who need to be taken to school. Setting your own hours allows you the freedom to do this. The disadvantage of working for yourself is that when you are the boss, you are responsible for generating income. For this reason, many self-employed people work longer hours than those who are employed.
Another advantage of being self-employed is having the freedom to work where you want. This could be at home or in another place such as rented offices. People who work at home do not have to face hectic commutes to and from their workplace, so as well as being hassle-free it may also result in significantly reduced travel costs.
About the author: Francesca is a blogger and freelance writer who enjoys writing about a variety of subjects from business and careers to travel and food.
Credits. Photo courtesy of Milda K.