Do you want to take your entrepreneurial spirit to the next level and go self-employed? Despite the numerous pros and cons of self-employment, people are increasingly taking the plunge to go it alone. While the pandemic has undoubtedly shaped the way we structure our working lives, it’s also given many people the freedom to reassess their career opportunities.
When I joined the 4.2 million self-employed workers in the UK, it was the best decision of my life! It’s influenced my personal growth, business knowledge and has made me achieve goals I never thought were possible!
Calling your own shots is not only a rewarding experience but is also the first step to achieving professional independence. Before going self-employed, it’s essential you understand the pros and cons of self-employment. This will give you the best start with your new business venture.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
Pros of self-employment
Self-employment has provided me, and many like myself, the chance to shine in our careers and showcase our passions. There are a ton of advantages to being self-employed. Here are the main three I believe to be the most important:
We all know the saying, ‘freedom is priceless’, and it’s undeniably true! When you’re self-employed, you give yourself the flexibility of having the power to choose your working hours. Regardless whether you’re a morning bird or night owl, you control when, where, and how you work; even if you’re in your pyjamas! As a result, most self-employed individuals are less stressed, have a better work-life balance and have a better mental well-being than when they worked a regular job.
Immense job satisfaction
What’s not to love about your working life when you’re passionate about your business? Being your own boss can be hugely advantageous and making a living from your own business is likely to increase your job satisfaction. When you set up your own business, you determine your targets based on your strengths and your own hard work. This professional fulfillment comes from reaping the rewards from your own success which is very different from working for another company.
Unlimited financial benefits
Lastly, the sky’s the limit! There isn’t a cap on the possible earnings when starting your own business. In addition, you could be eligible for extra financial benefits by writing off some business-related expenses through tax deductions. For example, claim on travel expenditure. Alternatively, if you work from home, you could be entitled to a percentage of your utility bills. Ultimately, you can grow your business by going corporate and employing people to scale your business further.
Cons of self-employment
Although the pros of self-employment are in abundance, there are always cons that could scare people away from this career move. Therefore, it’s important to arm yourself with the potential negatives to being self-employed before making the leap.
Undoubtedly, there are significantly more responsibilities when you start a business. This can include: learning accounting, writing reports, marketing, etc. Usually, this either results in more expenses or hours worked. Setting up your business initially can mean an increase in irregular working hours as it will involve more than just simply doing paid work. To start off with, it would be a good idea to calculate your hourly rate. This will provide you with a clear idea of wage costs against time spent.
When employed with a regular job, you’re guaranteed a payslip. This is either weekly or monthly. However, when you’re self-employed, nothing is guaranteed. This is especially true at the beginning when your finances can fluctuate considerably each month. It’s even said that up to 50% of all businesses fail within two years, making the future uncertain. Therefore, it’s often challenging for a new entrepreneur to remain innovative, profitable and sane while developing a new business.
As briefly mentioned above, you’ll be confronted with a lot more responsibility which many cannot handle. You are financially responsible for your business. Consequently, you will need to have a fundamental understanding of tax, vat, and accounting in general. Although you can outsource this, it’s still a significant part of a business that can boost profitability and stableness. You will also have to generate your own workload in terms of chasing jobs and clients which can often be time-consuming.
Summing up the Pros and Cons of Self-employment
After reading the above, I hope you have a broader understanding of the pros and cons of self-employment. Unquestionably, as with most things in life, these will change from person to person. The best advice I can give is to always keep motivated. If you do, you will stay on the right path for business success.
So, do you think you’re ready to take on a self-employment venture?
- Beginners Guide to Going Self-Employed in the UK
- When To Register as Self-Employed
- How to Work Out Your Hourly Rate
- How to Create a Start-Up Budget
Taxes are changing! From April 2024 sole traders will need to report their earnings and pay tax on a quarterly basis. This is known as Making Tax Digital, which you can read more about in this guide to help you get prepared.