I thought I’d write a post about being self-employed today and the things you should consider before actually going self-employed. I used to dream about having my own business, but the financial implications of leaving a reliable income in my twenties would have been financially devastating.

I became a mother at sixteen, so I had to work really hard to make sure my son had what he needed in life. Ten years later I had my daughter, who turned up like a bolt out of the blue and I thought to myself, that’s it! I’ve got to do it, if I don’t do it now, I never will. I’ll be stuck in a job that I don’t want to be in for the rest of my life.

I figured it would be difficult, and spoiler alert it was, but it’s also been a humbling experience- and I can finally tick it off the bucket list. I’ve had to learn how to budget intensely during my first year and I risked my savings to start my business, which in itself, was one of the scariest things I have ever done!

Anyway, over the past year I have learned a few things that I thought I would share with you all, If you’re thinking about going self-employed, here’s my tried and tested 10 things to Consider before going self-employed…

Tips for going self-employed

1. You need to be able to budget

If you’re the type of person who enjoys luxuries such as food and you often overspend, until you get those spending habits under control, I would strongly advise against going self-employed.

However, that’s not to say that you can’t do it. Budgeting just takes practice. You could try setting yourself a really tight budget every month for a few months and see how you get on. If you can stick to it and find ways to save money, self-employment might be for you.

It’s also wise to have some savings set aside before going self-employed as businesses rarely make a profit in their first year.

I really like using Plum to save money. It’s a savings app that you can download on your phone. It rounds up spending to the nearest pound and puts away money automatically each month so you don’t have to think about it.

It also looks at your bills and tells you when you’re overspending- and how to save money on bills which is pretty cool. There is a fast withdrawal also, in case you need to withdraw anything. To sign up to Plum (psst, it’s free) today, click here.

2. How will you Cope if you don’t earn?

How are you going to pay your bills if you don’t earn? You may have to look at something like getting a second job or asking family to help you out if you have to. If you’re not in a position to do that, I wouldn’t advise going self-employed, especially if you have taken out loans to start it.

I went through a separation during my first year of business, which left me depressed and unable to work, something I totally didn’t expect or factor in. I also had to leave my home as I couldn’t afford the bills on my own- so I moved my stuff into storage and had to move to my parent’s house for a few months until I could work again.

I was lucky to have this help and also didn’t have any loans- so I was lucky, but if you don’t have a worst-case scenario option/plan I wouldn’t go self-employed until you do.

3. Get Insurance

I’m going to say this, if you have a business or go self-employed you need insurance. When it comes to being self-employed, income protection is essential. Income protection pays out a percentage of your salary if you’re signed off from work, ill or unable to work due to injury.

There are some great companies out there offering income protection, they usually pay 50%- 70% of your salary, depending on what package you chose of course. If you shop around some companies even offer 100% so it’s worth browsing through policies. I like LifeSearch, to see their income protection policies, click here.

Did you know that income protection is one of the least bought insurance policies bought in the UK?

Even though it’s perfect for just about anyone that works many people don’t have it! Whether you’re self-employed, have a business, work for someone else or are a single parent, income protection should be essential.

The amazing thing about income protection is that you’ll get it alongside sick pay, so you’ll be financially secure during times of crisis.

I am so thankful to have found income protection when I did. I’d still be living with my parents without it, yikes! Thanks, LifeSearch.

4. It gets kinda lonely…

So this one I don’t mind too much. I mean I have online meetings every now and again, but for the most part, I’m on my own. If you’re the type of person who enjoys social interaction and looks forward to work nights out, going self-employed might be difficult for you.

Although there are things you can do to still socialise, you could join a business advice association and get guidance as well as business tips from other business owners.

Or, if you’re on a budget even something as simple as joining a self-employed group on Facebook might help. You can always socialise online.

You could even join an exercise class in the evening or pop into the local pub after a busy day, the point is, self-employment can be lonely but you’ll still be able to get social outside of work so don’t let that put you off.

5. Set Work and life Boundaries

So it depends on what your business is of course, but if you’re a web business and work online, a lot of your working schedule is probably going to be based at home. If you’re working at home it can be really difficult to set boundaries when it comes to working.

Sometimes I just don’t switch off and find myself half watching a film in the evening whilst still editing graphics on Canva and pinning on Pinterest. #bloglife

Make sure you set yourself a schedule and remember to take time off. I spent months working on my blog without taking a day off and I think it actually made me less productive. Never underestimate how much good having a day off can do for you.

6. Create a work space

If you do work from home, it’s really important to have a space solely for your work. It can be really tempting to snuggle up on the sofa with your laptop but this is really counterproductive and also makes it harder to switch off at the end of the day.

7. Don’t plan on buying a house

If you’ve been saving up a deposit for a mortgage and have had a stable income for several years, don’t go self-employed, this will affect your chance of securing a mortgage. It’s also harder to apply for one when you’re self-employed as you need to show at least five years of earnings and taxes, as well as expenses.

It might be wise to hire an accountant if you’re planning to buy a home in the near future as the bank will go into much more detail if you’re self-employed.

8. You won’t throw away receipts

Do you ever get annoyed when the shop assistant asks ‘would you like your receipt?‘ Well, welcome to the world of being self-employed.

You will meticulously keep receipts, whether it’s for business or budgeting. Either way, you won’t throw away receipts, ever again.

I’d also recommend getting really organised and filing receipts as soon as you get them. You can also download apps such as Quickbooks to help with the process and can simply photograph receipts on your phone and Quickbooks work it out for you. Awesome! (Open Quickbooks in a new tab here)

9. Pay your Taxes, NI contribution and Trademark your business name

So as a self-employed person you’ll be responsible for taxes, NI contributions (important for your pension) and you won’t get holiday pay, sorry.

You also need to register as a self-employed sole trader via the GOV.UK website. (To open in a new window click here)

Afterwards don’t forget to Trademark your business name!

10. Be prepared for how difficult/rewarding being self-employed is…

I still stand by my ethos that going self-employed was the most terrifying, exciting and liberating experience of my life.

Once you get used to the idea that your money will come from multiple streams instead of one consistent place it gets a little easier. It also makes you realise that income potential is uncapped.

If you’re going self-employed I wish you the best of luck on your journey, It will be scary but there are ways to protect your income. Income protection will give you the security you need to go on to do amazing things.

Working hard for something we don’t care about is called stress. Working hard for something we love is called passion.

Simon Sinek

So there are my 10 things to consider before going self-employed, don’t forget to like, share and comment on my post today.

Thanks for reading,

Soph.

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