Beginner’s guide to becoming self-employed

Many experts predict that the UK will become a ‘gig’ economy, where people work for themselves; it’s already believed that there are as many self-employed workers as people working in the public sector, and it may very well soon surge past.

There are plenty of reasons to follow this pattern, but the transition can sometimes be difficult without correct preparation. It’s not simply a case of stopping going into the office one day and starting up the next; there are certain steps that should be taken to ensure a) that it can be a success and b) that you’re doing it legally. This second step is crucial as it is your responsibility to pay tax and national insurance.

The success of working for yourself really depends on the research, the market appetite, your ability to spot an opportunity, and – perhaps most importantly – your ability to make the adjustment. Can you cope with having to go out and find work under the pressure of paying bills? Will you miss the fun of working in an office, and being able to talk to colleagues at any time? Or will you be delighted to escape and work in an environment where you do not answer to anyone other than yourself? How good are you at setting your own prices and schedules, and hiring? These are all factors that require serious thought.

Two pieces of advice that rarely fail:

  1. Start saving a few months before you’re due to leave your job. While you’re presumably confident that you’ll succeed – otherwise you surely wouldn’t have made the decision – the freelance world can be inconsistent and turbulent, affected by factors completely out of your control such as the economy, trends and even the weather
  2. Test the water by starting a few months beforehand, in your own time. That probably means evenings or weekends, but it could also mean taking time off. Don’t use company time or resources, and be careful if you’re starting a business that will be a competitor to the one you are leaving.

The legalities of your new arrangement are more concrete, and no less important. Firstly, if you’re made redundant, you might have to sign a settlement with your soon-to-be-ex employers, so be wary of breaking the conditions. Once you’ve left your old workplace you need to register with HMRC as self-employed, and it isn’t a bad idea to set up a direct debit agreement to pay your National Insurance contributions. If not, you might have to make up the gap later with one lump sum.

With taxation, seek as much advice as you can – getting an accountant involved early could save you a substantial amount of money and hassle down the line, and prevent you getting bogged down in paperwork when you’ll need to be devoting your time to making the business work. The key dates to remember are October 31 (paper tax returns), and January 31 (online tax return/payment), but if you have an accountant you’ll probably be reminded of these fairly regularly!

These are just a few considerations when making that big exciting leap. As the Telegraph article shows, you’re by no means the only one – in fact, you’re actually part of a growing, vibrant trend. Follow the correct steps and you’ll make it work.