Understanding self-employment
In essence, being self-employed refers to operating independently rather than working under an employer.
This could either be freelancing, being an independent contractor, or starting and running your own business.
The notion of having control over one’s career is alluring; however, with it comes a significant set of responsibilities and risks.
The perks of self-employment
Independence and autonomy
One of the primary benefits of being self-employed is the level of independence and autonomy it offers.
Self-employment allows you to choose your work, set your hours, and decide where to work from location-wise.
This can improve work-life balance and provide a sense of control over your career path. Plus you’ll potentially save on commutes, travel and other expenses – for example, if you work from home.
In some cases, it’s possible to travel while working – also called being a ‘digital nomad.’
Career satisfaction and personal growth
Being self-employed may lead to increased job satisfaction. You can choose projects that align with your interests and values.
Moreover, operating independently can expedite personal and professional growth, as you’ll likely wear many hats and develop various skills.
The potential challenges of self-employment
Financial instability and planning
One of the main hurdles of self-employment is the potential for financial instability.
Your income might be irregular, especially during the early stages, making budgeting and financial planning more difficult.
This extends to mortgages, credit and finance, which are more challenging for self-employed people to secure (considerably so in the case of mortgages).
Lenders view self-employed individuals as a higher risk until they have several years of accounts.
Self-Assessment and tax responsibilities
As a self-employed person registered as a sole trader, you must complete a yearly self-assessment tax return. You must submit company filing information if you own and run a business.
This includes tracking your income and expenses, understanding what you can deduct as business expenses, and meeting critical deadlines.
Getting this right is crucial to avoid penalties and ensure you’re not overpaying tax.
Navigate self-employment with expert advice
Transitioning to self-employment comes with both opportunities and challenges. Having access to expert advice can be invaluable in navigating the intrepid self-employed landscape effectively.
At Hugh Davies & Co, our team of seasoned accountants and business advisors offer tailored guidance for your self-employment journey.
From navigating self-assessment tax returns, managing financial uncertainties, and maintaining a healthy work-life balance, we’re here to assist you.
If you’re considering embarking on self-employment, reach out to our team of expert accountants and business advisors to guide you through self-employment options.