In the business world, going solo is a massive step. Self-employment, solo-working, freelancing, whatever you want to call it – it’s going to be a change from the world of traditional employment. With that said, more and more people are taking the leap. Working for yourself provides many benefits, such as being able to pick and choose your own working hours and how much you want to do on a daily basis, but there are also pitfalls to this dream world. Making sure that you have all of the basics covered is one step to entering working paradise…
There are a lot of people who are getting away without being fully insured, but it’s usually a case of too little too late for them when everything takes a turn for the worst. We are living in a sue culture, where any minor detail or infringement can be picked upon and turned into a big deal. This can result in court cases, loss of money and, potentially the most damaging of all, the closing of your own personal business. Getting in touch with a lawyer, such as Medler Law Firm’s John Medler, and keeping them updated with everything no matter how big or small it may be is one way to put a safety net around you and your growing business. Taking out the right insurance, picking the right policies and ensuring that you have the correct cover for what you need is of vital importance. It’s all dependent on a lot of factors as to why type of insurance you will need, and the amount that you need to be investing in your policy. There are certain things that can affect it: whether you’re working from home or travelling, how many people you will have in your employment, whether the public come into contact with you. These are just a few examples of the things that you need to consider before you take out any cover.
Depending on your country of residence, you could be entitled to quite a bit in terms of tax breaks, credits and benefits awarded. In the United Kingdom, for example, there is a certain amount that you have to be earning and declare before you have to pay National Insurance contributions. There is a lot to learn in the world of tax and finance when it comes to self-employment, so the best thing you can do if it’s a bit confusing to you or you don’t know where to start with it is to hire an accountant to take care of the hard work for you. You’ll be spending money on their professional skills, but it’s worth doing this over facing a huge tax bill for getting even the slightest thing wrong. Then of course there are the things that you aren’t entitled to, which you would have been if in employment. Maternity/paternity leave, holiday pay, sick pay and health benefits will have to be covered by you and you alone. Your pension will have to be moved over to a private pot rather than paying into a standard company scheme. There are a lot of loose ends which need tying in this respect when you decide to make the change over to the sole-trade world, but there is also the added bonus of the fact that you don’t necessarily need sick pay for ‘off days’ if you can still sit on the sofa and get work done, and you can get life insurance to cover when things take a turn for the worst.
Your gained independence is a great thing, but you need to ensure that there is nothing written into your previous contract of employment with another business to stop you from procuring their clients. If you are taking a completely different route, then this of course is not something to worry about. If, however, you know that you will be taking some people away with you and they have given the green light to doing so, this could be stopped completely and taken to court/legal proceedings by your prior employer. It can be an extremely damaging thing to businesses, to have their clients ‘stolen’ effectively, and so you need to be careful that you are not treading on any toes and going against what you have given your word for. Setting yourself up as somebody who is completely independent of the person, company or business that you worked for previously can be hard going, especially if you have made contacts within the industry. It means that you will be associated with them for some time to come. Remember that you are only as good as your last job, and people will be viewing you upon your failings rather than your successes; even the smallest thing gone wrong can create a lasting impression. It’s this part of going out and making a name for yourself which can be the most taxing and demanding; you will be tested and criticised more so than you will have been done under the employment of somebody else. It would’ve been somebody else picking up the slack for you, and blame can often be easily passed around offices until it dissipates. When you are self-employed, it’s just you for the time being – it’s hard to get used to, but will help you grow a thicker skin.
A lot of money can be lost by investing into the wrong things. It’s a gamble of sorts which is less taboo than placing all of your assets onto a roulette wheel, but it can have just as much of a disastrous effect as if you put it all on black but the ball lands on red. Ensuring that you know absolutely everything about what you are putting your money into can be a hard thing to do – not everyone is sure of the safety of where they are putting their belongings, and even the top-trained actuaries can never be 100% with their predictions. Your best bet is to hold off until you can get good, guaranteed advice over something that is as sure as you can get it. If and when you grow your business, there is the opportunity to offer out shares and stocks for your company. It’s exactly the same principle with this; time it right and you could be laughing to the bank. Time it wrong, and you could be facing quite a cut on what potentially could have been lining your pockets in years to come. If you’re not too wise on investments or where you should be placing your money, talk to somebody who is more in the know and that you can completely trust. You’ll be picking it all up in no time, especially if you’ve never looked into it before; it’s just the starting steps to get you to where you need to be in the span that you need it done which need covering before you start to think about further things.
Passive vs Active Income
It takes a while to get to the stage where you will be able to garner passive rather than active income. Working for your money is what you may have to do for quite a while in order to establish yourself once you decide to work for yourself. It could completely take off and you will be employing people faster than you had ever imagined you could, giving you the chance to pick and choose when you want to work and how often you put yourself out. However, it could go in completely the opposite direction and you will find yourself working longer hours and for less money than when you were in employment in some cases. It’s proof to yourself whether you can do it and if you can stick with it. It can be a trying time, but you’ll be able to decipher whether it’s actually the job for you and if you want to risk
With big changes to you come big changes to your family. It’s something that quite a lot of people who decide to go it alone don’t realise until the effects of the career swap become clear – either by your family enjoying life a bit more due to having you around often, or complaining because you’re constantly sat trying to get your business off the ground. You should be utilising those around you for support, but there comes a time when they will need support, too. This can be the case especially for those who are still in full-time employment and are using their income to support you on your journey. It can be a very trying time for all involved. Make sure that you look after each other and consider everybody’s wants, needs and thoughts about the situation that you find yourself in. It could be that absolutely nothing happens and you go on living your life as normal – this is particularly the case with those who were used to bringing their work home with them/working from home the majority of the time)