Ahh Self Employment, the joy it must be deciding whether or not you are going to work today. Plus your boss ALWAYS lets you take holidays whenever you want – you’re your own boss after all!
But wait, what if you don’t get sick pay, or what if clients don’t pay on time, what if you’re suddenly responsible for everything?!
OK, let’s get serious here. There are pros and cons to being self employed. If you’re currently self employed, you’ll know all about the ups and downs, you’ll also recognise a lot of these myths we’re about to discuss! If you’re currently employed and looking to make the move to self employment we hope this blog will both enlighten and encourage you.
Myth #1: You get to go to work in your pyjamas
So, while this one might be true, depending on what your self employed work entails, it’s really not how the self employed live. Treating your professional life like you would treat a Sunday won’t lead to productivity, and without being productive, you’ll struggle to make money.
Plus many self employed jobs require work on-site with your client. In-fact, in addition to your pyjamas, you may find yourself needing to shop for a greater range of work clothes to suit the different environments you’ll be working in.
Myth #2: You only do the work that you really love
While we wish this could be the case, as with most things ‘if it sounds to good to be true, it probably isn’t’. Everyone has aspects of their jobs that they like and dislike. Being self employed doesn’t necessarily give your free-reign to do only your favourite tasks. It’s likely you’ll have to compromise at times to make sure you keep yourself going. However, you do get the option to turn down the jobs you don’t like as much more often when things are going really well.
Myth #3: Being your own boss is great
This one is sometimes un-true, and largely depends on the type of person you are. Sure we all love to hate the boss or our line manager, we’re a nation that loves a little complain or a moan. But at the end of the day – if we were in their shoes – could ‘we’ manage ‘us’?!
Can you be perfectly objective when it comes to your work persona, will you give yourself a stern talking to if you’ve been procrastinating and something is late, or finances haven’t been kept on top of? Sometimes it’s not so great being your own boss.
It also depends on who your previous/current boss is, some bosses are fantastic and some… less so. As long as you are confident you’ll be a good and fair boss to yourself, you could be in with a winner on this myth!
Myth #4: There’s no job stability
No job stability, oh really? Take a look at your current employed contract and your current notice period. Very few jobs offer complete stability. You can have confidence in a company and it could sell, restructure or go into administration – there’s no such thing as 100% risk-free work, whether you’re employed or self employed.
The trick with self employed work is that the trust you place in your employer, is trust placed on yourself. So, how much do you trust yourself, your skills, the market in which you work? That’s where you’ll find real stability and clarity.
Plus, being in complete control of the finances and making smart financial decisions means that the % profits that were going in your employed boss’ pockets, now go into yours. So if anything, there’s more stability in self employment – so long as you’re doing it correctly.
Myth #5: It’s a lonely lifestyle
One aspect of employed work that many self employed people miss is the social interaction. But being self employed doesn’t mean you have to be isolated, locked away in room never seeing the light of day. On the contrary, self employed people are more able to pick up new hobbies to practice during the 9-5 as they can often make up the time flexibly outside these hours.
Plus, not all self employed work is solo, you might be starting a business and growing your own team, contracting or freelancing on-site with many different companies, or working in a coworking space.
One huge benefit of socialising as a self employed person is that you’ll meet a greater variety of people and even get a little networking done in the process.
Myth #6: You have no support or backup
Here’s the scenario – something has gone wrong, you or your customer/client have made a mistake. When you’re self employed, you have nobody to back you up, right? Wrong, this is where that ‘self employed boss’ persona comes into the picture again. You are perfectly capable of standing up for yourself, or communicating – politely – that the issue is on the customer/client’s side.
Plus, we always recommend a Professional Indemnity Insurance poliy is a great backup in case of trouble ahead, so that when/if it was your mistake, you can be covered too.
Another scenario sees your client/customer taking advantage of you or treating you badly. If this case arises, it’s possible to say ‘thanks, but no thanks’ to more business from them.
Myth #7: You don’t have to answer to anyone
This is completely untrue. As a self employed person, you’re essentially a business, and as a business you’ll always have someone to answer to. Whether that be your customers/clients or investors. Yes you’re the ‘boss’, but as soon as you realise that every business in the world is in ‘sales’ and therefore has ‘customers’, you’ll soon see that you will be held accountable.
On top of that, you absolutely have to answer to ‘the powers that be’ at HMRC, so it’s best to do your research, follow the rules and keep everyone happy.
Myth #8: The flexibility is great
There are two sides to the ‘work fexibility’ coin. Yes, absolutely, working as a self employed person allows you to have a greater amount of flexibility. But you may find you have to compromise your flexibility for your clients to ensure everyone stays happy.
For example, if you want the flexibility of working form home you may not be able to if your client wants you on-site a few days a week.
Myth #9: There are no work benefits
In terms of the benefit schemes offered by many employers, no – there are no set benefits. However it’s relatively easy for you to work some into your business plan. For example, you can set up your own pension, calculate an hourly rate that allows for a few weeks holiday and a few days sick leave, get income protection insurance and charge all of your business expenses back to your Limited Company.
Myth #10: Finding work is easy
It’s true, for some people finding work is easy and they regularly have to turn down work. It depends on your specific skills and the demand in the industry at any one time. Others find it more of a struggle and will struggle to win contracts. You won’t know until you try.
Myth #11: It’s too risky
What work does not come with risk? You could be ‘let go’ tomorrow. In fact, being self employed you have more control, which means it is less risky than employment. And if you’re worried about legal risks or risks associated with running your own business, there’s insurance for that. In fact we actively encourage our contractors to take out a Professional Indemnity Insurance policy as well as our new Tax Enquiry Service.
Myth #12: You get paid so much more!
In general, yes you do. You have to factor in the lack of benefits, sick pay, holiday pay, etc… but you’ll probably still come away with a little more in your pocket each month. It really depends on your type of work.
Myth #13: You won’t make as much as you did when you were employed
On the other hand it’s possible you’ll see a dip in your income at first, but it really depends how well you market yourself, how quickly you find work, how many clients you’re planning on taking on at a time. There are so many factors. But essentially, if you were working like-for-like hours, you should find yourself earning significantly more per hour than in your full time job. Plus, it’s up to you to set your hourly rate, so do your research first and correctly value your skills.
Myth #14: You can take time off whenever you like
Not necessarily. While ultimately it’ll be your decision when to take time off, you will likely still be contractually obliged to arrange your days off and holidays at a time suitable to the project you’re currently working on. If you’re a contractor this is particularly important.
Myth #15: You will work really long hours
Again, this one is partially down to you. If the type of work you do allows you to dictate the hours, then putting in a few extra hours a day can be a great option if you’re looking to earn a little more and vice versa if you want to work fewer hours. However you certainly don’t have to go outside the 9-5 if that’s what you’re comfortable with. Just make sure you’re charging by the hour.
Plus, if we look at the typical Brit’s working hours, as a nation we’re one of the worst for working far too many hours every week. Most people are contracted for 37-40 hours full time and work significantly longer with no overtime pay.
Myth #16: You have to use a recruitment agency
There’s little truth to this one. Some larger companies will have policies in place to source all of their contractors and freelancers via a specific agency, but it’s by no means the norm.
Most companies will hire you directly, it’s usually a better deal for everyone by cutting out the middle man.
You can find freelance or contract work on all the usual job search sites, LinkedIn and specialised self employed sites such as People Per Hour.
Myth #17: Umbrella companies take all the stress out of it
Not true, many umbrella companies charge a lot for few services. At first it may seem daunting to be setting up your own business with nobody to hold your hand, but you’ll quickly realise with an umbrella company, the hand-holding is not worth the fee! Plus there are current employment rights issues as well as tax issues surrounding umbrella companies. Take our advice, you’re better off without them.
Myth #18: It’s stressful
Whether you’ll find self employment stressful or not really depends on who you are as a person. Do you find responsibility or autonomy stressful? Of so, perhaps the self employed lifestyle isn’t for you.
And yes, the running of a business and tax matters can be stressful, but that’s where we’ve got you covered!
Most people report that they actually find self employment less stressful.
Myth #19: It’s harder to get a loan or mortgage
This is definitely the case for your first 2 years of self employment. Lenders, especially in this economic climate, like to have at least 2 years of your business’ financial records before making a decision on a loan or mortgage. There are actually specialist lenders who deal with loans for contractors, freelancers and the self employed, though. So it’s not the end of the world. Keep your credit score high and your records thorough and you should be able to come away with a good deal.
Myth #20: The financial side of things is way too complicated
If you don’t have a great deal of experience in business finance, this could be the one that really puts you off! The UK Tax system can be extremely confusing, and then there’s VAT, employees, legislation and more to worry about!
But let’s face it, you aren’t looking to become self employed to turn into a business financial guru overnight. The good news is, you will learn. The better news is, there are people out there waiting to help you – like us!
We live the small business finance life 24/7, so going into business with an accountancy firm, like Warr & Co, is a great idea. Plus with decades of experience we have the know-how to help you get off the ground-floor and into that dream self employed penthouse you’ve always wanted.
If you’re looking to become self employed, give us a call. We offer everyone a free, no obligation phone consultation with one of our directors. Take that first step today with us by your side.