working for yourself

Working for yourself

Thinking of ditching the 9-5 and going self-employed? Starting up your own business may be the dream, but is it right for you? We look at some of the pros and cons of going it alone to help you make a more informed decision.

Why become self-employed?

Self-employment and traditional employment have their benefits and drawbacks. Choosing between them requires careful consideration of individual circumstances and preferences, including financial implications. Taxation plays a significant role in determining the pros and cons of being self-employed or employed.

Pros of self-employment

  • Flexibility: Self-employment offers more control over work schedules and workload, allowing for a better work-life balance. Self-employed individuals can choose to work on a project-by-project basis or set their hours to fit personal needs, making it easier to attend to family and personal commitments.
  • Unlimited earning potential: Unlike traditional employment, self-employment has no fixed salary, which means that earnings are directly related to the amount of work done. Self-employed individuals have an unlimited earning potential, which can significantly increase income over time.
  • Tax benefits: Self-employed individuals have access to a range of tax benefits that are not available to traditional employees. For example, self-employed individuals can deduct business expenses from their tax bill, such as equipment, travel, and office space. Self-employed individuals can also claim capital allowances on certain assets, reducing their taxable income.

Cons of self-employment

  • Financial instability: Self-employment is typically more volatile than traditional employment, with irregular income and cash flow. This can make budgeting and financial planning more challenging, particularly during the early stages of starting a business.
  • Responsibility: Self-employed individuals are solely responsible for the success or failure of their business. This requires a level of risk-taking and entrepreneurial skill that may not be suitable for everyone. It also means that there is no safety net if things go wrong.
  • Taxation: Self-employment can also have higher tax obligations than traditional employment. Self-employed individuals must pay both income tax and National Insurance contributions on their earnings. In addition, self-employed individuals may be required to register for VAT if their turnover exceeds £85,000.

Pros of traditional employment

Before you decide to make the leap into becoming a business owner, it is important to understand what you are leaving behind by being employed. For some you may be giving up a great deal such as stability and employee benefits and for others, it may be much less of a risk. Let’s take a look at potential pros of your current position.

  • Financial stability: Traditional employment provides a stable income, with regular pay, benefits and job security. This can make it easier to plan and budget for personal and family expenses.
  • Employee benefits: Traditional employees typically have access to a range of benefits, such as sick pay, holiday pay and pensions, which are not available to self-employed individuals. These benefits can significantly enhance the financial well-being of employees.
  • Reduced tax obligations: Traditional employees have lower tax obligations than self-employed individuals, as employers are responsible for paying a portion of National Insurance contributions on behalf of their employees.

Cons of traditional employment

  • Limited earning potential: Traditional employment typically has a fixed salary or wage, which means that earnings are limited. There is less opportunity for rapid income growth than self-employment.
  • Less flexibility: Traditional employment generally requires employees to work set hours and adhere to strict schedules, reducing the flexibility to attend to personal and family commitments.
  • Limited control: Traditional employees have limited control over their job responsibilities and career trajectory, which can be frustrating for those seeking autonomy and career growth.

Making the decision to become self-employed

The decision to become self-employed or seek traditional employment depends on individual preferences, circumstances and financial goals. While self-employment offers more flexibility, unlimited earning potential and tax benefits, it also carries financial instability, responsibility and higher tax obligations.

Traditional employment, on the other hand, offers financial stability, employee benefits and reduced tax obligations, but comes with limited earning potential, less flexibility and limited control over job responsibilities and career growth.

Getting help to start my own business

With lots to take into consideration, especially regarding the legal requirements, starting a new business can be scary and a little overwhelming. We can help advise on the best trading structure and define the legal responsibilities to help you set off on the best possible start.

From business plans and marketing strategies to fundraising requirements and cash flow, we’ll be on-hand to support you. We’ll guide you through the process of planning for your business growth, ensuring your processes allow to you grow efficiently and your financial systems allow you the best possible insight into your successful future. You can find more on our business startups page.

Business Startups

Business Startup FAQ’s

Here are some of the common questions people also ask.

How to start your own business2023-03-07T10:59:28+00:00

Here are some basic steps you can follow when starting your own business: (1) Conduct market research and develop a business plan; (2) Choose a legal structure for your business; (3) Register your business and obtain any necessary licenses and permits; (4) Set up your financial accounts and get funding if necessary; (5) Develop your product or service, and start marketing to potential customers. Remember that starting a new business can be challenging, but with the right strategy, it can also be rewarding.

Can you help with software for invoicing and accounts?2020-12-11T17:20:29+00:00

Choosing the best system and software for your business can be difficult with so many to choose from, however we can advise you on the best accountancy software program for your business.

Your business type, size and its needs, are all factors that will impact which software we recommend.

All our customers benefit from the latest leading industry software Xero and Receipt Bank FREE at no additional cost.

How can an accountant save me money?2020-12-11T17:10:14+00:00

Finances are one of the most important aspects for a business especially during the start-up phase. With the popular phrase being ‘Cash is King’.

A business start-up accountant will keep your accounts up to date whilst you use your time to manage the rest of your start-up. With up to date accounts you will be able to make more informed decisions avoiding costly mistakes.

A good accountant will look at the profitability of you business, ensure you are on track for suitable growth and advise accordingly. They’ll help with your current business goals and help you create the most achievable goals,  reflecting a realistic time-scale and successful outcome for growth.

I’ve just set up my business when should I look for an accountant?2020-12-11T17:02:53+00:00

We recommend that the earlier you can get an accountant involved in your start-up business the better. An accountant will be able to offer you help and support from day one, whether helping you to register with HMRC or assist you the best way to record your finances.

An accountant can also will help with your payroll, ensuring that all employees’ tax codes and payments are recorded correctly.

How can an accountant help you with starting your business?2020-12-11T16:58:39+00:00

With lots to take into consideration, especially regarding the legal requirements, starting a new business can be scary and a little overwhelming. We’ll advise on the best trading structure and help define the legal responsibilities to help you set off on the best possible start.

We can help many tasks from creating business plans to calculating business expenditure and registering for VAT. We will work with you to help in these financial areas are set up smoothly and efficiently.

Many accountants work as business advisors to help you decide the best trading structure, register with the appropriate government departments when setting up your company.

Let others know!

With the right business advice from the start and flexible financial systems that make business processes easy, startups have the best possible chance of success.

If you know someone who is considering making the switch to self employment, you can send them this article by clicking the button below.

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How We Work

Working with us couldn’t be easier and we make switching simple

Step 1.

Book A FREE Consultation

Contact us to book your FREE initial consultation. We’ll work around times that best suit you.

Step 2.

Initial Discussion

We take the time to get to know you and your business, your challenges and expected outcome.

Step 3.

Recommend Options

We’ll review and present our recommended options in plain english with associated fees.

What’s Included

It’s important you make a good connection with your accountant. Your accountant will become an extension of your business, working with you, for you.

Our initial free consultation allows us to get to know each other and for us to understand your challenges. We’ll also explain how we think we can make a difference. Here’s what you should expect in your initial consultation.

  • Typical consultations take around an hour, so we won’t take up too much of your time.

  • Don’t worry about preparing lots of information for us ahead of the meeting, it is not necessary.

  • If you would like to send us your last return, we’ll happily take a look before we meet.

  • We can meet at your convenience. Out of hours and even weekends, just let us know.

  • There’s no obligation and we will happily answer any questions you may have.

Book a FREE Consultation

Please complete the form below and we will get back to you promptly.

Franks Accountants respect our customers privacy. Rest assured, we will never pass your details on to any other companies.

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