What Should You Be Thinking About When Going Freelance or Self-Employed?
Self-employment has grown dramatically in recent years. The number of self-employed workers was as many as 4.8 million in 2017, according to the Office for National Statistics (ONS). In fact, it’s now predicted that they make up at least 15% of the population.
But in light of National Freelance Day, which takes place on the 20th June this year, and as a tax expert, I wanted to take this opportunity to give advice for those freelancing, or thinking about freelancing, on how to make it.
Going self-employed is a big risk for people, but the rewards can be huge. It can give you more flexibility, the chance to be your own boss and generate revenue on your terms. However, while being self-employed might have multiple benefits - there are also areas to be aware and mindful of too.
There are many things you should think about before going freelance if you want to truly make it. They include:
1. Knowing Your Way Around Expenses
The first thing I would recommend is really knowing your way around expenses. There’s a lot that the self-employed can claim on expenses that they don’t know about, even right down to heating and lighting bills, travel fees and uniform costs. What I would recommend is really doing research into the claimable expenses you rack up every year, and if in doubt seek the help of a professional, as you could be saving yourself thousands as a freelancer.
2. Not Ignoring The Rise Of Co-Working Spaces
Co-working spaces and offices, such as WeWork, and their popularity has risen dramatically in recent years. These spaces give freelancers and self-employed people the chance to have their own working space away from home - which is great for work-life separation, but they also have several other benefits too. They give you a chance to network with a wide pool of people, either potential clients or those who could become another arm to your business. They give you a desirable office location which is good for hosting meetings and conferences. And, they allow you to be flexible with the way you work - which might very well be one of the reasons you decided to freelance in the first place.
3. Staying On Top Of Your Tax Returns
One of the biggest for me is staying on top of your tax returns. Last year, we did some research that unearthed the fact that some weren’t submitting their self-assessment until seconds before the deadline. Others, after the deadline. When you’re a freelance worker, you can have a lot of things to remember and to keep on top of - but if you don’t give your self-assessment attention, you can risk some hefty fines. What I’d suggest is chipping away at it throughout the year, making sure you’re logging receipts etc. and really keeping it in the back of your mind. That way, when ‘deadline day’ looms - you won’t have a big task ahead of you.
4. Valuing Networking And Its Power
As a freelancer, knowing people is incredibly important. And one of the best ways to do this is to network, get out there and meet people. I can talk all day long about how important it is to keep on top of your finances and taxes, but I also think it’s well worth mentioning that if you really want to make it in the self-employed space - you need to market yourself. Networking events are a great place to interact with people who you might not normally meet. And also just making yourself known and available for coffees and meetings can open new doors for you as a freelancer and help you expand your clientele.
5. Keeping Your Personal And Business Finances Separate
And finally, I’d also touch on the importance of managing your separate finances. As a businessperson, I would advise you to have separate bank and business accounts. As a sole trader, it’s not a legal necessity, but, it would give you more transparency in your finances as you can keep cleaner records - some business bank accounts even categorise your expenses to make the record keeping easier. Look for providers that offer a mobile app, a free or low-cost monthly account fee, low transaction fees, an overdraft facility and free cash withdrawals.
GoSimpleTax is running a competition this year in line with National Freelance Day. The company is offering a year's free IPSE membership and a year’s free subscription to GoSimpleTax. Keep an eye on their Facebook from Thursday 20th June at 9am until Monday 24th June to find out how to enter.
Mike Parkes - https://www.gosimpletax.com/
Mike Parkes is the Technical Director of GoSimpleTax, a software that helps you to submit your self-assessment and identifies where you can be making tax savings and saving money. He has over 30 years of experience in taxation, working for HMRC for a big portion of his career.