Staying Afloat Whilst Self Employed
Written by Tom Sheridan on 2 December 2015
When in full-time employment, it’s easy to take certain things for granted; be it annual leave, sick pay or even the peace of mind from having money coming in on a regular basis. These benefits are especially useful when it comes to financial planning, and gives you the foresight to budget your funds, pay debts and even save for a rainy day.
According to the Guardian roughly 15% of the UK workforce was self-employed in 2014, amounting to approximately 4.6 million people. This number rose significantly after the financial collapse in 2008 and shows that, even in the most economically difficult times, it’s still possible to be self-employed and keep yourself in the black.
However, working for yourself requires a great deal of organisation and – perhaps most importantly of all – motivation. These simple steps will help you keep your head above water and let you live more freely and independently.
1. Make a budget
One way in which self-employment is no different from regular full-time employment (or even unemployment or retirement for that matter) is the necessity for budgeting. The sooner you can understand what your financial commitments are, both personally and professionally, the easier it will be to manage your money.
This is also an important first step as it may provide you with some insight into how financially viable self-employment may be for you. If you have the benefit of choosing your form of employment, creating a preliminary budget may be key in telling you if heading into self-employment is right for you.
2. Record your receipts
Perhaps one of the biggest shocks to those going into the world of self-employment is, having to record and report your financial receipts and expenditures manually. Certainly, this requires work and can be a culture shock to those who are used their taxes being paid via PAYE. But never fear, taxes need not be an inconvenience.
The key to keeping your taxes in order comes down to staying up to date. As the saying goes, ‘a stitch in time saves nine’ and you could save yourself a lot of trouble by regularly updating your records.
Apart from making sure you aren’t paying too much tax (which could affect your cash flow) or too little (which could land you with an unexpected bill from HMRC) keeping an organised record of your incomings, and outgoings, is a great way to increase efficiency within your business, and weeding out unnecessary expenditures.
3. Claiming back
Collecting and staying on top of all your receipts and accounts can also save you money in the long run as there are a number of daily expenses you can claim back for. This includes your mobile phone bill as well as petrol and travel expenses. This can even include expenditure on clothing. For a full list of what you can claim back for visit www.gov.uk.
4. Business as usual
Arguably the most difficult thing about being self-employed is dealing with the new boss; you. Many people who choose to work independently often find it difficult adapting to a more flexible work routine. It is quite easy to fall into the trap of spending days you aren’t working watching Netflix instead of looking for new clients or work.
One particular characteristic that’s common amongst those who’ve found success in self-employment, is a flair for self-motivation and a passion for hard work. Although this is very difficult to successfully ‘fake’, you can give yourself a helping hand simply by being well organised.
Every week day should be treated as a work day. Keep a strict work schedule and try to avoid lie-ins, long lunches and half-days – time is money after all. There will be times where you don’t have work or clients, but it’s important you use that time productively; even if it’s a case of taking a second look at those taxes, or honing some of your professional skills.
Filed under Money Management Tips