Being self-employed: what you need to know

Do you know that since the COVID-19 pandemic, more people are becoming self-employed? Yes, there was a lot of job loss in 2020 because we all had to stay at home for a long time and employers could not reconcile the need to keep so many people on their payroll while earning so little income. So, they let a lot of people go.

Because of that, many people ventured into the self-employed world and their experiences are inspiring more to follow in their footsteps. As a matter of fact, statistics showed that about 65% of workers in the UK are planning to become self-employed sooner or later.

Definition of self-employed

To be self-employed simply means to work for yourself. It does not mean working alone though. So, you can choose to work in partnership with others and there is a legal term for that – business partnership. You can also decide to be a sole trader who employs others to work for him or not. 

Being self-employed can also mean that you are one of the shareholders or the sole shareholder in a limited liability company.

Either way, you are your own boss and you own the business and you decide how much income you get. You do not have to answer to any boss. You can also choose the direction in which you want to take your company without having to consult with anybody first. That is cool, right?

Let us take a brief look at the things you stand to gain as a self-employed.

Why should you consider being self-employed (Advantages of self-employment)?

Apart from being your own boss and answering to no one, there are other advantages to being self-employed.

1. You can choose to work out of your home without necessarily obtaining an office space.
2. If the need to rent an office space arises, you can simply choose to buy a virtual office address which comes without the stress of actually managing a physical building. This is because the service provider will see to that and you have access to things like a dedicated receptionist or secretary for your business, a local business telephone number and email domain name, meeting rooms for your occasional meetings, receiving, handling, and forwarding of emails, and a host of other benefits.
3. You can choose to own different branches of your company with local virtual offices without being actually present in those places.
4. All the profits from the business after tax payments are yours.
5. When you own your own business, you can personalize your services to your clients in a unique way that distinguishes your business.
6. You can choose to work at any time and from anywhere in the world.
7. Registering your business with HMRC as a sole trader or business partner makes you eligible for benefits of the Class 2 National insurance scheme, tax-free child care, etc. You and your business will also be eligible for grants and incentives for small and local businesses.

How to register as a self-employed online with HMRC?

First, you must register your new business with HMRC, especially if your business is providing services to citizens of the UK, even if it is an online business. This is very essential and legally required especially when you have started to earn over £1000 in a year. 

When you have registered with HMRC, you earn the official status of a self-employed person that makes you qualified for some incentives from the government like Class 2 National Insurance.

To register with the HMRC, simply log on to the HMRC’s website at gov.UK. Search for HMRC services and log in and create a profile with the agency. Then proceed to fill out a Self-Assessment form providing information about you and your business so that the amount you will need to pay for tax will be calculated.

Registration for Self-Assessment with HMRC is free so you need not worry about costs. All you need is to fill out the form online and submit it. Alternatively, you can print the form and fill it out manually. Then you should send it to the address on the form.

It would normally take just 10 working days for your application to be processed and approved by the HMRC if you currently reside in the UK. Otherwise, it could take 21 days.

After your registration, you will be issued a UTR number (Unique Taxpayer Registration number) with which you will pay your tax every time it is due.

What business skills to learn to make you self-employed

Well, the truth is that the skills you need to become self-employed are not limited. You can either sell your skills as a freelancer taking on clients or working for several companies and getting paid as a contractor. From dropshipping to hosting events, writing, and promoting the business of others, the list is endless.

Virtually any skill you learnt from university or through a diploma can be sold online these days. Even when those skills seem unsellable like medical workers, pilot, lawyer, engineering, etc., you can provide tutoring or advisory services and get paid for it. So, you see? It is about being creative and finding the niche your skill belongs to.

However, to be able to distinguish yourself as self-employed, you need to know how to sell your skills to the highest bidder without compromising your standards. This is because, no matter how obscure your niche may seem, there are other people in there ahead of you. You need to make yourself stand out.

How you do this depends on your ability to market yourself well. You can get someone to do that for you or you can too if you have the skills for it.

Conclusion

To cap this up, it is important you know that being self-employed is something to aspire to because it gives you the freedom to do as you wish. However, you should count the cost and be sure you are up to it because starting out may be difficult. But, once you get the hang of it, you can begin to enjoy the benefit of being self-employed.