By: Tim Bennett
23.10.2018
For anyone thinking of leaving full time employment to go it alone, here is Tim Bennett’s checklist of things to consider before making the move.
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Five key questions for budding freelancers
Breaking away from full time employment to work for yourself can be hugely rewarding. However, there are a number of things to think about first. Here, I sum up five of the big ones.
Will it suit you?
There is a natural trade-off between being a full time employee and being a freelancer – on the one hand, as an employee you have predictability when it comes to your income but, on the other, you do not have the same flexibility when it comes to deciding your working hours. And that’s not the only thing you need to weigh up as the following summary shows;
You will also need to think about how important your work social network is to you and whether you can replicate it self-employed. Once you leave full time employment, you will also be responsible for your own IT support and office space.
What will your status be?
There are a couple of ways you can set yourself up outside of employment – as a self-employed freelancer, or as a company. Each has its own pros and cons, especially when it comes to issues such as your legal liability for debts and also the way tax works. All of this is worth discussing with a professional up front (see below).
Who will help you?
As an employee key headaches, such as payroll and tax, are handled by your employer. Self-employed folk, on the other hand, need to make sure they get the right advice and are supported while they build their business. As a minimum, it is worth considering whether you will need help from the following professionals;
- An accountant – to sort out your day-to-day record keeping, advise on tax and also help you to choose the right business structure
- A planner – to guide you when it comes to long-term saving and pensions and to set up the right policies to protect you if things go wrong
- A solicitor – to help you set up the right legal structure and guide you on contract and liability issues
What downside protection will you need?
As an employee you usually have automatic protection in the event you become ill at work (permanent health insurance) or even die (death in service benefits). Once you are self-employed, there is no automatic cover but the good news is that you can set up the equivalent of these yourself. This is worth discussing with an adviser who can help you decide what you need and get it for you at a reasonable cost.
Who will you tell?
A number of parties should be informed early on that you intend to change your employment status. The obvious ones include your partner and your family. However, you should also speak to your bank about your new day-to-day banking requirements and also the ramifications that this change may have for your mortgage.
Don’t forget…
Setting up a business can be time consuming and stressful. So it is very easy to let certain important things go, such as;
If in doubt, bring in help as early as possible.
To find out more about some of the issues raised here, please contact a Wealth Planner.
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