Self-Employment Explained

If you’re facing redundancy or have just experienced it, you will naturally want to think about your future. Should you look for another job like the one you’ve just left? Something a bit different? Perhaps even going into business on your own?

Self-employment can seem like an attractive option for many people in those circumstances. Moreover, the growth of the Internet has made it easier than ever before for workers to earn their living on a freelance basis, doing work for clients all over the world. In total, more than 12% of the workforce in Britain today is self-employed.

Self-Employed Careers

Thinking it might be nice to be self-employed is all well and good. But self-employed is just a status, not an actual job. So what kind of self-employed careers can you have? In the past, self-employment tended to be associated with creative careers or very high-level professional work.

But recent years have seen a kind of atomisation of traditional business structures, so that where, in the past, a company might have tried to do everything in-house, it will now contract out a significant part of the work it needs to be done. Many traditional jobs are now viable on a self-employed basis. Did you know, for example, that even secretaries now sometimes work remotely for bosses they have never seen?

Advantages of Self-Employment

Compared to conventional salaried employment, self-employment offers several advantages :

• You are your own boss. No one tells you what to do or when to do it.
• Your earnings are unlimited. If for some reason, you prove to be spectacularly successful in your new capacity as a self-employed person, you yourself would profit from it. In a conventional job, the profits from your success would go to the business you worked for. But the converse is also true. There is no downward limit to your earnings either. If you do not get enough work, you will struggle to pay the bills.
• In some cases, you may have tax advantages with self-employment. For example, you may be able to write off the cost of your computer against tax if you use it for your work.

Disadvantages of Self-Employment

As well as the advantages listed above, there are serious disadvantages too. These are :

• You need to discipline yourself. There is no external routine to keep you on track.
• You need to handle your own tax affairs or pay to have them taken care of by an accountant. No more PAYE simplicity for you. As a self-employed person, you will have to arrange to pay your own national insurance contributions. You pay a different kind of national insurance contributions, however, one which restricts your future access to some government benefits.
• It’s not enough to be good at whatever it is you do. You need to become your own salesperson, marketing manager and negotiator rolled into one. Even if you’re the greatest graphic designer in the world, it won’t count for anything unless you can make others aware of it.
• You’ll have no paid holidays, no paid time off work because of illness, no pensions (other than the state pension and any private pension you may arrange for yourself), no bonuses, and no guaranteed career progression.

Self-employment may seem alluring at first. The idea of having no boss except your own guilty conscience is surely appealing. The reality, however, is that self-employment is neither a bed of roses nor an easy option. Self-employed people usually face greater uncertainty and the stress associated with it. Statistics also show that they work longer hours than do most conventional workers. When you are your own business, it can be difficult to make a distinction between your private life and your work life.

Self-Employment – Conclusion

Self-employment can be fulfilling for some, but frustrating for others. Be sure and think it through carefully before deciding it’s the right step for you.

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