Did you know that the number of self-employed people in the UK jumped to 4.8m people in 2017 from just 3.3m people in 2003? Commentators have long asked why there has been the jump in the number of people making their own financial ways in life and, more often than not, it’s a mixture of:
• the increased opportunities offered by a world that’s getting more and more digital, and
• the suppression of wage increases in the last 10 years.
Self-employment is a completely different type of lifestyle to full-time employment. You might often have heard the expression that the self-employed sell their time for retail rates while the employed sell their time for wholesale rates. However, while the opportunity to make much more for every hour you work as a self-employed person is greater, you never quite know where your next income is coming from, especially in the early days of striking out on your own.
What are the five biggest perks to being self-employed? The 786Loans team looks at the 5 most important benefits.
Able to choose your own clients
One of the hardest things many self-employed people have to get used to is the idea that they actually choose who they work with. It’s tough to get to grips with because, certainly in the first two years of being self-employed, most people are grateful for any custom they can get.
However, as time goes on, your customers begin to order from you again and again and your reputation increases among your core group of target clients. That means that you can simply turn down the work you don’t want to do because you don’t enjoy it or you don’t like the particular client.
Rising rates through specialisation
After a while, you become the go-to person for a particular skill or talent once the quality of your work and the professionalism of your approach becomes widely known.
You might have a particular array of talents but one or two things your particularly good at. The more you concentrate on improving this hard-to-find skills and the more time you spend on letting potential clients know that you are the best person for them, the higher your hourly or daily rates will rise.
Pretty soon, you’ll be able to charge the same amount for 2 or 3 days’ work a week than you charged for 5 days of work when you first became self-employed.
Although the difference is not as great as it used to be, the self-employed pay lower taxes than their full-time employed colleagues, especially if they set up as a limited company.
There are certain pieces of legislation that the self-employed need to be careful about, especially IR35, but, given the right professional support, you can successfully navigate these.
One of the tests that HMRC imposes on the self-employed under the IR35 rules is whether you can appoint someone else to do the work under the contract if you want.
What that means is that, once you have built up a network of trusted customers and sub-contractors, you might be able to service multiple contracts at the same time for different clients by sending other people in to do the work instead of you. You could be at one client’s premises working on one particular problem and you could have three or four other contractors out earning you money with other clients.
Better work/life balance
Let’s make no mistake by implying that the life of a self-employed person is easy. Particularly for the first two or three years, finding clients is a real challenge as is making sure you get paid on time. There are also a lot of other things you’ll be responsible for that are new to you which you never had to encounter as a full-time employee.
However, when you have a great bank of clients on board regularly coming to you for work, it’s possible through time management and sub-contracting to be able to enjoy 2-3 months off a year. Better still, you’ll still be earning during the time you’re away with your family or on holiday.
How easy is it for a self-employed person to get finance?
Before you have 2 or 3 years’ accounts prepared and published by your accountant, it can be difficult. Even though self-employed people earn more and they are less likely to default on any loans, credit cards, or mortgages than their employed counterparts, lenders are still wary.
Why? As we mentioned earlier in the article, self-employed people cannot say with absolutely the same certainty where their next pay is coming from, unlike a full-time employee who gets their wages at the end of every month.
If you’re unable to produce 2 years’ full accounts showing profits in both years, you are unlikely to be able to get access to loans, credit cards, or mortgages through mainstream lenders like banks. Your best bet is short-term financing like payday loans or loans with a term of less than 12 months.
If you’ve been self-employed for a while now and your accounts show a consistent profit and an ability on your part not to live too much on credit, you will have most types of credit open to you as are open to full-time employees who have been in their job for a long time.
Finance for the self-employed through 786Loans
786Loans has a dedicated team for the self-employed of Britain looking for access to finance – please click here to find out more.
786Loans is powered by LoanTube, the UK’s newest and most revolutionary credit broker connecting lenders and borrowers. We’re licensed by the Financial Conduct Authority and all of the lenders we have on our vast panel are also licensed by the Financial Conduct Authority for your peace of mind.
Whether you’re self-employed, a director of your own limited company, a freelancer, or a contractor, let the 786Loans team work with you, no matter how long you have been trading on your own. You’ll find us committed, enthusiastic, knowledgeable, and driven to deliver you the very best deal.