If you’re reading this article, then the chances are that you’re thinking about becoming self-employed. Self-employment can be extremely rewarding, but it’s essential to realise that it is very different from working a conventional nine to five. So if you’re thinking about working for yourself, or setting up your own business, then here are four things that you should be aware of first.
You can be self-employed and employed at the same time.
Many people wrongly believe that you can only be either employed, or self-employed, and there’s no in-between, but this is incorrect. If you work for your employer during the day, even as a full-time worker, but you also run your own business or take money for yourself in the evenings or at weekends, then you are also self-employed. Whether you are planning on becoming self-employed full-time or will be self-employed alongside your usual job, then you still need to set yourself up as a sole trader and to notify HMRC of your earnings. If you are worried about getting set up and started as a self-employed contractor, then you can learn more here.
You may not be entitled to maternity pay.
If you are already pregnant, or have plans to become pregnant, while you are self-employed, then you may not be eligible for the full amount of Maternity Allowance. In order to receive the full 39 weeks of Maternity Allowance, you must have paid Class 2 National Insurance for at least 13 of the 66 weeks before your baby is due to arrive. If you have not paid enough Class 2 National Insurance to get the full £151.20 a week, then so long as you meet the other criteria, then you should get £27 a week. If you’re reading this short notice, then don’t panic, you can still ensure that you get the full rate by making early National Insurance payments. You can find out more and make your claim here.
You need to keep records of your income and expenses.
Whether you are full-time self-employed or still working for your employer on the side, you will need to keep a record of ALL of your self-employment income and expenses. This includes any invoices you send, and any payments that you make that are to do with your business. If you submit your tax return on or before the tax deadline, then you only need to keep these records for 22 months. However, if you send your tax return late, then you only need to keep the records for 15 months after you submit your return. To be safe, most self-employed people keep a digital record of their transactions of at least two years.
You will no longer be eligible for Statutory Sick Pay.
If you are full-time self-employed, then you will no longer be eligible for SSP as you are no longer an employee. This means that if you fall sick and can no longer work then you need to have put money aside to cover your living expenses; otherwise, you could find yourself in financial difficulty in the future.
So there you have it – although these four things are by no means meant to put you off becoming self-employed, it is important to realise that you will need to make some changes.