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Due to the recent Covid-19 pandemic spreading like a wildfire, there has been a huge impact on our daily way of living; unexpected school closures and working from home has become the norm whilst changes to our everyday life has resulted in restrictions on partaking in leisure activities and group gatherings. Due to this, there have been negative consequences to personal finances as well, especially as inflation has risen and individuals have been made redundant because businesses are no longer able to afford labour costs or have had to be liquidated. This has left much of the nation with no other choice but to apply for government benefits and make use of food banks because they do not have enough funds to afford the basic necessities required for a good quality of life.
However, it’s not all doom and gloom, as some individuals have turned this bleak moment in their lives around and have decided to become self-employed. It’s a pretty good opportunity to offer your skills and services to others in this moment of time; particularly as there has been a demand for home repairs and interior decoration. Although it sounds like a great idea to be your own boss, there are also some important factors to consider before becoming self-employed – let’s take a look!
Have a solid plan
First and foremast, it’s important to take a step back and do a reality check – Are your skills and areas of expertise needed right now? Are your self-employed services in demand by the population? It’s crucial to think through your options and have a solid plan, so you are 100% ready for your new venture. It’s also vital to ensure that you will be receiving a decent income in order to put food on the table and pay necessary living costs, such as bills. Moreover, be sure to keep in mind that you will need to invest in setting up your business, so have some funds saved onto one side for this too!
Consider income protection
If you’ve not already considered it, income protection is something to look into and purchase in case you become ill or get an injury causing you to take time off from work. Depending on your policy, your provider can pay 50-70% of your salary, so you won’t see a negative effect on your personal finances. It’s pretty great to invest in for a piece of mind as a self-employed individual and it’ll ensure you have a steady income to help with meeting ends until your able to get back on your feet.
Get an accountant
There’s going to be paperwork and lots of it, so be sure to hire an accountant, especially if you’re not good with record-keeping and numbers. Your accountant will be able to assist you with tasks such as filling out your tax returns, ensuring you pay the correct amount of income tax and ascertain you meet self-employment laws. It may also be helpful to purchase management accounts services to control the finances of your business and meticulously plan ahead in terms of business forecasting and safeguarding against potential risks.
Open a business bank account
Having a separate bank account for your business is handy to establish your sales and expenses. It also makes record-keeping a whole lot easier when it comes to doing year end of year tax returns with your accountant. Plus, it’s always a good idea to keep your personal and business funds separate from one another, so you have a clear idea of your finances.
Choose a suitable workspace
It’s particularly important to have a dedicated workspace so you’re not distracted by other things in your day to day life. Choosing a suitable location to work in can do wonders for your productivity and ensures your business documents are organised and in one place. If you plan on working from home, allocate a separate room to act as your business office and maybe consider putting a lock on the door, especially if you have little ones, so that important information regarding your business does not get lost or tampered with. Alternatively, you can also rent out an office or shared workspace elsewhere, but be sure to take into the additional costs this may incur you.
On a final note, self-employment is always worth considering whether you’re currently unemployed or already have a job on the go – not only does it provide you with an additional form of income but it also gives you the independence and flexibility to do a job on your own terms.
Until next time.