Looking to take the leap from employee to self employed? With the ability to work online and from home, it’s something that more and more of us are doing. It can be incredibly beneficial for the right kind of person, but there are things you’ll need to bear in mind. Read on to find out more.
Decide what you’re going to do for work
Most people tend to transition into self employment in phases. This career path usually starts as a side hustle, after looking into the best ways to make residual income you might have started a blog, signed up to a freelancing site or starting buying and selling items for a profit. These kinds of gigs can all be done around a full time job, but if you’re lucky they can really pick up and start doing well. You might reach a point where you realize that you can do this full time, and so when it comes to going self employed, you’ll already know what you want to do. But if you’re quitting your day job, it makes sense to think of alternative streams of income in the event that things slow down (which is always a downside to self employment). For example, you might make good money as a blogger but have days or weeks where things are quieter. Having a way you can boost your income in this time can help you to maintain your finances. Freelance sites are always good for this, there’s always work available and you can pick and choose what you want to do. If you’re having a slow month, you can take on some projects.
Register as self employed
Once you’re earning money from your side hustle (even if you’re already working as a full time employee at the same time) you’ll need to register as self employed. This enables you to pay the correct taxes so that everything is above board and you’re not unwittingly breaking the law. It sounds scary and complicated but the system has all been designed to be user friendly so it’s something you can do without any outside help. You’ll usually just complete an online form, and they will contact you if they need any more information.
Save money towards your tax return
Speaking of your tax return, this is something to get right as a self employed person. You’ll need to put aside about twenty percent of your profits, so that in April you can afford to pay your tax bill after your return has been submitted. In some countries you will have additional costs to cover such as national insurance and any student loans if you owe them. It’s worth doing your research ahead of time, find out what you’re likely to owe so you don’t end up caught short.
Save for holidays and time off
When you’re an employee, you’re entitled to a certain amount of paid days during the year. However, this isn’t the case when you’re self employed. So if you want to take time off, such as over Christmas and other holidays and when you’re unwell, you need to ensure you can afford to do so. Having emergency savings that you can use for time off when needed is always going to be a smart move.