Getting started as a contractor or going self-employed
According to a BBC report in 2018, the self-employment numbers have risen year-on-year for almost two decades. That means that approximately 15% of the UK’s working population are now contractors or declared self-employed – and that is a pretty significant number. The fact remains, however, that most of these individuals have not ticked even the most basic of boxes that will keep them safe, profitable and on track to a successful solo career.
Wherever you are on your journey: thinking about the leap, still finding your feet in year one, or a seasoned pro – there are some crucial things that you need to consider.
4 top tips for commercial freelance success
1) Get fully insured: Yes, I know that insurance often feels like paying out money for nothing tangible in return but hear me out. Firstly, there is nothing worse than the day disaster strikes – except the days after when you are trying to pick up the pieces and work out how you are going to pay for it. Secondly, you do get something tangible in return – you get peace of mind and the ability to focus the rest of your mind on what you should be doing.
And don’t always go for the cheapest insurance either. Get ‘adequate’ cover, because paying for something less really is like throwing your money away. Think about these areas for insurance: public liability, tax enquiry, legal expenses, income or keyman protection policies.
If this is an area that requires attention in your business, check out Kingsbridge. They provide cover to thousands of freelancers, contractors and independent professionals in the UK.
2) Open a bank account: If individuals trade through a limited company, they will need a separate bank account; whereas sole traders can use their personal account. My advice is to always keep the two separate – there are several reasons, but the main one is that it just makes everything (especially calculating your tax) so much clearer and simpler.
3) Hire an accountant: OK, this suggestion may seem a little self-serving, but please let me explain. You may be the most financially capable and number savvy person you know – but your job is not to do your accounts. Whatever area of expertise you have decided to pursue in your self-employed or freelance life, that is exactly what you should be focusing your time and energy on. If you have the time to do your accounts as well, you are leaving money and opportunity on the table – fact!
The only caveat I would add here is that if you love accounts and finances, and you are prepared to sacrifice fee-earning money for the sheer pleasure of DIY accounting – go for it.
4) Work today and plan for tomorrow: The single biggest way to guarantee failure in any long-term venture is to approach it with a short-term mindset. Set targets and goals, create 1-year, 3-year and 5-year plans, outsource administrative tasks that are below your paygrade, make daily self-appointments to work ‘on’ your business, set up a pension plan, think about how to make your business sellable at some future date, and keep a close eye on your financial numbers.
There is so much more to think about when it comes to business planning, but that should be enough to be getting on with for now.
If you would like more advice about starting out on your self-employed journey, or you know someone who might need a helping hand – please get in touch.