Self-Employed Support +
The most common mistakes people make when becoming self-employed.
Many of our members here in the co-working space are freelance and understand the challenge of making the move into self-employment. We have introduced a help pod for business questions and to share the business support that is available. The 1:1 business advice is available to all members here @Inc. and covers the grants, loans, set-up questions many have when starting a new business.
Taking the leap into self-employment is an important decision and we understand that here at MENTA. The average person spends roughly 90,000 hours working during their lifetime, so ensuring you are doing something you enjoy and brings you the remuneration you anticipate, is a very real consideration.
The positives of working for yourself are clear. You get to choose your working hours, your customer base and salary. You don’t have to answer to anyone, and you can take your business in any direction you want without having to consult others. However, like everything there are pitfalls to consider.
As the sole trader you must be across all aspects of your business. In this post we will look at things that are often overlooked by people starting out as self-employed. A lot of it surrounds the issue of paperwork.
Ensure you have a contract and scope of work.
Very often sole traders and those who are self-employed do not clearly set out a proposal to clients or customers with the project deliverables defined. It means that they can end up doing more work than they originally quoted for.
Find an organisation like MENTA who offer courses which cover how to write ‘scope of work’ and proposal documents. Sometimes you will need to find a professional who can draw up bespoke legal contracts and MENTA can guide you through ways of finding those services.
Track your sources of income.
When you are employed, you get paid one lump sum of money each month by the payroll department. When you are self-employed your income can come from many different sources. It is important to ensure you carefully invoice each source and track payment. Often a simple spreadsheet will help with this.
When you are employed, HR takes care of your pay and tax. When you are self-employed you are solely liable for paying your own tax. You will need to fill out a self-employed tax return and submit it by January 31st each year. If you fail to submit a tax return you will be fined. Within the tax return you will be asked to submit your expenses which could help to lower your tax bill. It can be difficult to track expenses. Make sure you keep receipts.
An expenses spreadsheet will also help. MENTA courses are invaluable when it comes to setting out ways of recording expenses and finances when you are starting out.
Manage your time.
Being a sole trader means you choose your own hours, there is no 9-5. However, some self-employed people find they start working constantly because they are not managing their time properly.
At MENTA we advise those starting out as self-employed to set rules when it comes to time management and discipline. Establish a clear work plan and follow a schedule. That way you will meet your deadlines. For more information on what pitfalls to avoid when starting out as self-employed or a sole trader, get in touch with the team at MENTA or talk to Suzanne here @Inc.