There is a great feeling when deciding to become your own boss, isn’t it? You know there are great rewards as you are in charge, you make decisions, you choose when and where to work, etc. There are also other rewarding elements like you are a creator! But!!!! It also has its own difficulties. Think of it! You are the main investor not only with capital but with personal effort and dedication. You need to work hard to make the business function/work well, you need to plan, buy your own tools, keeping track of all expenses, adapt to your customers, maybe work unsocial hours to keep/gain customers. On the other hand there is another alternative, to be an “employee” which is to work for somebody else (an employer) which has also its advantages. Let’s look at advantages on both options:
Being an Employee. First of all, you have a contract of employment and therefore you have statutory rights. For example:
- Working specific hours of the day. A timetable. Generally it means you may work 40 hours a week or according to the agreement with your employer.
- You have the right to get holiday paid.
- You get sick leave payments.
- You also get at least statutory paternity and maternity paid leave.
- When you finish a day of work you go home. Your employer has to deal with their business to keep it afloat and you, the employee, have a responsibility of doing your work diligently for your employer.
- If you are made redundant you will get a compensation, redundancy payment (all depends if you have stayed in the job for 2 years or longer). Your employer is also bound to give you notice of terminating your contract so that you can look for another job. That notice has to be paid for even if they do not wish you to continue in the job. The employer has a duty to discuss with the employees when they are considering to make people redundant and the reasons before they provide redundancy notice.
- You don’t need an accountant as you will be in the PAYE System and therefore the employer will discount automatically from your wages, National Insurance contributions and Income Tax to pay HMRC.
- There are many other reasons, but the last point I would like you to consider is that probably your role will have nothing to do with worries how to make the business thrive except doing your job well. You do it well and your boss/business owner will keep you as you create reaches for them.
Self-employed. As mentioned earlier, it is very rewarding to be your own boss but you need to take the following into consideration:
- You will be classified as “Sole Trader”. This means you are responsible for your business and you will be personally liable for its debts. There is no difference between you personally and your business. This can at times be very handy on the other hand it has its own risks too should anything go wrong in your business as whoever asks for compensation could reach your own personal assets to get such compensation.
- You need time to develop your own business. You may have a job (as employee) in order to boost your personal income, and at the same time you may develop your own trade and business side by side. Just remember that some contracts of employment may restrict doing your own business as sole trader whilst you are an employee, so check it out.
- You need to keep a good track of your assets (this will help to calculate depreciation when reducing your tax bill), expenses and income. Another issue is if you are registered for VAT returns. In other words, you need a good bookkeeper or to become one.
- You are not only the main worker but also you need to deal with clients. This means to make offers, provide a quotation on prices after studying the project, checking costs, materials, time to complete the job, etc.
- You will have to deal with other subcontractors (this may be other self-employed people) and you may need to register to pay tax on their behalf in the construction industry (check details here: https://www.gov.uk/what-is-the-construction-industry-scheme). You can also employ other people to help you to do the job but you will need to place them on the payroll and provide a contract of employment.
- You have your own working hours which suit you to do the job, in other words, you decide when to work, what hours of the day. The question is…. what suits your clients?
- You are your own boss (even though you will have to consider approaching the following philosophy “Customers are always right”).
- You will need to spend money on public indemnity insurance in case something goes very wrong to be able to respond and have cover.
- If you employ people, you’ll need to follow employment law. As an example, remember that some trades have restrictions and you may need to request a DBS (Disclosure and Barring Services) check to safely recruit people to do the job, get Health and Safety certifications and other trade certificates.
In any case, you may run profits or loses. You could be very successful! It is a risk. The questions at times is, if you don’t try… then how are you going to know if your ideas can work then? In any case, get business advice which many times is for free from many local business hubs and check it out, mate! Don’t let the feeling of business rush to rush you, but use this rush as motivation power to rush in getting advice, as a good business plan will turn out to be a good healthy business practice.