Since the pandemic started, many people were furloughed or lost jobs, and many have had to juggle a work-life balance. But this does not stop people from dreaming the dream they always wanted. Some of us want to get married, have children in the future and be able to work around the family life. Some dream of starting their own business and to be their own boss, or simply to have greater flexibility in their life.
It is hard to choose to enter the world of self-employment, especially when you don’t have a plan or a stable income. Nevertheless, don’t let any negativities stop you from doing the things you like! When I chose to leave nursing 11 years ago, I questioned whether I did the right thing but I have never looked back. It was a hard decision, especially I as can’t go back to work as a nurse now as my practice license expired. But at the end of the day, I was able to spend a lot of quality time with my children, nurture them and watch them grow. I also started my blog and working as a freelance writer.
Here are the costs to consider before you become self-employed or freelance:
Make Sure You Are Insured
Regular readers will know that I came from Singapore and we have a culture to buy all sorts of insurance for protection. Even the Singapore government makes sure everyone is protected, especially for income.
Life has many ups and downs. One of the things you can’t guarantee is what comes next. One minute, you might be fighting for your life dealing with the COVID virus. The next minute, you might be losing your home. Hence, I bought myself health insurance in my early 20s, just in case. My husband and I also have income protection insurance, just in case we have to get signed off work through illness or injury. The insurance payout will help us to pay for our mortgage. The last thing we want is to lose is the roof over our heads! Hence, it is important to get insurance when you can and while you are young!
Also, not forgetting, when you are in business, you are required by law to have certain insurance policies in place, like employers liability insurance and public liability insurance.
My blog deals with personal data and I have to pay a yearly fee to Information Commissioner’s Office. You must always check that you have acquired all information when you are setting up your business.
Hire an Accountant
You will need to register your business with HMRC as self-employed. I know filing taxes is such a pain. I have a bad habit of waiting until the end of January to file my tax return!
Registering with HMRC is quite easy. If you have any questions, there are many videos to watch how to file your taxes. Luckily, I only deal with small amounts each year and it is usually quite straightforward. If you find it hard keeping up with your finances, always find a proper accountant to do your accounts. They will be able to file for you at a cost.
Renting a Workplace
If your work requires a workplace, always shop around before you commit to the area. There are a few things to consider, like location and space as rent will be high if it is near a city area. If you are a food business, you might need a bigger space for any kitchen equipment.
Buying equipment/stock for your business will require a lump sum of money to set up. You should budget for getting the equipment insured as well especially if valuable or difficult to replace. Also, stock will likely decrease in its value, especially with food as they have expiry dates. You will need to learn how much you need to stock at a given time.
Open a Business Bank Account
It is vital to keep your business records and finances separate from your personal affairs. Opening a business bank account will incur a small fee. Again, shop around the market before you commit.
If you are taking on staff, you will be responsible for paying the National Insurance for your staff as well as additional benefits, so be prepared for the extra costs before hiring anyone.
I hope these will help you think about the costs that you might incur when you become self-employed.
Disclosure: This is a featured post.