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Risk and Rewards – becoming Self-Employed

Risk and Rewards - becoming Self-Employed

June 14th, 2018

If you could have any job, what would it be? And no, you can’t say “Ben & Jerry’s Flavour Guru”… well actually you can, that is a real job title. Seriously.

More and more people are taking matters into their own hands to break from their 9 to 5, and that dreaded commute on a less-than-punctual train, to instead turn to self-employment to pursue their dream jobs. Is this daft or daring?

It’s a daunting task for many reasons, with the biggest question on everyone’s minds being: are the rewards really worth the risks? IPSE, the Association of Independent Professionals and the Self-Employed, recently surveyed hundreds of freelancers to find out – the results of which are published in their latest report: The risks and rewards of independence.

So, are the rewards worth the risks?

Well, according to IPSE, the vast majority (83 percent!) of those surveyed said they felt the rewards they get from self-employment outweigh the risks…phew! When entering the world of freelancing, you inevitably open yourself up to risks, however, the freedom and flexibility it offers (not to mention the lack of office politics) is what drives freelancers to continue to pursue this way of working. Harvey Morton, who started his IT support company in 2013 when he was just 15, says that what he enjoys most about freelancing is that “no two days are the same –  you never know what’s around the corner or who you’re going to meet or where you might be traveling to”. Sounds a bit more exciting than sitting in an office trying to decide between Pret or EAT for lunch – for the third day in a row.

IPSE’s survey set out to discover what exactly it is about freelancing that makes it so rewarding straight from freelancers themselves. They found that four out of five respondents said one of the most satisfying elements is having the freedom to choose projects they actually want to work on (81%). Thomas Love, a graphic designer for film and television says that “the ability to choose different jobs, take breaks between jobs, work on side projects and just generally choose the direction your work wants to go” is the kind of freedom and flexibility that he finds most rewarding about freelancing.

Among other reasons such as not having to deal with company bureaucracy and having a greater variety of work, 79 percent of respondents also said that increased earning potential was another major reward they found with freelancing. Gemma Milne, a freelance journalist and copywriter who used to work for large corporations said she frequently felt frustrated when she would try and go above and beyond in her role and was often told ‘no’. After transitioning to freelancing, she says she now feels a great “sense of empowerment”.

And yet, this report isn’t simply titled “the rewards of independence.” There are undoubtedly risks associated with going it alone. But don’t be scared off – with preparation, contingencies, and the right support and cover in place, almost all of these risks can be mitigated.

Unfortunately, one of the biggest risks freelancers fear is that they will not be financially prepared for their retirement, with 69 percent of respondents claiming this to be their deepest concern. And this doesn’t just mean they worry about not going on their dream retirement holiday to Bali, this means not having to work at the age of 83 just to afford basic living expenses.

Among other concerns for freelancers outlined in the report is the risk of being investigated by HMRC (65%). Not only do HMRC investigations cause considerable anxiety for freelancers, they can also be drawn out for an extensive amount of time and create a significant financial burden, regardless of the eventual outcome. And finally, as freelancers aren’t entitled to holiday or sick pay, there is a level of insecurity if you don’t have a safety net in place.

And yet despite these risks, we still have the vast majority of freelancers saying it is unquestionably worth it. That’s likely because these risks, as intimidating as they may seem, can be mitigated when the right steps are taken. Here are a few starting points:

  • Staying informed: The Association of Independent Professionals and the Self-Employed (IPSE) provide helpful guides as well as bi-monthly magazines, fortnightly newsletters and updates to keep the self-employed community informed of any changes that may affect them.
  • Source an accountant: Not only can accountants save you a lot of time and hassle; they can also help you to save money in the long run. Plus, it will show the tax man that you’re taking steps to comply with the tax rules.
  • Setting up a pension: It’s never too early to start saving, and setting up a pension with low rates will allow you to save securely and effectively.
  • Networking: Use social media and networking events to meet other people and make connections. Not only could this be the source of your next clients, providing a steadier stream of income, but it also allows you to connect with fellow freelancers who may be facing the same challenges.
  • Getting the right cover in place: tax investigation insurance is perhaps the most direct form of protection from HMRC investigations. You can also get cover should you unexpectedly fall ill or get injured, as well as other things that could keep you from being able to work.

Freelancers already juggle a million things at once – anxiety from the risks that get in the way of achieving their dreams shouldn’t be one of them.

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