The term ‘accidental entrepreneur’ was first coined in America during the Great Recession, and it refers to a demographic of individuals who eschewed the traditional labour market in the pursuit of self-employment. While it took a little while for the same trend to reach the shores of the UK, this has now taken hold and there are now a record number of British residents who work on a self-employed basis. More specifically, there are now 4.6 million individuals working for themselves in the UK, with construction, taxi-driving and carpentry the most popular professions.
Working for Yourself: Compliance and Profitability
While self-employment may bring considerable opportunities, however, it also carries tremendous responsibility and liability. The two biggest issues facing freelancers are compliance and profitability, as they must operate within the boundaries of UK while also maximising their earnings over time. Consider the following: -
Compliance with Tax and Other Laws
In terms of compliance, it is imperative that self-employed individuals operate within stringent tax and alternative laws. Taxation arguably the most important factor, as freelancers must establish a working infrastructure that reduces their financial liability and also complies with existing legislation. They have the initial option to establish themselves as a limited company or a sole trader, for example, while they can also utilise the services of an umbrella service such as Network One to strike a balance between the two. Beyond this, it is important to partner with an accountancy expert you can help you to make regular repayments in full and on time.
Maximising Your Earning Potential
Choosing a taxation structure that suits your scope as a contractor will also help to minimise repayments, while also enabling you to avoid making VAT contributions if you earn less than the national threshold. You can also maximise your take home pay through other means, primarily by charging a viable price point for your services and networking aggressively to secure a regular stream of work. Without a proactive strategy to help win and retain customers, it is impossible to build a body of work or achieve your true earning potential over time.
The Need for Strategy and Tenacity
Aside from these practical steps, self-employed individuals must also display tenacity and an ability to think strategically if they are to succeed. While the former enables them to source, win and complete work on a regular basis, for example, the latter ensures that they are able to comply with national laws and stringent tax regulations even as they continue to evolve.