How to know if self-employment is right for you

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By Rosana Beechum

In a time when money is tight, and jobs are hard to come by, many people are considering the prospect of being self-employed. Going down this route can be incredibly daunting, especially if you’re not someone naturally suited to a leadership role. However, there are benefits to being your own boss, some of which may overwrite any concerns you may have about going solo.

To work out if self-employment really is right for you, it’s worth sitting down and considering everything that this venture entails. If you think about these four points and believe you can handle them all, then this could be the job you’ve been waiting for.

You’re not afraid of financial instability

When you’re employed, you always take home the same pay check at the end of the month, unless you’ve earned a bonus. That’s not usually the case when going solo, though.

More often than not, your pay differs from month to month because your workload can be incredibly inconsistent. One week, you might be sinking in work, while the next, you barely have anything to do. While the latter can offer useful opportunities to get ahead, it can also put a damper on your finances. That’s obviously not ideal, as it means you might not always make as much as you want to each month. If that’s going to affect your ability to support yourself, you need to consider whether or not self-employment is a financially viable option.

It helps to go into this venture with a bit of money set aside. That way, you should manage to ease yourself through any rough periods where the cash flow situation isn’t ideal.

You can deal with added responsibility

Being self-employed is more pressure than a lot of people realize. On top of having to find work and being the only person around to do it, you also have to deal with financial headaches in the form of tax and pension.

Unlike when you work for a company, there’s nobody else sorting all this stuff out for you. That responsibility rests solely on your lap, so unless you pay an accountant to deal with it for you, you need to know what you’re doing.

Thankfully, there are resources online that can help. The internet is full of information on how to do taxes, and when it comes to your pension, you can use this self-employed defined benefit calculation to work out your deductions. Depending on your age, income, and years in business, the amount you’ll be able to contribute each year will differ. Fortunately, there’s greater flexibility with a detailed benefit plan over other retirement options, so if you want to put more away for the future, you can. Saber Pension can help with setting one up so you can start saving immediately.

Being responsible for all of your business’ money can be stressful, especially as you can’t afford to do things wrong. However, if you feel you can handle that, then self-employment might be for you.

You’re able to work long hours

It’s true that those who are self-employed have more freedom to do as they please. That’s a benefit that inspires many people to go down this route, and understandably so. However, it’s not as flexible as you may think.

Many people who become self-employed often end up working long, awkward hours, which disrupt their daily lives. In the beginning, that’s down to the greater effort involved in getting your name out there and trying to attract clients. As time goes on, though, it simply becomes a matter of having too much work on your plate and no-one else to help carry the burden.

Obviously, you can hire employees to assist you, but if you don’t want to be responsible for others, or if your business isn’t financially stable enough, this may not be a good idea. In which case, during the busy periods, your self-employed venture can really take over your life. You need to be able to cope with that if you’re going to become your own boss.

You can cope with working alone

After the last year, this point may well be what makes or breaks it for you. Working remotely is something that millions have become accustomed to because of COVID-19, with many hopeful of keeping this up long after the pandemic is over. 2020 showed them that they can handle working from home without much in the way of regular social contact, so they see no reason for things to change.

You may well fall into this category, in which case, you shouldn’t struggle with being alone on your self-employed venture. However, if you’re a social creature who found this last year tough to get through, you may not be so eager to go down this path. Being self-employed means missing out on the workplace culture and all the colleagues you come to love or hate. While you may think you can cope without this at first, you might start to miss it after a year or two.

These points may make being self-employed seem like a terrible idea, but that’s just because they’re the drawbacks of going it alone. There’s plenty to love about being your own boss, too; it’s just that these are the things you have to be most prepared for when you fly solo.

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Rosana Beechum is a business and marketing undergraduate from Nottingham Trent University from the UK, who is attempting to share her knowledge through writing articles for small business owners.

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