Freelance Freedom or Full-time Framework?
Posted on 21st September 2018 by Phil Ainley MCIM
Going self-employed has its rewards, but is it really right for you?
The growth boom of the self-employed market, since the financial crisis of 2009, has changed the landscape and the way people view employment in the UK.
According to data by the Office of National Statistics (ONS), in May 2017 there were some 4.8 million self-employed people on the UK. That’s 15% of the total of people in work in the UK.
Lat year, the ONS were forced to change their figure of the total sum paid out in dividends up, from £12bn to £61.7bn, after obtaining tax data and revising their statistics.
As a former freelancer, now back in full time employment, I know all too well the pros and cons of being employed and also working for yourself. But which one is right for you?
In this article we take a look at the differences, nuances, and the pros and cons of both.
- 67% of people surveyed said they freelanced “for the freedom”
- 1 in 2 people said they preferred the work/life balance as a freelance worker
- 87% of the self-employed who were surveyed say they would never be an employee again
- 44% of self-employed workers work from home
- 9% of British employees have to travel fro 3 or more hours per day for their work
- Apparently, being self-employed is less stressful, with 35% taking two or more holidays per year outside of the UK, compared to only 29% of those who are employed.
All of the above are positives for the self-employed economy, but it isn’t all rosy as a self-employed person and a lot of people try it and struggle.
Pros of self-employment:
Freedom – As a self-employed person you’re not tied to a 9 to 5 job and a potentially long and tiresome commute too and from work. You will also be able to take as many days off each year as you like without being tied to an employee holiday entitlement.
Work wherever you like – The rise of co-working spaces has provided desk space and meeting rooms for the self-employed. Ironically, for those who were looking to avoid working in an office at a desk.
Other freelance workers like to work in cafes or parks (if the weather’s nice). It’s your choice, if you don’t like your surroundings you can change them whenever you like.
You make the decisions – Not everyone likes the way they are managed by their line managers. We can’t always agree on every point. As a self-employed person you make the decisions and those decisions will define you, your business, and how successful your business is.
Tax advantages – Many items you purchase become tax-deductible provided it’s bought for the sake of your business. Anything you purchase that is directly related to you earning your taxable income is considered a business expense, which can be claimed back against tax.
Cons of self-employment:
Accounting and Taxation – You don’t get to spend all the money you are paid by your clients. As a self-employed person you need to keep your books in tip-top order and put money aside for your taxes, including: Corporation Tax, Income Tax, National Insurance.
A lot of self-employed people and small business owners finish their day-to-day work tasks, then start their bookkeeping. Often they will work deep into the night to ensure their books are up to date. So, you have to ask yourself, are you prepared to do the same?
You will also need to ensure you have money available for your accountancy fees and other important business costs such as your insurance policies.
No employee benefits – You will not have any protection or benefits that you would have if you were employed. National Insurance and Taxation will have to be paid by you from your invoiced work.
You will also forfeit sick pay, paid annual leave, and other employee perks such as: dental insurance, gym membership, company car etc.
YOU make the decisions! – You make the decisions, for ALL aspects of your business and those decisions will define you, your business, and how successful your business is. Make the wrong decision and it can cost you, that’s why many savvy self-employed people and business owners engage in the services of a business mentor and conduct regular meeting with their Accountant or Business Manager at their bank, to ensure they are well informed before making any kind of crucial decision.
Procrastination – Time not working is time not earning. You work for yourself, from your home. It’s July and the sun is shining… the message here is clear. It is far too easy to allow yourself to become sidetracked, or allow yourself some ‘me time” when really you should be finishing that client brief so you can invoice for the work and get paid.
Isolation – A lot of people enjoy their own company, so working alone may not bother them, but for most of us, being isolated with no colleagues to talk to can be mind-numbing.
Isolation and missing office camaraderie is often cited as a reason why people re-enter employment.
If you’re not the type of person who gets involved in gyms, sports clubs or social events, you could very quickly find yourself in an ‘all bed and work’ scenario.
Insurance policies – You want to insure yourself, your work practices and your equipment, you’ll have to pay for those yourself. Obviously these are tax-deductible, but it is common for self-employed workers not to carry enough insurance cover. This is often due to cost-cutting, but that can leave the self-employed worker dangerously exposed to potentially harmful claims being brought against them.
Chasing money – Unfortunately, a lot of self-employed workers spend a lot of their time chasing money for the work they’ve delivered to their clients. Not every self-employed business has this problem, but it’s an issue that’s commonplace in the business world.
As with our Freelance Freedom section, we should begin with a few stats about the employment.
- According to the ONS, in May 2017 there were approximately 32 million employed persons in the UK, or 85% of the total people in work in the UK.
- According to Statista – 847,800 of those were part-time employees.
- On average, UK full-time workers work 37.2 hours per week.
Pros of full-time employment:
Regular salary – This is an easy point to start with. A regular monthly salary, with all your tax, NI, pension deduction taken out makes it easy for you to plan for finances and ensure your monthly outgoings are covered.
Paid leave – You may not be able to take days off work whenever you like, but you will at least be paid for your holiday time as a full-time employee.
Subsidised training – Many forward-thinking employers know, and realise, the value of upskilling their workforce on a regular basis. Many training interventions and courses are at least part subsidised. Most are fully subsidised
Subsidised pension – With people living longer on average, and the overall cost of living rising by the year, the introduction of company contributory pensions has provided many UK employees with the chance to save for their retirement. Something that many of us overlook when we are young and then panic about when we reach our late thirties.
Company insurance – It is law in the UK for all employers to have Employers Liability Insurance. A lot of employers will also carry insurances against professional indemnity claims (for mistakes that employees make as part of their work), for personal accident claims (this sometimes includes while an employee is commuting too and from work) and many other insurance policies.
Staff socials – Office camaraderie often spills over into social outings. These are always a great way to relax, let off steam and reconnect with your colleagues. You also get to talk to your line managers and directors on a personal level.
Paid overtime – If you are lucky enough to work for an employer who rewards you if you go the extra mile, it can be highly beneficial. Extra money in your pay packet or extra days awarded off work as time in lieu are common.
Cons of full-time employment:
Stagnation – It is widely believed, that if you stay in the same role for three years without any variation, improvement or promotion that you can start to regress.
Barriers to your development – You may have a very good job, but be in a role where you can only gain promotion if someone leaves the company first.
Monochrome CV – If you work in the same role, for the same or similar companies for years, your CV can start to look boring. Variety can look more attractive to an employer, but that doesn’t mean you should change your job every 6 months!
Unpaid overtime – Not every company will pay extra if you have to work overtime. In some industries, such as the creative media sector, you are expected to work to tight deadlines that impose out of hours working on you whether you like it or not.
Putting extra hours into your job every now and then is accepted by most employees, but when it becomes a regular occurrence it can breed resentment and is often cited as a reason for the employee leaving the company.
These are just a handful of the pros and cons of being self-employed and full-time employment. It is likely that you can add to this list. Either way, there is a lot to think about if you are thinking about working for yourself.
Are you currently an employee thinking about becoming self-employed?
If so, Caunce O’Hara have the insurance package to enable you to feel confident and thrive in your venture.
For more information, please call our award-winning schemes team on 0333 321 1403
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