Many people like the idea of becoming self-employed. They feel that they will be much better off being their own boss, compared with working for someone else. They like the idea of being flexible doing freelance or contract work and therefore being able to decide what work they do and when. However, there are pros and cons to being self-employed and it is worth understanding them all before going self-employed.
Pay is a big motivator for most people when it comes to their jobs. Most people need a certain income so that they can afford what they want. Being employed means that you know how much money you will have coming in each month, when you are self-employed you do not. Many people think that this will be fine as they will be able to claim benefits if they are not earning enough. Under the new Universal Credit, this is not the case. If you are not earning enough money through self-employment you will need to prove that you are looking for work and claim unemployment benefit, there is no income support to top up earnings.
If you are an independent contractor then you should be able to get a higher pay for the work that you are doing compared with being employed. However, you will need to make sure that you pay your tax properly, as you will be responsible for it and you will get no holiday or sick pay, pension contributions or expenses. You will also be on a short contract and your job can be ended quickly and just because there is no work for you. An employee gets more job security with a longer notice period and they have to either be made redundant or there needs to be very good reason to get rid of them.
If you are working online then you will need to compete with many others, possibly even form abroad. Some may have much lower standards of living and therefore may be able to afford to charge a lot less than you and you may lose out to them. Alternatively, you may have to bring down what you are charging and this could mean that you will be being paid a lot less money.
You may feel that it will be easier to pick and choose the work that you do. This is true, but there is no guarantee that there will be lots of available work that you will be able to do. It could be that you will be forced to do work that you do not really like just so that you can earn some money. Then as your experience grows in that field it may be what you end up doing all of the time, even though it is not what you wanted to do originally. You may feel that you need to work harder so that you can prove yourself and if you start this, you will have to keep it up. You may end up doing lots of small boring tasks just to get a little money.
You may like the idea of being able to be more flexible about when you are working. It can be great being able to fit work around family or being able to do it at a time the suits you. However, if you have deadlines, it may mean that you will be forced to work at certain times of the day anyway and so that may not work out as planned. It might be you that needs to be more flexible rather than your employer and you could find that you end up working unsociable hours because your employer is abroad or has high expectations.
So, although it can seem like a really good idea, you do need to be careful. Money is probably the most important factor as you will need to make sure that you have enough to cover your bills and if the work is sporadic or low paid, this may not happen and you may need to consider taking out a short term loan. The flexibility that you are hoping for my also not happen and it may mean that you are working more hours or less sociable hours than before. It is therefore worth looking into before you make your decision. Make sure that you are aware of what work is available that you might like to do, how much it pays and what the expectations are. See whether you would be able to pick and choose between jobs or whether you would have little choice and would need to take on anything that comes along and risk low pay and odd hours. It is a hard decision but will depend on the industry that you work in as to whether you will be better off being self-employed. You will need to decide whether the pros of being self-employed are better for you than the cons.