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Employed versus Self-employed: Which way of working is right for you?

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Employed versus Self-employed:  Which way of working is right for you?

At one or more points in your career you might have found yourself faced with the question of whether to be employed or be self-employed and work on a freelance basis?  How do you know what’s right for you?

There are many different factors that can influence your decision on whether to change from being an employee to being self-employed.  Each scenario comes with it’s own unique benefits and challenges and it’s important to weigh these up when deciding which working scenario that suits you best.  Plus, it’s useful to remember that no decision has to last forever and that it is certainly possible to switch from being an employee to being your own boss and back again – and even to do both at the same time if that appeals.

Being employed has many positives for your career, in the here and now and also for the future:

1. Financial – an employed job brings a steady income, which also has opportunity to increase in the future, plus the potential of additional income such as bonuses or commission.

2. Career progression – employed roles provide opportunities for structured growth and career development.  There may be career opportunities with your current employer or roles within a new company, where your experience to date will stand you in good stead to secure a higher role.   As well as new job prospects, working in a structured employed environment can provide access to training and development, increasing your skills, knowledge and experience.

3. Additional benefits – as an employee, your company will offer standard benefits like holiday leave and access to pensions and might also offer wider perks, such as gym membership or employee benefits programmes.

4. Tax – if you’re employed, paying tax and National Insurance is taken care of at source by your employer, which makes managing your finances quick and simple for you.

Even with all of the benefits that employed roles can bring, the appeal of freelance working can still be very strong.  There are many pros to being self-employed or working as a sole trader.

1. Financial – As your own boss, the opportunities for earnings are uncapped.  Financial growth is only limited by your own time and efforts, which makes the potential of uncapped earnings exciting.

2. Career Independence – Being self-employed means you are your own boss and ultimately in charge of your own business and how it will grow.  You can choose projects that suit you, set your own fees, choose how and where you work and make your own decisions.  This offers a freedom that being employed can’t offer.

3. Career variety - Working self-employed means working for many different clients at the same time.  This gives the opportunity for a varied working life, where you can choose clients that inspire, excite and challenge you.

4. Tax – Completing self-assessment tax returns is another sign of the freedom and authority that being self-employed can bring.  Filling this in, either independently or with the assistance of an accountant, does not need to be a time-consuming and difficult task, although organisation is definitely essential.

It’s also very possible to enjoy the best of both scenarios at the same time, by taking on some freelance work alongside a job.  It is completely down to the individual whether this works or if it makes more sense to choose either employed or freelance at any one time.  Just remember to stay organised and keep track of tax, what you need to do and when.  This will help make sure your working life is as smooth and stress-free as possible!

Please note this article has been written on the basis that you have satisfied the government's IR35 test.
For more information regarding IR35 & self-employed rules & regulations please visit:

https://www.gov.uk/government/collections/employed-or-self-employed

https://www.tax.service.gov.uk/check-employment-status-for-tax/setup

Date Posted: November 30th 2017

Posted By: Yvette Owen