The labour force is undergoing a sea change, with people increasingly opting to be their own boss. According to yourMoney there are more than two million freelancers in the UK, producing more than £100 billion annually. Their study also mentions that, according to the Office of National Statistics, freelance work has increased by almost 50% in the past 15 years. And with 60% of businesses saying they expected to increase freelancer usage during 2021. it’s expected to continue rising.
Setting your own hours and schedule is indeed attractive, but going the freelance route isn’t as easy as quitting your job and letting the contracting work flow in. Here are four things to make sure you have buttoned up before you start freelancing:
1. Learn basic accounting skills.
Without an accounting or HR department, it falls on you to take care of your accounting as a freelancer. But unfortunately, many freelancers don’t have a handle on basic accounting skills. To avoid long- and short-term headaches, make sure to learn simple accounting practices before you go out on your own.
2. Know the freelancing tax rules.
For freelancers, taxes get a little more complicated. For further information, see the government’s guide to working for yourself.
As a freelancer, it’s crucial to have a solid understanding of your tax obligations, most importantly how much you need to set aside and when. Do as much research as you can. The last thing you want is to be hit with a penalty charge.
3. Consult with a professional.
For those who can afford it, advice from tax and bookkeeping experts is a worthy investment — especially when freelancing is a new career path. They can help you navigate the financial waters of working for yourself, and set up budgets to help keep you on track.
4. Implement online tools and software.
Luckily, there are a number of affordable tools that can help freelancers manage their business, from simple bookkeeping technology that can help you avoid audits to invoicing software to help you streamline your billing process. Before you take the plunge into freelancing, get some of these tools in your arsenal. They’ll make managing everything a lot easier.