Guest blog been written by Andrew Trodden, Marketing Executive at Churchill Knight & Associates Ltd – specialist contractor accountants
The idea of becoming self-employed straight out of university may sound frightening and unrealistic. However, more and more graduates are choosing to become their own boss as soon as they complete their studies. Starting a solo professional career will involve a lot of willpower and determination but the rewards can be substantial.
The number of self-employed workers continues to rise
The number of self-employed workers in the United Kingdom (UK) is on the rise and has been for a number of years. The Office of National Statistics (ONS) confirmed that in November 2016, there were over 4.77 million self-employed personnel in the UK, making up 15% of the entire workforce. Since 2008, the number of self-employed has increased over 23%.
Graduates are increasingly being drawn towards freelancing and the gig economy
A recent study by Elance has found that 87% of graduates with a first or second class degree believe that freelancing and working in the gig economy is “a highly attractive and lucrative career option” (Elance, 2013). Furthermore, 29% of students have already decided that within 5 years of graduating from university they plan to be working as a freelancer. Based on these figures, it is possible that over 4,750 students at York University are already planning a self-employed career in the near future.
Advantages of being your own boss
There is a host of benefits available to those who are their own boss. Below is a list of the main reasons people decide to become self-employed.
- You can choose the contracts that suit you and decline the ones that don’t. As a result, work should never be boring.
- You are able to be flexible by negotiating the terms of a contract. For example, you might want to work 4 days a week or decide to finish at 4:00 pm every day. This can make planning your holidays easier than if you were in full-time employment.
- You can earn more money. You are in charge of the rates you set and the opportunity to make an excellent living is realistic.
- You will have the opportunity to learn from a variety of clients. Whether you work from home or at external locations, you will meet a variety of knowledgeable clients, as well as carry out new and exciting tasks to develop your skill set.
- You will avoid the typical office politics that full-time employees regularly complain about. As a self-employed worker, if you don’t get on with one of your clients then you can choose not to work with them again.
- You will be responsible for running your own business, building a brand and developing your place within the market. Whilst this will involve a lot of hard work, it will be exceptionally rewarding.
- You are not committing to being self-employed forever. If you decide that contracting just isn’t for you then there is no need to worry – you can look for a full-time position.
How will you get paid?
Self-employed workers tend to work through an umbrella company or set up a limited company. If you work through an umbrella company, you will be paid as if you were in full-time employment and the umbrella company will make the appropriate tax and National Insurance Contribution payments to HM Revenue and Customs. Using an umbrella company will remove the complicated administration involved in being self-employed and starting your own company, but it is not the most tax efficient way to operate.
The most tax efficient way to operate as a self-employed worker is to set up a limited company. This is also considered the most professional way to present yourself in front of clients. A limited company can theoretically involve a lot of paperwork and ongoing administration. However, you can choose a specialist contractor accountant to take care of this for you.
What to look for from a contractor accountant
If you choose to use a contractor accountant, you will want to select one that takes care of all the important things involved in running a limited company. The following checklist should help answer some of your questions when looking for an accountant:
- Are they specialists in the contractor and freelancer sector?
- Do they charge a setup cost or close down fee?
- Is there a tie-in period?
- Do they offer a fixed fee that is based on your requirements?
- What kind of administrative support do they provide?
- Are you paying to use the accountant’s software package or will you receive a full package support from real people?
- Do they have an online portal?
- Do they offer any additional services, for example completing your personal tax return?
- Do they operate in full compliance with HM Revenue & Customs legislation?
Finding your first project as a self-employed worker
Finding your first contract might seem a daunting task. Firstly, make sure you have an up-to-date CV and you are ready to hand it out to the appropriate organisations. Refresh your LinkedIn profile at the same time and start connecting with recruitment agencies and people of interest. There are many recruitment agencies specialising in roles for contractors. Having a browse online is a great place to start. If you notice a local networking event, make sure you go along.
Knowledge is the key to success and a great way to find out more about contract roles in your chosen field is to ask around. Are any of your friends or family self-employed, or work in the recruitment industry? Have you considered touching base with your university careers department?
Whatever you decide, don’t rush in to anything until you have had a thorough review of the options available to you. There is a lot of support available for students, both undergraduate and postgraduate. Please do not hesitate to ask for guidance.
Best of luck!