How to Quit Your Job and Go Freelance
The idea of leaving full time employment, to ‘go it alone’ as a freelancer, can at first seem a bit daunting.
However, with the right guidance and advice from a good freelance accountant, you can rest assure that the advantages of being self-employed far outweigh any negatives.
Just some of these benefits include:
• Being your own boss and ultimately having more control of your destiny compared to a permanent worker.
• Having increased flexibility and freedom – this means being able to choose when you work, where and for however long you like.
There is also the fact that taking time off for holiday will be a lot easier, as you will not be in the position of having to juggle your days off around other colleagues. You can also choose to have as much time off as you want, instead of the standard few weeks in a year.
• Being able to claim all of your business expenses against your income to further reduce your tax bill.
• You can set your own rates – an average freelancer rate can easily be double that of a full time employee, sometimes even more.
Where to start as a new freelancer…
Firstly you will need to find a contract. Ensuring you have an impressive CV is the starting point, so make sure that you highlight skills that will make you an attractive contractor to work with; use correct grammar and industry buzzwords, keep it short and check that it has no typos.
• Look on specialist contractor websites – There are many websites that are especially for freelancers and some of these can provide job opportunities.
• Social media – Social networking sites such as Facebook, Twitter and LinkedIn are an effective source for freelancers and are a free way of advertising your business.
• Use your contacts – Building up a portfolio of contacts that you have met along the way is a great idea; this is especially useful if they can perhaps offer you a role in your chosen field. Don’t be afraid to contact them directly and send them your CV.
Limited or Umbrella Company?
Once you have a contract, you will need to decide whether you’ll be trading through an umbrella or limited company. Choosing which route to go down will all depend on your circumstances and which will suit your needs best.
Umbrella services are generally best for shorter term (less than three months) or lower value contracts (less than £25,000), however, for most people, working through your own limited company is the best option as it is the most tax efficient way of working.
For example, by trading through your own limited company you will see a 75%-80% take home pay, compared to 60%-65% with umbrella services.
Appoint a Specialist Accountant
It’s important that you take on an accountant who specialise with freelancers, so that they understand the ins and outs of how contractor tax works and know how to advise you properly.
By using a firm such as SJD Accountancy, you can rest assure that you have someone who can explain and guide you through issues such as National Insurance contributions, Corporation tax and whether you are considered as ’outside’ or ‘inside’ the IR35 legislation; you also have the confidence that your finances are being taken care of properly.