Working for yourself

4.31 million people in the UK were self-employed* in April-June 2023 according to the ONS, enjoying the freedom to determine their own goals, working conditions, hours and salary. 

Many of us aspire to the dream of 'being your own boss', but what does working for yourself really entail - is it the right choice for you?

Working for yourself broadly means running your own operation to earn money and largely being in charge of what you do - and how you do it.  You could do this on your own or with others, from premises, your home or even a vehicle - and the products or services that you provide could be new, different or the same as those already on offer.

When considering what you could do, think about your passions, interests, skills and the resources you have available, as well as the gap or niche that your idea would fill. (You'll likely want to not be directly competing with lots of established businesses, at least when you start out)

Working for yourself could give you the freedom, flexibility and reward that you want.

What does being self-employed mean?

• If you run your own business, working as an individual, for yourself, this means that you're 'self-employed'*
• If the above is true, then you're also classed as a sole trader, as far as HM Revenue and Customs (HMRC) are concerned (Whether you've told them or not!)
• In order to register as a sole trader, you need to inform the HMRC and file a Self Assessment tax return every year
• Sole traders don't have to work on their own and can hire help, as long as they remain the sole owner / controller of the business or venture

Being a self employed sole trader is probably the simplest and quickest route to working for yourself.  Sole traders need to keep business and expense records, fill out an annual self assessment for tax, plus pay income tax and national insurance.  (There are slightly different tax implications if you intend to contract your services to the construction industry)

Sole traders typically enjoy more control, less admin and fewer costs than other types of business owner, but they have to accept unlimited liability, meaning that your personal property or belongings could be at risk from your creditors if your business falls into debt.

Some examples of potential sole trader self-employment include:

• 'Renting a chair' at a salon as a hairdresser
• Carrying out building or decorating services for an individual client or as a contractor to a larger building company
• 'Going out' to clients' with services, such as being an electrician, plumber, manicurist / nail technician or pet sitter
• Being a self-employed 'gig' delivery driver (parcels or food)
• Selling art or photographs online or being a freelance copywriter 
• Running a small shop or market stall / cart
• Buying and selling secondhand goods or collectibles using online auction sites (specifically when you buy items that you intend to sell)
• Self employed taxi driver (Contractor)
• Videoblogging or streaming original content online (If you have enough regular views for significant advertising revenue.  Do be realistic if you are considering this, you need significant 'traffic' to your content in order to begin monetising your channel.  Find out more.)

Did you know?

Being a sole trader isn't the only way to structure a business. MENTA offers free business start up training for people looking to work for themselves in Norfolk and Suffolk, including information on how to register yourself and which types of company might be suitable.

Other ways of working for yourself

Business partnership
A partnership business structure means that you and your partner(s) share responsibility and rewards for the business, including all profits and debts.  You need to register a partnership with HMRC and each of the partners pays tax.

Benefits of setting up a partnership include getting the support and resources of the other partners in your venture.  More partners working for the business means potentially more profit, a more balanced workload and help with settling business costs and debts. There is less paperwork and more privacy compared to setting up a Limited Company.

Some disadvantages include the same unlimited liability as sole traders, meaning that your personal assets could be at risk from business debts.  You do get to share any debts with your business partners, but this also means that you could be impacted financially by decisions or actions that other partners may have taken.  You may earn more with one or more partners in a business as there are more of you to secure as well as complete work - but don't forget that you'll need to split the profits too. 

Limited Companies
Unlike sole traders and partnerships, a Limited Company is legally and financially separate from the people that run it.  Limited companies are publicly registered and have various official roles that need to be filled, such director(s), secretary, shareholders and guarantors - as well as named persons who have significant control over the business, either by vote or because of the amount of shares they hold.  (More than 25%)

The roles, responsibilities, records and accounting required for limited companies depends on which type of limited company you are running.

Advantages of starting a limited company include the limited liability implied in the name - this means that as long as there is no fraud committed, then business owners are not financially liable for losses and debts incurred by the business. This may also make it easier to seek investments and business loans.  The business exists as a separate entity, so the people that run it can come and go, being either appointed, changed, dismissed or retire with the venture continuing on as long as the records are kept up to date. There can also be legitimate tax advantages to this type of structure.

Challenges of operating a limited company include the legal requirement for more meticulous record and account keeping. There is less privacy, due to the fact that business must be registered with Companies House, so anyone can look online to find out basic information about your business, such as the names of the owners, their appointed roles, the business address, annual accounting summaries and more.  The record and account keeping requirements for Limited Companies combined with the need for certain appointed roles in the business will mean that Limited Companies are more likely to cost more to set up and run other business structures.

Entrepreneur or a small business owner?

If you're interested in starting a business you might be - or aspire to be - both, but there is a difference! 

• Entrepreneurs typically look introduce new, unproven products and services whilst simultaneously generating interest in those products and services
  • They often have national or global aspirations for the business
  • They are more open to riskier propositions and often seek larger investments
  • Some entrepreneurs look to get new ventures off the ground and established before selling them on, looking to then repeat the process with something new
  • An example of an entrepreneurial business could be be: Producing and supplying a new type of environmentally friendly packaging    
• On the other hand, you might be better described as a Small Business Owner if your venture is about supplying more typical products and services or fulfilling a local requirement
  • You probably won't be considering wider expansion of your venture at the beginning
  • You likely are more interested in the stability, sustainability and security of your idea than pursuing particularly risky rewards
  • A lot of small business owners are invested emotionally and financially in their business, looking to grow and evolve it long-term 
  • An example of being a small business owner could be: Opening a bakery as there isn't one in your village  

So which are you? It's useful to think about how you see yourself and your business / venture when it comes to securing support and investment, and how you approach your promotion and marketing. It will also determine how you plan to run your business in many ways, as well as your approaches to strategy.

Did you know?

The Prince's Trust offers a free Enterprise Programme for 18-30 year olds who have an idea about working for themselves, but need help to make it happen.

Why not have a look at a selection of our Self Employment Stories videos? 

These interviews were recently conducted with small business owners across Norfolk and Suffolk as part of the Youth Pledge for Employers project.  These real life stories are full of useful information and inspiration about the owners' journeys in setting up their own businesses.

Pros and cons

Working for yourself can be exciting and rewarding, but it can be a challenging experience.  Before you embark on a venture of your own, you need to consider the risks involved, (as well as the potential rewards, of course) the market segment or niche you're looking to get involved with, the broader economic outlook and your own skills and resources as well.  Luckily there is a lot of free advice and resources available to help you weigh up the facts, which we're sign-posting to on this page. 

Benefits include...

• The freedom to plan and run your working life as you wish, with you making the big and small decisions about your products and services, pay, working hours, strategy and more!
• Job satisfaction - as you'll potentially be able to concentrate on doing the things that you are passionate about
• The reward of building a legacy for yourself.  The hard work you put in could directly benefit you and your family / business partners in ways that aren't possible when you work for someone else, including having the power to decide what you want to do with any profits
• Flexibility in terms of where you site your business or where you work from on a daily basis - and who and how you choose to employ if you want to expand your operations

Challenges and considerations...

• Absolute responsibility for the business will be down to you (or you and your business partners) including any tough or risky decisions that need to be made
• You'll have to account financially for any personal time off for appointments, holidays and sickness.  Whilst your flexibility to take time will be at your own discretion, you won't automatically be 'paid' for taking time out, as you likely would as an employee.  This will affect you most when you are the only person in the business - especially if your venture requires you to be present to take money and fulfill orders.  (You might be able to mitigate this through online sales, hired help or order fulfilment services)
• You'll likely have a less predictable income than you would as a salaried employee.  You will need to have sufficient flexibility in your existing financial commitments or access financial reserves to account for this, certainly at the outset of your venture.  This uncertainty might mean it is more difficult to secure credit or loans, although a robust business plan and realistic business forecast will help to counterbalance this
• Working for yourself typically affords fewer financial protections and support* for unexpected circumstances, such as redundancy. (When compared with an employee of an organisation)

More ideas

Further info and inspiration

You'll find links below to more online information that could help you in your journey, and don't forget to check out some of our Self-Employment Stories videos which feature interviews with real small business owners in Norfolk and Suffolk for inspiration!

Information and advice on this page has been gathered through internet research and is provided in good faith as recommendations to where you can find more detailed information about working for yourself. The information on this page does not constitute legal advice and we do not present it as such. Always fact-check information yourself and decide whether it is provided from a reputable source. We are not respnsible for the content of external websites or videos linked to from this page.