Work from home jobs: a guide to being self employed

The popularity of online jobs has increased dramatically in recent years, not least as a result of the coronavirus crisis that swept the world in 2020. Many companies have encouraged working from home even beyond the necessity of lockdown. But people wondering how to make money online with remote jobs aren’t the only ones thinking about how to work from home. There are lots of other ways to make money from home – and being self-employed is arguably the best way to maximise that opportunity. In other words, working for yourself rather than for a company.

Jobs from home

That’s because how not to have a boss is almost as important to those people as having home based jobs is. It’s the idea of having more independence that matters to freelancers and other people with self employed careers – and that means being in the environment they want to be in and setting their own rules and ways of doing things as much as they possibly can.

So, the first thing people tend to do when they want to be self-employed is to think about easy ways to make money online. Those things include things like filling out surveys for money, doing competitions and using apps like Streetspotr to earn extra money doing small tasks on their smartphones. But these kinds of activities only give people a very limited income – ways to make extra money or other rewards, not a real living. So people find themselves asking, ‘what self employed jobs can I do?’

Well, here’s a list of self employed, work at home jobs that are very popular:

  • Running a pub
  • Graphic Designer
  • Photographer
  • Videographer
  • Author
  • Copywriter
  • Journalist
  • Makeup Artist
  • Web Developer
  • Hairdresser / Barber
  • Taxi Driver / Chauffeur
  • Tutor
  • Event Planner
  • Social Media Specialist

Should I go self employed?

Whether or not you should consider going self employed all depends on what you want out of life. You get to be your own boss, which is the big selling point and you can set your own hours. If it’s the right kind of business, like running a pub or running your own hairdresser’s shop, and if you do it well, you can potentially earn significantly more money than you would by simply working in one of those environments.

There are a few questions you should ask yourself before you decide if self employed working from home is for you, though. Things like:

  • Do I have enough money to get set up as a sole trader?
  • How would I cope with periods of reduced or no income?
  • How do I attract customers to my new business?
  • Am I committed enough to really make a success of my own business?
  • Am I confident and organised enough to manage my own turnover, do my own bookkeeping and complete my own tax returns?
  • Can I cope without employee benefits like paid holidays, employer pension contributions, sick pay and other perks?
  • Is my life going to change dramatically in a way that might affect my ability to be self-employed, such as having a child, getting married or having a medical procedure?

Being your own boss is a very exciting prospect indeed, but it takes a really organised and energetic person to be able to become a successful sole trader so it’s important to consider all this before you take the plunge.

What are the benefits of working for myself?

If you decide you’re the right kind of person to become a sole trader, there are all kinds of benefits to being your own boss. So, if you’re wondering, ‘should I start my own business?’, here are some of the reasons you might want to say, ‘yes.’

  • You’ll never be bored – working for yourself is so varied and so full of adventure – there’s always a new project to keep you excited or a new challenge to overcome
  • As a creative entrepreneur who knows they need to stay on their toes to make a good living, you’ll learn how to be successful as you build your business
  • All that freedom and flexibility you’ve always craved as someone with a job or a boss – well now you can have it – and there are partnerships you can forge with other companies to work on a self-employed basis but still have the support of a big brand behind you, if you want it, so you’re not just thrown in at the deep end
  • You’ll be able to deduct legitimate business costs from your income when you calculate your tax liability each year – things like portions of your utility bills, travel expenses and research tools
  • You may be able to determine your own hourly or daily rate, in which case, it might be significantly higher than if you were employed by a company or maybe your business’s profits will give you more money than if you were working in a company that employed you to do a similar job
  • If you work from home as a self employed person, you can forget about the daily commute – you’ll save time, money on petrol, the stress of travelling and the cost of having to buy lunch or dinner on-the-go

How do I become self employed?

There are more than 5 million people in the UK who work for themselves now. Which just goes to show that it’s quite simple and straight forward to do so.

If you earn more than £1,000 in a single tax year from self-employed / freelance work, you’ll need to set up as a sole trader so you can pay tax on the profits you make, but it’s really easy. All you have to do is register with HMRC for self-assessment and they’ll send you a tax return every year for you to fill in yourself or with the help of an accountant.

As well as being very simple and straightforward, being a sole trader gives you much more privacy that if you set up an incorporated business (in which case, all your company details – including turnover – could be found via Companies House).

You might, nevertheless, decide to set up a limited company, instead of being a sole trader. A limited company has its own legal identity, which is separate from the owners and directors, so for which they remain not liable financially, if the business doesn’t succeed. This protects you if the business gets into debt so a lot of people prefer to take this route. It is also easier to secure loans and investments if you’re a limited company.

The thing about setting up a limited company, though, is that it’s also more complicated than being a sole trader as you’ll have lots of additional responsibilities, like filing annual Director’s Fiduciary Responsibilities (in addition to your annual accounts). Your company’s earnings will also be visible to the public on the Companies House website, which might not be so appealing to you.

Working for yourself as a sole trader

Once you’ve decided what type of freelance work you want to do and are ready to get started as a sole trader, there are a few things you’ll need to do to get yourself set-up:

1. Make sure you tell HMRC that you’re going to be self-employed so that can register you for self-assessment and so that you can pay your Class 2 and 4 National Insurance contributions. To do this, go to the HMRC website and fill out your details.

2. Set up a separate business bank account so you can keep your personal finances separate from your business finances. All your business income and expenditure will go through your business account, leaving your personal account free to provide for your personal life.

3. Start your bookkeeping right away – set up a file for income, a file for expenses and make sure you keep every single receipt for every single business purchase, not to mention every single invoice, bill or receipt you give or send out to customers or clients. Putting things in order from the beginning will give your self-employed business the best chance of succeeding.

4. Get yourself insured! Professional indemnity insurance will make sure you’re covered for legal costs and expenses if you allegedly provide inadequate services, products or designs that cause your customers to lose money. Public liability insurance covers you against claims made by third parties, including everyone with whom you interact as part of your work related activity (except your employees), such as customers, clients and visitors.

5. Now you’re no longer going to be paying into a workplace pension, what about setting up a private pension? There’s no employer there now to pay into your pension, either, so you might want to consider how much you pay into it – the more you set aside, the better off you’ll be in retirement.

6. Make sure your mortgage provider or, if you’re renting, your landlord allows you to work from home – the last thing you need is to find out that you’re in contravention of any terms pertaining to using the property for paid activity.

Doing my own tax return

One of the most daunting parts of working for yourself, for many sole traders and limited company directors, alike, is the annual tax return. Especially if you’re thinking, ‘Can I do my own tax return? Without the help of an accountant?’

The Government website gives you lots of help and advice on who needs to send tax returns, how to register, the deadlines for submitting, the penalties for delayed returns (or failures to return) and how you can go about changing your tax return.

How much tax you’ll pay each year will all depend on how much profit you make after you deduct your allowable expenses. Don’t forget, though, that there’s a tax-free personal allowance, which fluctuates from year to year. In 2020-2021, you can earn up to £12,500 before you have to pay anything in tax. After that you’ll pay 20 per cent on any income you make up to £49,999 and 40 percent on anything you earn between £50,000 and £149,999. If you earn more than that, you’ll pay 45 per cent on anything above it.

Can I get a mortgage if I’m self employed?

If you’re running a pub or doing another job where living in is part of the job, you needn’t worry about this. Yet, for other people doing self-employed work, it can be quite nerve wracking thinking about going self employed and getting a mortgage because, the truth is, it is harder.

Mortgage lenders will generally want to see sustained periods of regular income of an amount that would enable you to comfortably make your mortgage repayments. So they will ask self-employed people to prove their income by providing bank statements and invoices and annual tax statements. And it is likely that you will have to have been self-employed for a couple of years before they’ll consider you for a mortgage at all, so bear this in mind.

If you already have a mortgage (especially one with a fixed term) that you can comfortably maintain while starting up your business, then you have no cause for concern, but if you’re thinking of re-mortgaging your current property any time soon and thinking of working from home for yourself, then think ahead. Your new work status could complicate things.

The way the mortgage lender will assess the amount they can lend you will be by taking an average of your earnings over a longer period of time – two to three years, generally – and calculating a sum they consider to be safe to loan.

Can I be self-employed and still work for a company?

The short answer is: yes, you can. You’ll still pay your tax through the PAYE system at your employed job but will also fill out your self-assessment return each year, in addition. You can also be self-employed and just work for one company – in other words a single client. For more information on this kind of off-payroll working (IR35) as a contractor, check out the Government website.

Any more questions about how to make money working from home?

Check out all the help that’s on offer to you from the Government page on how to get help and support for your business.

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