Pros and cons of self-employment
Being self-employed can give you control over the kind of work that you do. Depending on what this is, it can also mean being able to work in a more flexible way.
Gov.uk's page on employment status can tell you more about the differences between being self-employed and being an employee.
If you’re not ready for self-employment to be your only source of income, you could try it out first. If self-employment is not right for you, try searching for a job that matches your skills more closely.
Finding a job that matches your skills
Flexibility and choice
- Self-employment is flexible. It can be easier to take time off when you want for things like medical appointments and holidays.
- You can do something you’re interested in.
- Running a business means that you get to make decisions and when they pay off it can be satisfying.
- If you want to earn more, you might have the option of working more.
- If reducing your commute is important to you, you have a chance to do that or you could try working from home.
- Working remotely can help if you’re not comfortable meeting new people.
There is some help available
Responsibility and risks
Setting up as a sole trader (Gov.uk)
- Depending on the type of work, it might involve tight deadlines that you would need to manage.
- Your income is dependent on you. If you’re at the heart of your business, and you have to stop work, your business will stop too.
- All sales, all successes and all failures are down to you.
- If you’re selling stock, this probably means that you’re relying on a supplier. They may put their prices up, run out of stock or not be able to supply it in time. You’ll need to manage that, and customers could get upset.
- You rely on clients paying, and getting them to do this can be hard work.
- Running your own business has legal risks.
Setting up a private a limited company (Gov.uk)
- Having a healthy work-life balance can be hard. You might have to 'live and breathe' your business, particularly when you’re starting out.
- You need to have enough money to get your business started, keep it running and live until you make a profit, which could take some time.
- You may find it hard to get credit with suppliers at the start.
Money and planning
- Check which benefits you can claim
- You will need to plan for your retirement and pay into your own pension scheme if you have one.
- If you employ someone, you have to cover their salary before you pay yourself. You’ll need to pay into their pension too.
- You’ll need to manage paying for anything the business needs to run. This could include membership fees of professional bodies, rent and insurance. If anything that you rely on fails, you will need to pay for it.
- You’ll need a broad range of skills to run a business on your own to do things like marketing and bookkeeping. You can employ someone to help you but this will make it harder to make a profit.
- Finding good suppliers can be difficult.
- Importing and exporting stock means managing taxes and tariffs.
- Think about taking out a lasting power of attorney so that someone can make decisions on your behalf if something happens to you.
Working on your own
Either you’ll be working from home or covering the cost of working somewhere else.
- Working on your own can be lonely.
- If you’re working from home, there can be distractions like the TV or family members.
- Your business ideas are precious. If you want to talk about them, make sure people you talk to sign a non-disclosure agreement.
Sources of self-employment advice
The Prince’s Trust’s Enterprise Programme can help you if you’re aged 18 to 30 and have a good business idea. You'll get access to business skills training, planning, start-up loans, funding and support from a mentor.
MiEnterprise is a supported self-employment specialist that enables disabled people to set up their own businesses.
Self-employment support in Wales
Business Start Wales supports people starting, running and growing a business. This includes online information, advice and guidance, the Business Wales Helpline and Business Wales centres.
PRIME Cymru offers tailored support from an experienced business mentor to people over 50 looking to set up a business.
Last reviewed by Scope on: 02/04/2018