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Self-employment pros and cons

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.

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 work that suits your life and condition

Advantages of self-employment

  • 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 your own decisions.
  • 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.

Disadvantages of self-employment

Responsibility and risks

  • Your income is dependent on you. If cannot 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 on time.  
  • You rely on clients paying. Getting them to do this can be hard work.
  • Running your own business has legal risks if you are a sole trader or limited company.

Setting up as a sole trader (GOV.UK)

Setting up a private limited company (GOV.UK)

Starting out

  • You need to have enough money to get your business started, keep it running and live until you make a profit. This 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.
  • If you employ someone, you must 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, like marketing and bookkeeping. You can employ someone to help you, but this will make it harder to make a profit.
  • Importing and exporting stock means managing taxes and tariffs.

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.
  • Protect your business ideas. Make sure people you talk to sign a non-disclosure agreement.

Ready to get going?

Starting a business

Last reviewed by Scope on: 05/04/2022

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