Thinking about becoming your own boss – pros and cons

Leaving the world of being an employee to working for yourself does seem to many like the perfect dream, one that 5 million people in the UK have made come true. However, if you are pondering over whether you should make that move, we have put together some of the benefits and disadvantages of becoming your own boss to help you decide whether the grass really is greener on the other side.

PROS OF BECOMING YOUR OWN BOSS

One of the first advantages is the fact that you have a greater level of flexibility and your working week can, to a certain extent, be built around family commitments. This can result in a better quality of life for you and your family.

Self-employment can offer an increase in earning potential because freelance and consultancy work charge a higher hourly rate than most salaried jobs. Apart from taxation and NI contributions, you get to keep everything you earn, instead of making someone else rich.

Another financial advantage is that you can claim back expenses for many outgoings including: travel costs, business equipment, uniforms, office costs, business premises and telephone charges. If you work from home you can claim a proportion of your utility bills such as heating and electricity, as well as help with your mortgage interest or rent. In fact, the majority of freelancers work from home and if you decide to join them you can wave goodbye to the dreaded daily commute.

Being your own boss can be a more exciting career because you can choose a field you are passionate about and offer a diverse range of services. You may have an aptitude for a certain skill that was never utilised when you were employed. One huge benefit is you don’t have to worry about getting a call from the HR department telling you that you’re sacked; you’re the boss now.

CONS OF BECOMING YOUR OWN BOSS

Leaving the comfort and security of receiving a monthly salary to being completely responsible for generating your own income can be quite daunting. There may be some financial costs to starting your own business and building a client base can be an arduous and slow process.

Being self-employed means your income will fluctuate and can include periods where you don’t earn anything; this means paying your mortgage or rent can be challenging. Additionally, if you are looking to buy a home you may have difficulty securing a mortgage or even gaining approval for renting a property.

Chasing payments from clients you have carried out work for is another drawback. With some clients, you will find you won’t be a priority on their list of who to pay and you can be made to wait for three months or even longer to see your hard-earned money. Resilience, perseverance and patience are just three of the many traits you need when you’re self-employed.

Remember that if you fall ill or take time off for a holiday you won’t get paid. Self-employment can be a lonely existence and your home life and work-life can merge into one putting pressure on family relationships. Being your own boss means you haven’t got the support needed when things go wrong and you need to be strong-willed to get through the tough times. You may also need to learn new skills if you are not familiar with certain administrative duties such as bookkeeping and taxation.

Hopefully, you will now have a greater understanding of what becoming your own boss entails and whether you want to work for yourself or stay as an employee working for somebody else. Only you can make that decision but just imagine the sense of satisfaction and self-fulfilment that becoming your own boss provides.

If you need any help as you embark on your exciting journey of self-employment, we have some excellent business advisors in your area, to find out more, please click here.