Becoming self-employed

Being able to set your own schedule and make all your own decisions is great and everything, as long as you’re willing to put in the effort. Specifically when it comes to going freelance. With the world of work being slightly different for folks who wanna become a lone-wolf, we’re here to help you understand what becoming self-employed entails.

A young woman is considering becoming self employed. This is a full-body image.

What is self-employment?

Becoming self employed means working for yourself. Unlike working for someone else, you create your own opportunities and decide when and where you work. Just like the different types of business, self-employment isn’t a monolith. There are tons of different ways you can be self-employed. This article in particular is not about opening a limited company, creating business plans or becoming a business owner, it’s about being freelance a.k.a being a sole trader. 

If you’re interested in other ways of becoming self employed, a couple of our articles talk about starting a business or starting a social enterprise.

I’m young – should I go freelance?

At the end of the day, it’s totally up to you. We’re just here to give you both sides of the story so that you can make an informed decision: 


When you’re young, you’re usually more flexible since you probably have less responsibilities. This makes it a great time to be freelance.

Many young freelancers work in the creative industries – journalism, copywriting and graphic design; partly because getting long-term paid work is tough.


Career development and training can be hard to get as a freelance – unless you’re willing to pay for it yourself. Plus, you’re bossless. And before you start standing in the road yelling ‘I’m freeeee! Free of The System!’ you should remember that a good boss can actually teach you a lot.

Am I ready to become self-employed?

To become self-employed you need:

  • A skill that others are willing to pay you for
  • The confidence to pitch for work and the ability to convince clients you’ll do a good job
  • Contacts – and preferably the offer of some freelance work already. Make sure you give everyone you meet your email address
  • A space to work (even if it’s just a desk at the end of your bed)
  • Evidence there’s actually work available. Do you know other self-employed people in your sector? Are they doing OK, or spending their days tweeting about their never-ending misery?

Can I afford to become self-employed?

If you’re thinking of moving from stable employment to going it alone, it’s important to get a gauge on your living costs: rent, food, paying someone to fix your computer when it dies and takes a client’s work with it. The best way to go about this is to work out what your day rate is going to be. If you need some help, the professional body for your industry should give you an idea of what you can charge. Make sure the sums add up. And then get a friend to check your maths is right.

Next, have a look at your reserves. You’re gonna need a margin to fall back on if times get tough. A month or two’s rent saved for transitioning between jobs should be enough.

Can self employed people claim benefits?

Another thing to consider if what support you’ll be able to get if you fall on hard times. Self employed people can’t claim all of the benefits that employed people can claim, for example you wont be able to claim new-style Jobseekers’ Allowance. You also won’t be able to claim statutory sick pay. You may be able to claim Universal Credit through. Read more about self employment and benefits here and about Universal Credit here.

How does tax work for self employed people?

We hate to break it to you, but self-employed people still have to pay tax. So you should set aside around 25% of your earnings each year. And a little extra for Class 2 National Insurance contributions, as well as Class 4 National Insurance contributions if you earn over the basic tax limit. For more info about National Insurance contributions, click here.

As soon as you start freelancing you should call the HMRC and declare yourself. It’s worth noting that you’ll have to file a self assessment tax return each year regardless of whether you earn over the basic tax limit or not (the penalty for forgetting to do this is £100). You can read our article on self assessment here.

After that, it’s time to find an accountant to help you fill in your tax return every year. Alternatively, you can do it yourself. Just keep in mind that it can be a bit tricky at first. But it’s not impossible to figure it out if your incomings and outgoings are relatively simple.

Regardless, keeping good, clear records helps a lot. Similarly, you don’t necessarily need to open a business bank account. However, small business owners in particular, might find that having specific business accounts help you keep track of your finances. We’ve got a useful article on self-employment tax if you’d like to learn more.

Have I got the right personality for self-employment?

Self-employed people have to be tough, tenacious and able to deal with rejection. Of course it’s OK to cry a bit and relentlessly internet-stalk the client who just turned you down. As long as the next day you go back to them with another idea. Better yet, get their rival to hire you instead.

Before going freelance, you need to ask yourself how well you cope with uncertainty. There’s a high chance that you’ll wake up sometimes and have no work. Yes, nine times out of 10 you’ll turn it around. But being your own boss means getting more work comes down to one person – you.

Another thing to ponder is if you need interaction with other living breathing humans each day? Freelancing often means working from home for long periods at a time. So if you find yourself dragging confused strangers off the street for a cup of tea, chances are you wanna work with people.

Once I’ve gone freelance, can I get a ‘proper job’ ever again?

Employers actually kinda like freelancers. Working for lots of different organisations gives you a healthy CV and a strong portfolio. It’s also proof you’re good at pitching, making contacts and managing your own time.

And you’ll never have to give up your passion just cause you work for an employer now. Loads of people keep freelancing as a side-hustle – actress/waitress, swimming instructor/DJ, writer/office manager. You can be contracted a few days a week and gradually develop your freelance career round the outside a.k.a developing a portfolio career.

If you’re considering self employment, it’s worth learning a bit about how to run your own business. You can do this by seeing our article on starting your own business here.

Next Steps

By Nishika Melwani

Updated on 10-Jun-2022