What is self employment?
Self employment can often be seen as the first step to running your own business.
Essentially, self employment is working ‘for yourself’.
You are responsible for hunting for your own work, or generating sales, to pay your own salary, taxes and benefits such as pensions, healthcare, etc. rather than receiving a regular salary from a person or company.
The good bit however, is you get to keep all of the profits you generate.
Many people become self-employed as the first step of their entrepreneurial journey.
According to the Department for Business, Innovation and Skills, most self employed believe it to be a positive life choice in comparison to being an employee.
1 in 3 self employed believe they are worst off financially than when they were employed, but the work status gives them more advantages such as being able to work around school hours or care for family members. Self employment gives the opportunity to prioritise other things than work.
Many self employed, describe themselves as business owners, with just one in 4 having additional staff, these businesses could also be described as ‘micro businesses’. Many also fall below the VAT Threshold of £85,000 per year.
Research also showed that 1 in 3 self employed people either struggle to attain more than a basic standard of living, or they are reliant on benefits or tax credits to supplement their income.
Since 1975, we’ve seen a steady increase in self employment within the UK workforce, with over 14% in 2019, compared with 8% in the 1970s. The UK has one of the highest levels of self employment of the 38 OECD countries.
Historically self employment was confined to lower-paid roles such as construction, hairdressers, cleaners and drivers. However, over recent years more higher-paid occupations such as management consultants and IT professionals have appeared due to the contractual and project-based work.
The challenges of self employment are real.
- 1 in 3 self employed have had a big problem of not being able to save for the future whilst self employed.
- 1 in 3 self employed stated that not getting paid when ill or taking time off is a big challenge.
- 1 in 5 self employed report not having enough customers or work as being their biggest problem.
Now we’ve explored what is self employment, are you ready to take the next step?