Self-Employed Common Mistakes
Thu Jan 27 2022
The most common mistakes people make when becoming
self-employed.
We are sure to have left something out but here we go!
Taking the leap into self employment is an important decision and we understand that here at MENTA.
The average person spends roughly 90,000 hours working during their lifetime, so ensuring you are doing
something you enjoy and brings you the remuneration you anticipate, is a very real consideration.
There are big differences between being employed and self employed.
The positives of working for
yourself are clear. You get to choose your working hours, your customer base and salary. You don’t have
to answer to anyone and you can take your business in any direction you want without having to consult
others. However, like everything there are pitfalls to consider.
As the sole trader you must be across all
aspects of your business. In this post we will look at things that are often overlooked by people starting
out as self employed. A lot of it surrounds the issue of paperwork.
Ensure you have a contract and scope of work.
Very often sole traders and those who are self employed
do not clearly set out a proposal to clients or customers with the project deliverables defined. It means
that they can end up doing more work than they originally quoted for.
Find an organisation like MENTA who offer courses which cover how to write ‘scope of work’ and proposal documents. Sometimes you will
need to find a professional who can draw up bespoke legal contracts and MENTA can guide you through
ways of finding those services.
Track your sources of income.
When you are employed you get paid one lump sum of money each month
by the payroll department. When you are self employed your income can come from many different
sources. It is important to ensure you carefully invoice each source and track payment. Often a simple
spreadsheet will help with this.
Record your expenses.
When you are employed, HR takes care of your pay and tax. When you are self
employed you are solely liable for paying your own tax. You will need to fill out a self employed tax return
and submit it by January 31st each year. If you fail to submit a tax return you will be fined. Within the tax
return you will be asked to submit your expenses which could help to lower your tax bill. It can be difficult
to track expenses. Make sure you keep receipts.
An expenses spreadsheet will also help. MENTA courses are invaluable when it comes to setting out ways of recording expenses and finances when you
are starting out.
Manage your time.
Being a sole trader means you choose your own hours, there is no 9-5. However,
some self-employed people find they start working constantly because they are not managing their time
properly.
At MENTA we advise those starting out as self employed to set rules when it comes to time
management and discipline. Establish a clear work plan and follow a schedule. That way you will meet
your deadlines.
For more information on what pitfalls to avoid when starting out as self-employed or a sole trader, get in
touch with us here at MENTA.
Nick Pandolfi
