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Thinking of ditching the corporate ladder and finding a quicker route to becoming your own boss? Going self-employed certainly has its advantages, allowing you much more freedom over how much you earn and how you earn it. However, going self-employed also comes with a variety of costs that are worth considering first
Your taxes
As someone that is registered self-employed, you are in charge of calculating your own taxes. This can come with its perks, such as being able to claim expenses you otherwise might not be able to working for someone else. However, for many, it can also be a time consuming job which requires extra funding to make more efficient.
Make a miscalculation and you could end up paying a fine. You may wish to hire Joe Callahan for your tax attorney, or another local lawyer to handle these claims – most honest miscalculations can be legally battled against. However, you could avoid any errors at all in your books by hiring an accountant to take care of your books for you. On top of this there is software such as Xero you can buy for taking a DIY approach. Either way, you’ll be shelling out some money to keep your books in check, so make sure you budget for this.
Office space
Thinking of hiring an office? This can be a huge expense when going self-employed. Whether you rent or buy, you then have to further account for energy bills, various commercial taxes and potentially property insurance.
Fortunately, there are ways to cut costs in this area. A co-working space or shared office can be useful for giving you a place to work from home, whilst being much cheaper than a standard rented office. However, if you still want to save costs, working from home can be an even better option. You can outsource remote staff and meet clients in coffee bars, provide your work is wholly computer and phone based and you don’t work in retail or manufacturing. Working from home can have its distractions, so take this into account when choosing where to work.
Tools and equipment
Going self-employed will require you to buy all your own equipment and tools. Even if you’re working from home, you may want to purchase a separate phone and computer to keep your work/home life apart. There may be other costs too such as printer ink, fuel for meeting clients, company vehicles, security and specialist software, handyman tools, cleaning fluids, furniture and perhaps even uniforms. This doesn’t even include extra marketing and retailing costs. Depending on what trade you’re in, costs will vary wildly – some people may hardly need to spend a nickel, whilst others may need funds of hundreds of grand.
Hiring staff
The decision to take on staff should not be taken lightly. Whilst a bigger workforce will allow you to take on more work and therefore take in more money, there are all kinds of costs to consider such as wages, insurance, safety equipment, recruitment costs, training costs, legal costs and employee incentives.
Most business owners initially outsource staff from other companies to deal with aspects such as marketing or admin. Hiring part-time staff or voluntary staff may also be a solution. Don’t take on full-time paid staff until you’re certain you can financially provide all their needs.
