Setting up as a freelancer may well be the most exciting (and daunting experience) in your working life. At Sterling Finance we appreciate the challenge faced by many freelancers as they not only begin their search for new clients, but also begin grappling with their first foray into finances. The first things most freelancers do is design a business card, collect invoices and ensure they have a letter that proves they are self-employed. However, there are still plenty of procedures and policies a freelancer must do, even before they have earnt a penny to ensure they don’t get burnt by the taxman. Firstly a freelancer must:
As you continue as a freelancer – expanding your client base and getting to know your business there are certain financial leniencies granted. Being self-employed often means dealing with late payments, struggling with a low cash flow and, certainly in the beginning, doing work for lower than the going rate. The government therefore, allows freelancers far more control over their finances than the average employee.
As a freelancer, finding a client base, can often be the most difficult part of the business. Networking, advertising and using social media are all useful, reliable ways to get your message on a larger platform. Certainly, it is the way Sterling Finance expanded in the early years, and to this day, we continue to network with our peers to help us achieve a far broader understanding of best business practice.
However, there are plenty of freelancers who work for only a few clients, or possibly even one, who hires them on a contracted basis for the value added to the business.
If you are employed solely by one company, or even if your business stagnates with periods of little or low work this could mean you are not considered self-employed by HMRC. Unfortunately, in all things tax related if you will it, it remains very much a dream. And it is all too easy to go into the grey area of employment. As a general rule here are some easy questions that should help guide you towards an obvious direction.