January 10th, 2014. Ben Lloyd
How to Protect Yourself When You’re Self-Employed
If you are self-employed then you will be well aware of the increased risks that come with the freedom. You don’t have employment rights but you make the rules meaning if anything does go wrong you must be protected. What do you need to safeguard your livelihood?
What insurance might you need?
• Motor insurance.
• Professional indemnity insurance.
• Employer’s liability insurance.
• Building and contents insurance.
• Equipment insurance.
• Product liability insurance.
• Goods-in-transit insurance.
• Key person insurance.
• Legal expenses insurance.
• Business interruption or business continuity insurance.
• Travel insurance.
• Life insurance.
One of the most important forms of insurance you will need is for income protection. Income protection insurance covers you in case you have an accident or fall ill and are unable to work. A tax free pay-out based on the percentage of your earnings will be made after a pre-agreed period of time has passed. For example, if you have been off work for more than a month. This insurance may end up paying for your other insurance payments while you are off work.
Pensions and Savings
When you are self-employed saving money for your future can be more difficult. You may be tempted to plough any money back into the business and take little for yourself but it is all about balance. Don’t forget to create a pension as soon as possible as there will be no employer contributions to boost your funds.
Savings are not only for twenty years down the line, they can be for a rainy day not far away. You need savings in case work becomes slow or dries up. Create an emergency account if you’re too tempted to spend as this will make a handy safety net. These funds should be able to cover the day-to-day expenses of your home and business life including utility and mortgage payments.
Savings may also act as a crutch if you are reliant on payments from customers or clients which have not been received on time. If this happens regularly then contact an invoice factoring broker and have payments collected by a third party on your behalf. This can take the stress out of outstanding payments and will assure you payment, saving you from digging into your savings.
If you are self-employed then you will have to pay your own tax and National Insurance rather than it come out automatically from a pay package. You may even have to pay different types of tax. Every April you will have to fill in a self-assessment tax return so make sure to keep detailed and accurate records. Make sure to keep invoices, receipts and bank records so you’re protected if the tax man queries your paperwork.
Protect yourself from an overly ambitious itinerary by making realistic work schedules and workload predictions. You would not want to promise work and be unable to complete it as this may give you a bad reputation. If you are self-employed you may well work alone or with a small essential team so don’t take on too much work or you’ll have to employ more staff.
It’s better to be safe than sorry so get insured and you could even employ an accountant to help you with your taxes. Are you protected?
Article By Ben Lloyd
January 10th, 2014
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben