November 22nd, 2013.
Self-employment protection: Top tips
Do you fancy yourself as a bit of an entrepreneur? Perhaps you’re unhappy in your job and want to start off on your own? Working for yourself can seem like a dream but make sure to get protected!
It doesn’t matter if your career path takes you through a patch of freelance writing or self-employed building work, you are still working for yourself and therefore you do not have the safety net that comes with a business. Read over these handy tips and get protected. It’s better to be safe than sorry!
As a self-employed individual, one of the largest struggles is assuring fixed cash flow. Clients may not always pay on time when invoiced and this may affect your productivity. If you are struggling to receive payments as an individual then why not consider invoice factoring?
This involves hiring the services of a 3rd party to which you would sell your invoices. This company would pay you roughly 95% of the amount owed up front, collect the payment on your behalf and then pay you the remaining amount, once a fee has been deducted. The use of this finance method means you are guaranteed a large proportion of your payments every month and can plan ahead.
There are many types of insurance you should have but one of the most important as a self-employed individual is Income Protection Insurance.
You may have seen adverts on television talking of people reclaiming PPI insurance payments; however, if you are self-employed then this insurance may be highly beneficial. Income protection will pay out if you have an accident or fall ill and are unable to work. This type of insurance protects your livelihood even if you lose business for unforeseeable reasons e.g. you’re an ice cream man and it rains all summer.
Other insurance types you may have include:
General liability insurance
Commercial liability insurance
Public liability insurance
Business interruption insurance
Professional Indemnity Insurance
First things first, keep your personal savings separate from your work funds. That way if business fails you still have your family savings.
Secondly, set up a cash reserve. This will be money you set aside for a rainy day that you only use in an emergency. The amount you should keep in this fund is up to you but it should be enough to keep you going for at least 2 months.
Pay yourself a wage
Don’t live out of your business bank account; set up a separate account from your regular personal account for any income or outgoing business related payments. From this business account then pay yourself a wage. This way you can keep an eye on your spending and easily keep track of business expenses.
Just because you are self-employed it doesn’t mean you’re tax exempt. You still have to pay tax like everyone else so set some money aside for this. Put money aside as you go along so you don’t fall short when you have to pay your taxes.
Right, now you know how to protect yourself take the plunge and go at it alone. Live the dream of being self-employed and don’t forget you can always call on Pure Commercial Finance for advice.