Sky diver taking self-employed leap

Top 5 checklist before going self-employed

The lure of working for yourself is strong. Almost too strong. You’ll be your own boss. You’ll set your own agenda. You’ll answer to no one except yourself.

But before taking the leap, it’s worth asking yourself the five questions (and be honest with your answers).

1. Why do you want to go freelance?

On the face of it, this might seem like an easy question to answer. But being truly honest with yourself will help you work out what is really driving the decision. And when you know what’s driving you, you’ll be better placed to make a success of it.

With a bit of luck, the reasons you come up with will be positive. For example, you might want to learn new skills (such as how to run your own business) or it could be that you’ve seen a gap in the market.

However, there are plenty of negative driving forces, and seeing freelance as an escape route from your job is one of the most common. If this is your primary reason for going freelance, you might find that running away from one problem simply leads to another.

2. Do you have any work lined up?

Taking the leap into freelance only to discover there’s no work around can be devastating. It’s easy to fool yourself into thinking you’ll get loads of commissions from day one, but the reality can be very different.

Before handing in your notice, be sure to fully scope out your target market. If possible, try doing a bit of freelance work on the side first. This will not only allow you to slowly build up your client base while still having the security of a full-time income, but it will also give you a taste of the freelance lifestyle. It will also help you decide what day rate you should charge.

Doing freelance work alongside your day job won’t be easy, but if you’re truly motivated you shouldn’t mind putting in the extra hours.

3. Are your finances in good shape?

As already mentioned, it can take a while to get fully up and running when you’re freelance. It therefore pays to ensure you have a decent financial buffer in place – ideally enough to keep you going for 3 months.

It’s also a good time to monitor all your outgoings. Could you do without Neflix for a few months? Do you really need one-day delivery with your Amazon Prime subscription? Are you on the cheapest gas and electricity plan? Go through your bank statements with a fine tooth comb and you’ll be surprised just how much you can save.

4. Have you thought about getting an accountant?

When you’re just starting out, getting bogged down with accounting isn’t likely to be top of your to-do list. While it’s perfectly possible to do your own accounting, it’s not easy. What’s even harder is making sure you’re taking advantage of all the tax relief available to you. Keep in mind that at some point you’ll probably need to enlist the services of an accountant.

Do you want to be a sole trader or limited company? Will you be VAT registered? Are you at risk of being hit with an IR35 investigation by HMRC? If you don’t know the answers to these questions (or they just sound like gobble-de-gook), it’s worth speaking to an accountant. Most will offer a free consultation to demonstrate how they’ll be able to help you.

5. Have you got a business plan in place?

Business plans are just for funky start-ups and fully-fledged companies, right? Wrong. Whatever you do (be it a dog walker, freelance designer or cake maker), you need a business plan. It doesn’t need to be a long, complicated document full of jargon (in fact, that’s the worst thing it could be). Instead, it’s a chance for you to put down on paper exactly what your strategy is.

If you want to be a dog walker, your business plan would document how you intend to run and grow your business. What location will you target? What’s your basic marketing strategy? Will you be active on social media? Where do you want your business to be in a year’s time?

Putting together a business plan can be hugely therapeutic. It will also challenge you to find answers to questions you might not have thought about before.