Here at Propeller we talk about going self-employed all the time, but what does that even mean? Sure, it means working for yourself, but at what point does picking up the odd job turn into self-employment?
Okay, let’s start at the beginning. The dictionary defines self-employment as: “the state of working for oneself as a freelancer or the owner of a business rather than being paid by an employer.”
If the person giving you money is a client or customer, then congratulations, you are already self-employed! It can get confusing if the work you do is for a business, but this too can be a B2B contract. If you don’t have a set working schedule, get holidays, a pension or maternity leave – chances are you are also self-employed.
Still not sure?
Did you know you can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings?
Her Majesty’s Revenue & Customs (HMRC) is the governing office that deals with employment. They have a really helpful website that can talk you through the ins-and-outs of employment and self-employment. According to HMRC, you are “probably” self-employed if you:
- Sell goods or services to make a profit
- Have several customers at the same time
- Run your business for yourself
- Take responsibility for your business’ success or failure
- Provide the main items of equipment to do your work
- Are responsible for finishing any unsatisfactory work in your own time
- Charge an agreed fixed price for your work
- Can decide how, where and when you do your work
- Can hire other people at your own expense to help you or to do the work for you
Turns out I’m self-employed! Who do I need to tell?
If you’re earning less than £1,000 a year from self-employment, you actually don’t need to tell anyone – but it doesn’t hurt to keep records. You are taxed on your combined income, so if your business makes a loss, you may receive a tax rebate for what you have paid through regular employment. Plus, there’s always the chance you’re going to surpass the £1,000 threshold. In which case, you’ll really wish you had the paperwork ready!
If you are earning over £1,000 through self-employment, you need to tell HMRC. You can do this through their website.
What do I need to do?
Being self-employed can be a scary thought to many, but the legalities are pretty easy and pretty simple. You’ll need to report expenses (money going out) and earnings (money coming in), send a tax return once a year and pay your own income tax.
It’s a lot easier than it looks, and we can help you get started. Our mentors can help you register, set up your bookkeeping and much more. If you’re a UCLan student, graduate or staff member, get in touch or come see us in the Media Factory (4th Floor) and we’ll help you get started!