Generally speaking, running your own business is either absolutely for you or absolutely not.  These days, it’s probably fairly well understood that being your own boss has its advantages and disadvantages, but what may be harder for people to understand is the challenges inherent in being both chief cook and bottle washer or, at least, for being responsible for ensuring that all relevant jobs are done as they should be.  For example, in addition to being your own line manager, you are also your own HR department and your own finance department.  The good news about this is that there is plenty of general information available on the internet and it’s usually easy (and often very useful) to get professional help.

Being your own finance department

As your own finance department, you are responsible for managing everything from the day-to-day collection and management of receipts (both paper and electronic) to “big-picture” planning.

Day-to-day record-keeping

If book-keeping is not your cup of tea, then could be well worth investing some money in paying a professional book-keeper to take care of it for you.  As the name suggests, book-keepers simply keep your financial records in good order rather than giving you management advice as accountants do.  Catching up with them once a month or at least once a quarter can help to keep you on track for your annual tax return and can put you in a good place should you find yourself obliged to participate in the “Making Tax Digital” scheme (or if you decide you want to).

“Big-picture” planning

As an employee you may have access to a safety-net of employee benefits the importance of which you may never have fully appreciated unless you had cause to use them.  If you move into full-time self employment, it is generally wise to give serious thought to replicating these benefits with private sector products.  Here are ? options you may wish to consider.

Life insurance

If you’re reading this, you’ve obviously never had to call upon your former employer’s death-in-service benefits, but, morbid as it may sound, anyone can die at any time, even young people (the odds just go up as you get older).  If you have dependents then life insurance could make a significant difference to their quality of life in the event of your death.

Income protection insurance

This does exactly what it’s name suggests and provides you with an income if you become unable to work through illness or injury.  The more physical your job, the more important this form may become since you are both at greater risk of injury and more likely to be unable to work if injured.  Having said that, even knowledge workers should think seriously about this type of cover, you may think you can work your way through illness or injury but if you ever experience a serious illness or injury, you main discover that it’s very hard to concentrate on knowledge work when you’re in a lot of pain.

Critical illness cover

This pays out a lump sum if you are diagnosed with certain illnesses.  It dovetails with income protection cover in the sense that the former can be used to cover your regular income whereas the latter can help with expenses related to your illness – like hospital parking fees.

Pet insurance

You have the NHS, your pets do not and vet bills can be extremely expensive.  Pet insurance can be a very good idea even for those in employment, who have a guaranteed regular income.  Self-employed people, with non-guaranteed, fluctuating incomes, may find it rather more of a challenge to get credit and so might want to place pet insurance high on their list of priorities.

 

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