Isn’t it time you were the boss?

About five million Brits are self-employed: fancy joining them? We spoke to people who made the leap themselves to get some realistic advice on making it a success.

Become an AAT Licensed Accountant or Bookkeeper

If you’re an AAT professional member (either AATQB, MAAT or FMAAT), then your first step towards self-employment is applying for an AAT licence. This allows you to offer services on a self-employed basis.

Without a licence, you can’t offer accountancy or bookkeeping services professionally.

An added benefit: AAT acts as money laundering supervisor for licensed members. This is a legal requirement, so you’d be killing two birds with one stone. We’ll also provide you with AML support through additional resources and guidance.

Read more on how to comply with anti-money laundering rules here

Why go it alone?

Perhaps the commute is getting you down and you’ve had enough office politics for one lifetime. Or maybe you just really fancy taking charge and being your own boss?

Whatever the reason, going self-employed can be like coming up for air. You can craft a better work-life balance; have time for your family, friends and hobbies; and do it all your way.

You’ll be able to pick the work you enjoy, and only work with clients you want to work with. A lot of people go self-employed for these perks alone.

Financially, you could be better off too.

The challenges when self-employed

Sorry to be negative, but there will be some difficulties:

  • employer contributions into a pension scheme will stop
  • no more holiday or sick pay
  • no company car or medical insurance
  • no PAYE
  • income may become unpredictable
  • also there’s a social downside: no colleagues to chat to, or share work problems with.

You may quickly dismiss the lack of holiday/sick pay, but it can have a big impact on your mental state around annual leave, or taking time off when you need it. Prepare yourself by developing your mental strength.

Whilst the tasks of HR/Finance will now be yours too, your accountancy skills will serve you well. Set up a recurring calendar reminder to process your taxes and National Insurance and you’re good to go.

The challenges listed above are not insurmountable.

Build your business plan

This is the key to a stress-free transition to self-employment.

Ed Molyneux, CEO and Co-Founder of FreeAgent, has advised 90,000 potential start-ups since launching in 2006.

His advice? “Many new businesses fail because of cash flow problems. So create a detailed business plan before you set up on your own, enabling you to stay on top of your finances: that’s essential if you want your new business to succeed.”

Emotions may have driven your decision to go self-employed, but the key to success is breaking it down into practicalities and getting solid plans in place.

Line up your cash options

You’re going to need a cash cushion to keep you going until the money starts coming in.

Keep at least three months’ income – enough to cover your mortgage and household expenses – in an easy-access savings account.

Check out money comparison sites for the best savings on all things finance-related, like Moneyfacts.co.uk

Set up a business bank account

You may also need a business bank account – again, check out comparison sites for the best deal for you.

Emily Coltman FCA, Chief Accountant at FreeAgent underlines the importance of having a finance plan in place: “Will it be easier to keep your business and personal finances separate if you have a discrete bank account for your business? How will you keep track of everything you’re spending to get your business up and running? Make this a key part of your start-up plans.”

Essential insurance when you’re the boss

If you’re becoming a self-employed bookkeeper or accountant, then you may need public liability insurance, particularly if you have clients visiting you at home or in an office. This covers you if clients/members of the public get injured as a result of your business activities, e.g. tripping on a loose floor tile.

Professional indemnity insurance will also be required. This pays out if you make a mistake, or give bad advice and your clients lose money as a result. But each policy will have different T&C’s.

Read more on business insurance when you’re self-employed from the impartial Money Advice Service. AAT licensed members also receive competitive Professional Indemnity Insurance rates.

Don’t spend all your time chasing payments

When you’re self-employed, one task that can quickly spiral out of control is chasing late-payments. This goes on behind the scenes at a larger company, but can loom over you when self-employed.

Get a schedule and processes in place to stay on top of this, and keep the money flowing.

Gov.uk has some advice on invoicing and taking payments from customers, and software like Xero can shoulder most of the burden through automated chase emails.

Thinking back on creating your business plan, keep this necessary activity in mind and bake it into the business structure.

Be aware of your social connections

Loneliness is a big challenge when self-employed. But on the flip side, there’s a lot to be said for working comfortably in an environment of your own design, without the constant chatter of colleagues.

You can work the hours you like without having to ask permission – perfect if you have family/hobby commitments. And no distractions mean you’ll get more work done.

But even if a desire for solitude was a key reason for becoming your own boss, you may come to miss colleagues over time. That’s ok, there are other ways of staying social when self-employed.

Don’t just suffer through, combat your loneliness with some pro-active steps, like moving into a shared office space. It may scratch an itch, then you could go back to working from home for a while. Find what works for you.

And there are plenty of AAT events (some free) going on to get you mingling with your peers.

Become self-employed gradually

One way to approach self-employment is to make the move across slowly.

Andy Webb, Money Expert of Be Clever with your Cash and Presenter of Shop Smart Save Money on Channel 5, transitioned into his own boss over a few years.

“My move to self-employment wasn’t overnight. For a few years I was working on the business blog outside of my 9 to 5. But gradually I cut my days working PAYE: first to 4.5 days, then for 18 months I was in the office just 2 days a week.”

He admits the slow move was frustrating at times, but ultimately it worked out. “When I finally did go all out on my own, I had everything in place so I didn’t have to worry where work would come from.”

In summary

Going self-employed could be the best decision you’ve ever made. Working for yourself is rewarding, convenient and potentially lucrative; it’s a great opportunity to take charge of your life.

Planning will be essential in making your move a success. Above Andy Webb spoke about phasing into self-employment over a few years, which could be ideal for your financial situation, giving you added security for those early days. But the key takeaway from our self-starters is that there’s more than one way to become self-employed. Find what works for you.

Read more on getting started as a self-employed bookkeeper or accountant here:

Charlotte Beugge spent more than 20 years as the deputy personal finance editor on The Daily Telegraph and then The Daily Mail. A freelancer since 2010, her work has appeared in national newspapers, magazines and websites.

Related articles