Five tips to transition from employed to self-employed

So you’ve finally decided to make the move from being bossed to being a boss. No longer will you have to listen to orders or do the jobs no-one wants to do; you’re your own man or woman, and you’re going to prove it. However, it’s not just a case of striding out and starting earning cash, although with a little preparation that might not be too far away.

Here are five tips to make the change more smoothly.

1. Be prepared

While being your own boss is one thing, being your own company is quite another. Self-employed people often work on the road or from home, and loneliness can be a factor.  The laughter and teamwork elements of work as an employee should not be undervalued, even if your work includes meeting clients or phone conversations. Try to blend an element of meeting others into your routine, even if it’s just the odd coffee with ex-colleagues.

2. Don’t leave it until the start date

Unless you get fired and have no time to react, chances are that you’ll have time to prepare your transition. That gives scope to ‘moonlight’ and test the water before the move is permanent. Freelancing, meeting contacts, setting up your accounts, researching, and all the other tasks that need to be completed can all be achieved before leaving your current job. However, never complete personal business in your employer’s office or using its resources.

3. You are your own taxman

Remember when you looked at your payslip briefly, looked at the amount of money going into your account, and then just moved on? It’s no longer so easy – you’ll need to keep invoices and receipts of your incomings and outgoings, always remembering key dates such as January 31 (the deadline for online completion of your tax return). There are a huge number of resources showing how to complete your tax return when self-employed, and your first step is registering as self-employed with HMRC by October 5 of the end of the tax year for which you need to file the return. Also, you’ll probably need a business bank account and might need to register for VAT.

4. Start saving

As above, you’ll probably have a period of time to prepare yourself for the change to self-employed status, and one of the main pieces of advice is to save your wages in the event they are needed in the early days. If you fail to lock in a number of contracts/avenues of business before you leave, then you might not be able to adequately predict the level of fluctuation in your work at the beginning – some months you might struggle, while others might be very fruitful. You can potentially gauge interest during the ‘moonlighting’ period, and begin budgeting for contingencies.

5. Don’t burn bridges

In that period of time between announcing that you’re leaving and actually doing so, it’s easy to become a little lackadaisical, and maybe even a little cocky. Perhaps you don’t care about telling your colleagues how brilliant your life is going to be, and the freedom you’ll feel. But what happens if everything goes wrong and you want to go back to being employed? It’s by no means rare. It might therefore be prudent to keep your opinions quietly, in the event that you either return down the line or ask your ex-colleagues if they’ve heard of any opportunities going.