Is becoming self-employed right for me?

by Amber Rolfe

There’s no business like your own business…

Working for yourself might seem like the ultimate dream. No alarm clock (unless you want one), no commute, and definitely no passive-aggressive notes left in the communal kitchen. But while freedom is appealing, is it actually right for you?

Whether you’re considering freelancing, consultancy, or starting a brand-new business from scratch, swapping employment for self-employment is a massive life change. 

To help you decide if you should take the leap, here is everything you need to know about becoming self-employed:

What is self-employment?

Self-employment is when a person works for themselves instead of an employer.

This could involve anything from running and managing a business, through to selling goods or services regularly (for a profit) as a trader.

Instead of being paid a salary or wage by an organisation, a self-employed person earns their income directly through the profits made by their own business or trades.

Self-employed vs. employed

The difference isn’t just about who signs your paycheck. It changes your legal status, your tax responsibilities, and your daily life.

• When you’re employed, your employer handles your tax (PAYE), National Insurance, and pension contributions. You have rights like statutory sick pay, maternity pay, and protection against unfair dismissal.
• When you’re self-employed, you’re responsible for calculating and paying your own tax and National Insurance. You don’t get paid holidays or sick pay. However, you do gain the freedom to choose how and when you work.

Note: It is possible to be both. You can be an employee during the day and run a side hustle as a sole trader in the evenings.

Types of employment contracts

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What type of business can I run self-employed?

Before starting out, you’ll need to select the right business structure. This decision affects your legal responsibilities and financial management.

• Sole trader: You run the business yourself and keep any profits, but you are personally liable for losses.
• Partnership: Two or more people share responsibility for the business’s operations, profits, and liabilities.
• Limited company: The business exists as a separate legal entity, offering limited liability to its shareholders.
• Freelancer or consultant: You provide professional services to businesses on a contract basis and invoice for your work.
• Franchisee: You operate under the brand and systems of an established company, following an agreed business model.

Contract jobs vs. permanent jobs: What’s the difference?

Benefits of being self-employed

Like any career, self-employment has its benefits – and although they vary from industry to industry, many self-employment positions offer a range of perks that aren’t available with other career types.

Here are some of the key advantages of being self-employed:

• Creative freedom: You make the decisions. If you want to pivot your strategy or change your logo, you don’t need sign-off from three different managers.
• Flexibility: You set your schedule. Need to pick the kids up? Want to work from a coffee shop? It’s your call.
• Financial potential: Your earnings aren’t capped by a salary bracket. The harder (and smarter) you work, the more you can earn.
• Job satisfaction: There is a unique thrill in building something from scratch. Plus, you can choose who you work with – and who you don’t.
• Work from home: Many self employed work from home jobs allow you to ditch the commute entirely, saving you time and money.

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Disadvantages of being self-employed

If you’re considering self-employment, it’s vital to be aware of the cons as well as the pros. Not only will this ensure you’re making the right choice, it’ll also put your priorities into perspective.

Here are the potential disadvantages of being self-employed:

• Variable income: Income may fluctuate from month to month, leading to potential financial uncertainty.
• Lack of benefits: No paid holidays, sick pay, or employer pension contributions – making financial planning essential.
• Administrative burden: Managing all areas of a business requires time and organisational skills.
• Social isolation: Working alone can sometimes feel isolating.
• Complex tax requirements: Navigating self-assessment and business returns takes time and attention, or assistance from an Accountant.

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You may also have less recourse to employment tribunals if serious workplace issues arise. For most work disputes, solutions are usually found by communicating directly with clients. If that doesn’t work – say, if an invoice goes unpaid – you may need to take legal action in the county court (England and Wales) or sheriff court (Scotland).

Best self-employed jobs

Almost any role can be turned into a self-employed business if you have the skills. However, some careers lend themselves perfectly to this lifestyle. Here are five popular options, plus a list of other thriving sectors.

1. Personal Trainer

Personal Trainers help people to improve their level of fitness or general health through exercise and diet programs. They could work at a client’s home, at the gym, outside, or, most commonly, a combination of these.

• Potential earnings: £20–£40 per hour.
• What you need: Dedicated qualifications and liability insurance.

View all Personal Trainer jobs

2. Dog Walker

Dog Walkers will usually collect dogs from clients and take them to a dog-walking park (or wooded area) for 1-2 hours, in groups of around four or five. Other services could include dog sitting, training or grooming.

• Potential earnings: £10–£15 per dog, per hour.
• What you need: Insurance and reliability.

3. Freelancer (Writer/Designer/Developer)

A number of jobs can be done on a freelance basis, including roles such as writing, developing, and graphic design. They could be doing anything from producing content for websites, social media, and blogs, or graphics for brochures and business cards, through to writing code or building apps.

• Potential earnings: Varies, but experienced freelancers can earn upwards of £30k–£50k+.
• What you need: A strong portfolio and a laptop.

 View all freelance jobs

4. Hairdresser

Self-employed Hairdressers wash, cut, and style their customers’ hair – usually in the comfort of their own home (or yours). They may also choose to rent a chair in an established salon, if they’re looking for something a little more stable.

• Potential earnings: £20 for a cut to £100+ for colours.
• What you need: Qualifications and your own equipment.

View all Hairdresser jobs

5. Interior Designer

Self-employed Interior Designers design, plan and oversee the interior appearance of a room, house, or other property. Duties include determining budgets, pitching ideas, researching décor and overseeing all development work until the end of the project.

• Potential earnings: £25k+ depending on portfolio.
• What you need: A portfolio of previous work is essential.

View all Interior Designer jobs

Other self-employed careers:

• Trades – including self employed electrician jobs, self employed plumbing jobs, and self employed gas engineer jobs.
• Finance – including self employed bookkeeper jobs and self employed mortgage advisor jobs.
• Service – including self employed cleaning jobs, self employed delivery driver jobs, self employed carer jobs, and self employed support worker roles.
• Sales – self employed sales jobs also offer high commissions.

View all self-employed jobs

What qualities and skills do I need to become self-employed?

Although your level of success will be based on the power of your product or service, knowing how to drive it in the right direction is equally key.

Essential skills for self-employed people include:

• Time management
• Determination
• Focus
• Realism, and objectivity
• Good leadership
• Self-belief
• Creativity

Things to consider before you work for yourself

If you’re using self-employment as a route out of a job you don’t like, or a way to avoid unemployment – you might not be doing it for the right reasons.

To make sure your choice is well-directed, here are a few questions to ask yourself before you make a decision:

• Are you suitably qualified for your chosen field or service?
• Can you support yourself financially while establishing your business?
• Do you have access to funding, such as loans, grants, or investments?
• Is your business plan realistic and thorough?
• Have you considered how self-employment will affect your personal life?
• Are you familiar with the legal and tax requirements of running a business?
• Are you clear on how your working relationship with clients is structured, and does your contract reflect your actual work arrangements?

How to become self-employed

Moving into self-employment involves several practical steps. Here’s a structured approach:

1. Conduct market research: Assess demand for your product or service, evaluate competitors, and explore your potential customer base.
2. Write a business plan: Define your offering, identify your customers, set clear goals, and outline your finances and marketing approach.
3. Set up your business finances: Open a business bank account and develop a budget. Separate your personal and business funds, and ensure you have savings to cover quieter periods if possible.
4. Register your business: Register with HMRC as self-employed (see more in the section below). Decide on your trading structure early.
5. Establish your workspace: Set up a dedicated area for work, whether at home or in commercial premises.
6. Set your pricing: Research market rates and calculate your pricing carefully to cover all costs and ensure profitability.
7. Manage legal requirements and insurance: Obtain any necessary licenses or insurance for your sector, and stay up to date with legislation.

By planning and preparing thoroughly, you can increase your chances of success when starting out alone.

How to register as self-employed

Before you start trading as self-employed, you must register as self-employed online. Here’s how the process usually works:

1. Notify HMRC: You must register for Self Assessment by 5 October in your business’s second tax year.
2. Get your UTR: HMRC will send you a Unique Taxpayer Reference (UTR). You’ll need this to file your taxes.
3. Set up an online account: This allows you to view your tax details and file returns.

Important 2026 Update: Making Tax Digital (MTD) for Income Tax Self Assessment is being rolled out. From April 2026, if you have a qualifying income of over £50,000, you will be required to keep digital records and send updates to HMRC quarterly using compatible software. From April 2027, this applies to those earning over £30,000.

Self-employment rights and finance

Pensions for self-employed people

Consider setting up a private pension, as you will not receive automatic workplace pension contributions. Maintaining sufficient National Insurance contributions is also important for your State Pension entitlement.

Self-employed sick pay

There is no Statutory Sick Pay (SSP) for self-employed individuals. Income protection insurance can help mitigate loss of earnings due to illness. In some situations, you may qualify for Employment and Support Allowance (ESA).

Self-employed expenses

You can deduct allowable business expenses from your turnover to calculate your taxable profit – which lowers your tax bill. Common expenses include:

• Office costs (stationery, phone bills).
• Travel costs (fuel, parking, train fares).
• Clothing expenses (uniforms).
• Staff costs (subcontractors).
• Financial costs (insurance, bank charges).
• Marketing (website costs).

National Insurance updates (2025/2026)

• Class 2: This is now voluntary. You can choose to pay it (£3.50 a week) to protect your State Pension record if your profits are low (under £6,845).
• Class 4: You pay this on profits between £12,570 and £50,270 (at 6%) and 2% on profits over £50,270.

Tax rules for contractors and IR35

If you’re a contractor providing services through your own limited company or similar structure, you may be affected by IR35 rules. IR35 aims to ensure contractors who would otherwise be employees are taxed similarly to employees. Make sure you review the practical working relationship and check if IR35 applies. In construction, the Construction Sector Scheme (CIS) may also affect your tax obligations.

For more information on self-employment, visit gov.uk.

How to get started as a contract worker

Dealing with issues and disputes

As a self-employed person, you won’t usually have access to employment tribunals to handle workplace problems or grievances. 

If an issue comes up – such as unpaid invoices or disagreements – try to resolve it informally with your client first. If that doesn’t work, you may need to make a legal claim through county court in England and Wales or sheriff court in Scotland. The process for making a money claim is available on GOV.UK.

If you’re ever uncertain about your employment status or rights, helpful guidance is available from organisations like ACAS and on GOV.UK.

Frequently asked questions

Can I be employed and self-employed at the same time?

Yes. You can work a 9-to-5 and be a self employed sole trader in your spare time. You just need to declare your self-employed income to HMRC.

How do I provide proof of self-employment?

If you are applying for a mortgage or renting a house, you will likely need proof of self employment. This usually includes your SA302 form (tax calculation) from HMRC, bank statements, or certified accounts from a qualified accountant.

Do I need a business bank account?

If you’re a sole trader, it isn’t a legal requirement, but it is highly recommended to keep your personal and business finances separate. However, if you’re a limited company, you must have a separate business bank account.

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