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If you’ve always dreamed of becoming self-employed, this guide is for you. In it, we’re going to outline everything you need to do to make your dream a reality, whether you want to go it alone as a freelance designer or set up a small catering business. From choosing your business name to finding work, here’s everything you need to do to become your own boss.

Is self-employment right for you?

Before you go any further, the decision to become your own boss is not one to be taken lightly. Many people are drawn to self-employment by its perks, and it’s true that there are many major benefits to it:

  • You can create your own version of your perfect job based on what interests you most
  • You don’t have to answer to anyone – you call all the shots and do things exactly the way you think they should be done
  • You can work the hours you choose, and that total flexibility makes it much easier to fit work around family commitments, such as childcare
  • You no longer have to commute, freeing up more time for the things you enjoy
  • You don’t have to ask anyone for time off when you want it, whether that’s taking a couple of hours out of the day for lunch with a friend or taking two or three weeks’ holiday at a time
  • You can turn down work that you don’t want to do, or fire difficult clients
  • You increase your earning capacity, because you have no employer taking a cut of what you earn
  • You can offset work expenses against tax, so you pay less tax and keep even more of what you earn

There’s no doubt that being self-employed brings a tremendous sense of freedom and can be an overwhelmingly positive life change. However, tempting though it is to daydream about how much better life will be when you’re self-employed, it’s also important that you’re under no illusions about what the reality will be like. While we don’t in any way want to put a dampener on your ambitions, if you have a warts-and-all vision of what self-employment will be like, you’ll be better prepared, so here are some of the downsides to consider before you decide to become self employed.

Lifestyle aspects

Whatever your intentions, you’ll probably end up working longer hours than you did when you were employed, mainly because it’s harder to turn down work when you don’t know when the next project will next come in. Even when you’re enjoying some time off, you’ll probably still be checking emails and answering your phone; you never know when a lucrative job might come in, and you might lose out on it if you don’t get back to them quickly.

While you no longer have a boss, you’re still ultimately answerable to your clients or customers and their demands. There will be times when you have to go the extra mile to keep them happy, and that might mean you’ll sometimes find yourself working late into the evening or foregoing weekends in order to meet a tight deadline or deliver a big batch of work.

Financial aspects

There’s no two ways about it; the decision to become self-employed is a financial gamble that may or may not pay off. You’re giving up the relative financial security that comes from the fixed salary you receive working for someone else, replacing it with irregular payment – goodbye pay day! – and potentially, at least in the beginning, a ‘feast or famine’ situation whereby you might earn lots one month and little the next.

What’s more, you won’t get sick or holiday pay, and you’ll have no employer pension contributions or any of the other perks that often come with full-time employment (that free gym membership you enjoyed in your last job won’t pay for itself). If you want to take time off to go on holiday, you may end up working twice as much in the run-up to it to ensure your client work is covered for the time you take off, and to cover the lost earnings.

Don’t forget, your earnings won’t just magically land in your account the way a salary does; you’ll have to prepare invoices for every bit of work you do, and many clients won’t pay you on time, so you’ll spend a fair amount of time chasing overdue invoices. It’s also much harder to get a mortgage when you’re self-employed, so if you’re planning to buy a house, bear in mind you’ll need at least two years of self-employed accounts.

Before you take the plunge, be honest with yourself about the practicalities of being in this financial situation. Do you have any savings to tide you over in the beginning, and longer term? Does the thought of not knowing how much you’ll earn from one month to the next make you anxious? How will you cope with your monthly outgoings – mortgage/rent, bills and so on – in the leaner months?

You won’t just be doing the work you specialise in

You might be a brilliant graphic designer or gardener, but that’s not the only work you’ll be doing when you go self-employed. You’ll be responsible for running all aspects of your business, from sales and marketing to project management and accounting. In the beginning, becoming a sort of ‘jack of all trades’ will be a steep learning curve if you haven’t had experience of these aspects of business life. You’ll soon get used to it, but it’s something to be aware of, because it can come as a shock to the system when you’re used to knuckling down and getting the actual work done (if you’ve worked in house, for example).

You’re on your own

Self-employment can be a lonely way of working (unless you end up hiring employees, of course). While there are plenty of supportive freelance communities out there, the chances are that if you encounter a problem – whether it’s a difficult client or a very overdue invoice – you’ll have to deal with it on your own. Are you cut out for working alone, with no support? If you’re a sociable person who usually thrives in a team, you might find it difficult to adjust to working on your own.

Limited company vs. sole trader

If none of the above has put you off, and you’ve decided you’ve definitely got what it takes to be a success in the world of self-employment, it’s time to take the next step towards achieving your goal. The first thing to think about is what kind of company structure your new business venture will take, and in the UK you have three main options.

Setting up as a sole trader

The easiest option if your business is just going to be you on your own – if you’re a freelancer, for example – is to become a sole trader. This means you’ll be personally responsible for any losses your business makes, but you get to keep all the profits you make after tax. You can use your own name or use a business name of your choice, but you’re not allowed to use trademarked names or terms such as ‘Ltd’ in your company name.

It couldn’t be easier to set up as a sole trader; simply register as self-employed with HMRC and away you go. All you’ll need to do is file a tax return each year, pay Class 2 and 4 National Insurance and keep a record of your business accounts. You’ll need to include your business name and address on any official paperwork you produce, such as invoices and letters.

Setting up as a limited company

There are pros and cons to setting up a limited company. On the plus side, it keeps your company legally separate from you, meaning that if your business makes losses or goes bust, your personal finances aren’t affected. Some also feel that being an officially registered company and being able to put “Ltd” in your company name lends more credibility to your business.

The downside is that there’s more admin involved in setting up and running a limited company. You’ll need to register your business with Companies House, appoint at least one director, and you’ll need at least one shareholder. The accounting burden is greater, too, and all your company finances are publically available for anyone to view. Find out more about registering a limited company.

Setting up as a partnership

The third option is designed for people who want to go into business with someone else, but who don’t want to become a limited company. You can set up a business partnership with one or more other people (confusingly, you can also go into partnership with a limited company), and you’ll share equal responsibility for any expenses your business generates or losses it makes. You also divide the profits equally and each pay tax on your share.

To set up a business partnership, you’ll need to choose a name for your company (similar rules apply as for naming a company as a sole trader), nominate a business partner and let HMRC know.

Regardless of which company structure you choose, you’ll need to register for VAT if your VAT taxable profits exceed £85,000.

Establishing your online presence

Whatever company structure you’re going to choose, you’ll need to start building a presence online for your new business venture. Whether your business is web-based or not, it’s important to make sure that customers and potential customers can find you online. It takes time to establish a website in search engines, so the sooner you can get your new company website up and running, the better.

Before you can proceed with this, you’ll need to decide on a company name. As we saw in the previous section, even if you’re just freelancing and it’s you on your own, you can have a company name around which you can build a brand, or just use your own name. The same applies if you choose to become a limited company; you can still use your own name: ‘John Smith Ltd’, for example.

Buying a domain

The availability of domain names is a key consideration when choosing a business name in this day and age. We’ve written in detail about how to choose a domain, and when you’re ready, you can buy one here. It’s also worth looking to ensure that there are suitable social media handles that match your domain and business name (see below for more on social media).

Find a domain

Setting up a website

Once you’ve bought your domain, it’s time to put something on it. You don’t need to be a web designer or developer to set up a professional-looking website these days. Thanks to the likes of WordPressWix and Squarespace, you can use free or low-cost templates (known as themes) that you simply populate with your own words and images. As a minimum, the pages on your website should include:

  • An introduction to you and/or your company
  • Information about your products or services
  • A simple contact form so that people can get in touch

For creative jobs such as graphic design or copywriting, it’s a good idea to include a portfolio so that potential clients can see examples of your work. You could also add testimonials from happy customers or clients to help add credibility and instil trust.

Setting up social media and business profiles

Many customers expect to be able to find a company on social media, and social networks are powerful marketing platforms for small businesses. Don’t forget to put a link to your website in your profiles on these sites; not only will it take interested customers straight to your site, but the links pointing to your site will help establish it in the search engines, too (more on that later). Discover how to set up a Facebook page or learn how to create a logo for your brand.  

Even if you don’t immediately plan to use social media for your business, it’s still worth registering your preferred usernames. Otherwise, when you decide a year or two down the line that you’re going to use social media, you’ll find that someone else has claimed your perfect username (just look at the confusion that arises for poor @johnlewis on Twitter – an ordinary American man constantly mistaken for the UK retail giant, who’ve had to settle with the somewhat less catchy handle ‘@johnlewisretail’). 

Finding work and growing your customer base

Having set up your business and website, your most pressing concern will be finding work. As you get established, work will start coming to you, but in the beginning you’ll probably need to be more proactive about going out and getting it. Here are some of the business development tactics you could try to help grow your fledgling business into a successful operation.


Business is as much about who you know as what you know, so having a broad base of contacts can only be a good thing. From the moment you set up your business, if not before, you should start being proactive about making new contacts. You never know who you might end up working with, even years down the line.

Offline networking

Traditional offline networking still has its place in the world of business, and local networking events such as business breakfasts can be a great way to meet local businesses who might want to collaborate with you. On a larger scale, industry conferences are another good place to make new contacts.

Whenever you go to events like these, be sure to hand out business cards to the people you meet, and when you get home, connect with them on LinkedIn and Twitter so that you can follow up and keep in touch more easily.

Online networking

This brings us neatly onto the subject of online networking. Social media is, of course, a powerful networking tool in itself, providing numerous ways of meeting new business contacts and finding work. Following people in your industry – and complementary industries – is a great place to start. For instance, if you were a freelance copywriter, you might want to follow people in digital marketing, who are often on the lookout for good freelancers.

You’ll probably find that there’s organised Twitter networking for your area if you know where to look for it. For example, #suahour is a networking session for businesses in Stratford-upon-Avon, taking place at 11-12pm every Thursday, during which local businesses can connect and promote their work and events. You’ll probably find one for your industry, too; #ecomchat, for instance, is the same idea but for anyone involved in ecommerce who wants to share tips and get involved in discussions about issues affecting it.

As with anything, the more you put into social media, the more you get out of it. It’s not something that you’ll find success with if you’re too passive. Make the time to get involved in relevant conversations about subjects that relate to your work and you’ll soon start to get noticed. But – equally important – show some personality, and write about things that matter to you as well as work. You’re more likely to build lasting relationships if you’re being yourself.

Social media – in particular LinkedIn and Twitter – can also be a great source of freelance jobs, as many companies will advertise for freelancers or contractor jobs using these sites. Try searching for your job title (“freelance designer”, for example) and see what you find.

Job sites

Job sites aren’t just for full-time work; there are plenty aimed at freelancers and the self-employed. Regular job sites such as Indeed, or even recruitment agencies, sometimes advertise freelance positions or contract work, which you can apply for just as you would a normal full-time job. Depending on the nature of your work, you might find suitable jobs advertised on dedicated freelance sites such as:

Being listed on such sites also means that potential clients can come to you with work, but be warned: the work advertised tends to be low paid, and while it might offer the chance to pad out your portfolio, you probably won’t be wanting to rely on it in the long-term.


It’s always preferable to have work coming to you rather than you having to look for it, and advertising is another way of making that happen. For some kinds of work – gardening, for example – advertising in your local newspaper and websites makes sense, as your business is aimed at a local audience. If you’ve created a new product, advertising in a relevant magazine could prove a powerful way to raise awareness among its target audience.

If your work isn’t location-dependent (and indeed if it is), online advertising can work wonders. Once you’ve got your website up and running, you could experiment with ‘pay-per-click’ search engine advertising via Google Ads. This is an effective way to get yourself found in Google for relevant searches even if your site hasn’t yet made its way up the organic (unpaid) search results.

You may also want to explore encouraging customers to leave reviews (ensure you stay on top of these).

Working on your own website

Getting your website working harder at bringing work to you should also be a priority, and the more visible it is in search engines, the less work you’ll have to do to find new jobs yourself. Familiarise yourself with the basics of search engine optimisation (see our guide to SEO for new websites) – the art of getting your website higher up the search engine results pages for relevant search terms, making it more likely that the right people will find you.

Search engine optimisation is a process that involves making tweaks to your website to make it easier for search engines to understand. For example, using keywords in the right places tells search engine algorithms what search terms your site is relevant to. It’s also about things like ensuring that your site is structured in such a way that search engines can find and understand all the pages on it, and making sure that your pages aren’t taking too long to load (which adversely affects user experience).

An important part of on-site search engine optimisation is ensuring that your website has plenty of useful and well-written content. Algorithms aim to rank the best content highest, as it will be most helpful to users, so making your website into a useful resource with regularly added content is a wise move. A good way to ensure a steady stream of fresh new content is to start a blog on your website, where you can write about subjects relevant to your industry and to your specific business.

Search engine optimisation is also about improving the way the reputation of your website is perceived, and algorithms assess this by looking at the number and authority of links from other websites to yours. These are seen as endorsements of your site, and the more reputable the source of the link, the better it is for your website. ‘Link building’ is the process of gaining links from other sites and thus strengthening yours. You can combine it with other online activities to raise your profile, such as contributing guest blog posts, articles and expert opinions to other sites relevant to your line of work.

Word of mouth

In the beginning, you might find word of mouth useful in gaining your first clients, as your friends and family may know people who might be in need of your products or services. Try putting out a Facebook post announcing your new career venture and see whether you get any interest. You could even offer ‘mates’ rates’ as an incentive for people to get in touch.

As you start to get established, word of mouth recommendations and repeat business will grow to become your bread-and-butter. To encourage happy clients and customers to recommend you, you could set up a loyalty scheme that gives them an incentive for doing so. Also, don’t forget to ask them for a testimonial so that you can include their words on your website – it’s a great way to instil trust in potential new customers.


While it’s far from the most exciting aspect of running your own business, accounting is also one of the most important admin tasks you’ll have to do as a business owner. From creating invoices to filing your tax return, accounting underpins everything your business does, so getting to grips with it will make life much easier. If numbers aren’t your thing, don’t worry – basic accounting doesn’t have to be daunting, and you can hire an accountant to do the official stuff for you.

Day-to-day accounting

On a day-to-day basis, your business accounting will mostly revolve around creating invoices. You’ll need to decide on your payment terms (30 days is standard, but it’s up to you) and find a way to create professional-looking invoices. Many self-employed people choose to get all their invoices created and sent off on the last working day of the month to minimise the amount of time spent on accounting. Alternatively, you might prefer to get invoices sent off as you go along, as soon as the work is completed, which results in a steady trickle of income throughout the month.

For generating sleek invoices, and for keeping track of both your income and expenditure, accounting software or apps are well worth investing in. The good news is that there are some excellent free options out there, such as Wave Apps, designed for small businesses.

Don’t forget that your business expenses can be offset against your tax bill, so keep all your receipts and organise them into envelopes by month as you go along. There are lots of expenses you can claim for, including professional membership fees, business insurance (such as public liability or professional indemnity insurance), office furniture, stationery and equipment such as laptops, postage and delivery costs, phone bills, travel expenses and so on. If you work from home, you can even claim a percentage of your house running costs because you’re using your home as an office, including your mortgage or rent, utility bills and council tax.

Tax return

If the thought of filling in a tax return fills you with horror – and even if it doesn’t – hire an accountant! Accountants really are worth their weight in gold and will be able to save you more money than you pay them, as they know all the ins and outs of the tax system, what you can claim for, and so on. When you’re busy running a business, it will also be a huge weight off your mind for someone else to deal with your tax return on your behalf.

As an employee on ‘pay-as-you-earn’, you can pretty much forget about tax because it comes out of your salary before it hits your bank account on pay day. Something you’ll need to get used to when you’re self-employed is manually making tax payments to HMRC. This happens twice a year: once in January and a payment ‘on account’ in July. You’ll need to make sure you save a percentage of your earnings each month to ensure you’ll have enough to pay your tax bill; around 25% of your earnings should be ample, and then you’ll probably have a bit left over.

If you earn over the VAT threshold you’ll need to submit VAT returns, and if you’ve set up a limited company, you’ll need to pay corporation tax, which you can find out more about here.

Keeping motivated/working from home

Without a team around you or a manager to report to, you’ll be solely responsible for motivating yourself to bring in work, actually do the work, and get through all the admin and other tasks that come with running a business. Motivation can be a problem even for the most driven of self-employed people at times, but with the right approach you should be able to keep yourself on track for the majority of the time.

Creating the right working environment

The nature of your workspace depends, of course, on the nature of your work. If you’re making things, you might need a studio, for example; if you’re writing or designing, you simply need a desk. Either way, give yourself the space you need to work effectively.

Working from home

If you’re going to be working from home, set aside a dedicated workspace where you can work without being interrupted. If you don’t have a spare room that you can use as an office, make space for a desk; a bureau can work nicely, as you can then shut the lid when you finish work and achieve more of a separation between work and home.

On the subject of keeping your work and home lives separate, many self-employed people choose to go a step further and set up a ‘garden office’. These can be anything from a modestly-priced garden shed or summerhouse to a glamorous purpose-built work pod, but they’re easy enough to set up if you have the space. Get more tips on keeping productive when working from home here. 

Working from an office

If you think you’ll struggle to motivate yourself to work at home, an alternative is to get yourself some office space somewhere else. The downside is that it will involve a commute of some kind, but some people prefer the idea of getting out of the house to go to work; it puts you in a work frame of mind, and again, keeps your home life separate from your work life. Of course, if you’re setting up your own company and plan to hire people, you might have no choice but to rent some office space.

If your budget doesn’t allow you to rent a whole office to yourself, or it just doesn’t seem worth the expense, you could instead try hot-desking or a shared office with a service such as We Work.

Routine, and the importance of breaking it

Some self-employed people make the decision to continue working 9am to 5pm, Monday to Friday, as this helps them feel as though they’re going to work and gets them in the right frame of mind for doing so. Others might choose to start and finish work early, to have a few hours off in the middle of the day, or to have a late start and late finish. Different people are more productive at different times of day, and the beauty of self-employment is that you can take advantage of the times you are personally at your best.

Whatever you do, you might find that it helps to have some kind of routine so that you get into the habit of working efficiently. Starting the day by planning what you’re going to get done that day will help set the right tone, and breaking bigger jobs into several smaller ones will make it easier to feel as though you’re making progress.

Part of managing your workload properly is also factoring in time for breaks and days off. When you’re self-employed, the more you work, the more you earn – time is money. The problem with that is that you can be tempted to work every single day of the week without a break. While this will boost your earnings in the short term, it can also lead to burnout, which will have a dramatic impact on your longer-term productivity. So, be sensible about having time off and try to schedule at least one day a week off. It’s important for your wellbeing, and you’ll find you work better if you’ve allowed yourself time to rest.

There will be times when, no matter how hard you try to concentrate, you just can’t seem to get anything done (this can be a sign that you’re overworked – when did you last have a day off?). If you’re really not working productively, but you have too much work to do to take time off, try switching to a different task for a bit, whether that’s another job or even just some admin. Try working from somewhere else, as sometimes a change of scene can be enough to spur your brain cells into action. Ideally, though, stop work completely and come back to it.

Managing your workload effectively

Another important aspect of staying motivated is planning your workload effectively. Depending on the nature of your work, you’ll probably be juggling multiple projects at any given time, and you’ll need a way to keep on top of everything. For freelance creative work, project management tools such as Trello and Asana are a great way to keep track of project statuses and deadlines. Alternatively, you might find that a simple To Do list on good old-fashioned pen and paper is enough to keep you on track.

Time management skills are crucial, particularly if you’re no longer working standard hours. There will be many conflicting demands on your time: completing work, business development, admin, answering emails, answering the phone – the list goes on. It can easily become overwhelming if you’re not careful about how you organise your time. If you’re finding you’re getting distracted by social media, you can use apps to limit your access and help you concentrate. 

Find out more about managing your freelance workload here.

Useful resources

If you’re about to become self-employed in the UK, there are lots of helpful resources out there to support you on this exciting journey. Here are some of our favourites.

Advice and support

  • IPSE (Association of Independent Professionals and the Self-Employed) – there to speak up for the rights of the self-employed community and provide lots of useful guides to all aspects of working for yourself. Also offers training and professional development, with a host of other benefits if you become a member.
  • Being Freelance – an excellent podcast that interviews freelancers about their secrets to success
  • Working for yourself – Government advice and guidance on becoming self employed
  • Late payments – what you can do when clients don’t pay on time


  • Trello – a handy free project management tool
  • Whereby – free one-click video conferencing
  • Wave Apps – free accounting software for small businesses

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