Working for yourself can come with huge benefits – and extra complexities. You'll be in charge. This gives you more freedom to choose your path, set your schedule, and pursue your passions, but you'll need to manage everything from small business accounting to marketing and customer service.
In this practical guide, you'll learn the key things to consider before taking the leap, along with the benefits you can expect and disadvantages you’ll need to manage when you work for yourself.
What is self-employment?
Self-employment is when you work for yourself, rather than for someone else. Whether you're working as a sole trader, contractor or starting your own business, you'll earn money and pay tax differently from how you did as an employee.
Why become self-employed?
Becoming self-employed can come with a lot of benefits. As the sole decision-maker, you can choose where and how you work, what projects you take on and how to spend the income.
Improved schedule flexibility
Improved schedule flexibility is one of the most common reasons people try self-employment. You can create your own schedule – where, when and how long to work. This means you can arrange your work around other commitments like family and hobbies.
Potential income increase
Potential income increases come with the territory of self-employment. Unlike being an employee, your earning potential is uncapped, so the more you work, the more you could make.
Improved job satisfaction
Improved job satisfaction is often reported by self-employed people. That's because when you're in control, you can design your work environment to best suit you, and choose the work you enjoy most.
Sole decision-maker
As the sole decision-maker, you're in full control – how your work is structured, the tasks you take on, what you outsource, the policies you follow, the goals you aim for and the people you work with.
Considerations before working for yourself
There are a few things to consider before deciding to work for yourself. While there's the opportunity to set your own hours and take-home pay, it also comes with hidden costs, extra pressures and new responsibilities. Here's what to think about.
Be comfortable with being uncomfortable
Getting comfortable with being uncomfortable is a key skill of a successful self-employed person. You'll need to try your hand at new tasks, have difficult conversations with clients and suppliers and face new challenges like cash flow problems. Your responsibilities may increase to managing different teams, locations and systems – and change can take you outside of your comfort zone.
Evaluate your goals and motivations
Evaluate your goals and motivations before you take the leap. Ask yourself, "What am I hoping to get from moving to self-employment?" Is it the flexibility to spend more time with your kids or go travelling while you work? Do you have ambitions to grow a business nationally or even globally? Will you gain broader experience across a range of industries or increase your income? Consider what success looks like for you and what goals you'd like to hit, then regularly evaluate your progress and reassess your goals.
Embrace continual learning and development
Embracing continual learning and development is crucial to the success of a self-employed person. Your work will become more dynamic, you'll be dealing with a wider range of tasks, competing for work, and expected to bring a higher level of expertise than your employed counterparts.
Examples of self-employment career options
Examples of self-employment career options are many and varied – arguably, any work could be undertaken as a self-employed person. However, there are some careers that lend themselves more strongly to freelance work. Here are some examples:
Freelance designer
A freelance designer will be employed by businesses to complete one-off projects – graphic designs for new brands, brochures, websites, white papers or other marketing materials.
Online coach
An online coach, such as a life coach or therapist, will have regular sessions with clients, helping them improve their career, health, finances and more. Because the sessions will be conducted online, you’ll have the freedom to work from anywhere.
Event planner
An event planner oversees every aspect of events like weddings, launches or corporate functions. They'll have creative oversight and also take charge of the details, from venue and decor to entertainment and cleanup.
Digital marketer
A digital marketer helps businesses promote their brands and services online. They may come up with creative campaign ideas, and have the tech skills to understand and work with a variety of digital platforms and analyse results.
Tips when working for yourself
Set clear goals
Set clear goals for what you want to achieve as a sole trader or business owner– is this a step you’re taking to improve your lifestyle, or do you have ambitious growth goals? This can help keep you motivated and focused.
Stay on top of your cash flow
Staying on top of your cash flow is incredibly important. Even if your business is booming, you still need money in the bank to pay your bills – and yourself. Sometimes clients can be slow to pay, or you may deal with unexpected expenses, so good cash flow means managing your spending, sending invoices and keeping on top of your accounts receivable.
Ask for support and feedback
Asking for support and feedback can help you grow, learn, stay motivated and deliver quality work to clients. If you’re a sole trader or contractor, you may largely work alone. Even if you do have people you work with regularly, being the only decision-maker can feel isolating. It’s a good idea to develop your own support network you can turn to for advice and support.
Build relationships and a network
Building relationships and a network is about more than just finding paying clients. You'll also benefit from connecting with others in your field, asking and giving advice, and finding suppliers who can help you deliver great work for clients.
Make networking a priority
Make networking a priority – it's the best way to connect with other professionals, establish yourself in the market, and build your client base. Networking may take the form of industry meet ups or groups, but social media can also be part of the mix.
Think about tax and GST early
Thinking about tax and GST early is a good idea – many sole traders run into difficulties in this area. Unlike employment, where your income tax is taken from each pay, sole traders will pay in lump sums at the end of the financial year.
Similarly, whatever business structure you choose, you'll need to register for and calculate GST, which you'll pay in lump sums. It's a good idea to plan ahead, so you save enough cash to cover these large tax bills when they fall due. The simplest way to do this is to invest in excellent business software from day one. This automates most of your bookkeeping tasks, to give you full visibility of what you might owe.
How to work for yourself FAQs
How hard is it to work for yourself?
How hard it is to work for yourself depends on how much effort you need to put in to establish yourself in the market, set up your business systems, and manage the ongoing admin side of things. If your skills, services or products are sought after, or you already have a good professional reputation, you may get work quickly.
Similarly, if your work requires basic systems and you already have the experience to manage them, you may find the admin side of things simple too. Excellent business software is key here – it can all but eliminate the manual work it takes to manage tax, send invoices and deal with payroll, once you’re ready to take on staff. You'll also get the info you need to track your performance and make better decisions.
What are the disadvantages of being self-employed?
The disadvantages of being self-employed can often put people off. You will have fewer benefits than an employee, such as paid sick, annual and parental leave. Rather than drawing a salary, it's up to you to bring in enough money – and that relies on your clients paying you and your suppliers delivering on their promises. This may mean your income can be inconsistent.
Many people find working for themselves more consuming and that it can be difficult to separate their personal and professional lives. All this can mean more stress. However, for some people, this flexibility, focus and self-reliance are the benefits of self-employment rather than the disadvantages.
Success is in your hands
Self-employment comes with an exciting mix of flexibility, pressures, rewards and disadvantages. Business owners can often expect to make more money, enjoy their work more and pick where and how they work. But it’s not for everyone. People who succeed are generally experts in their fields, self-motivated, adaptable and willing to learn.
You'll also need to keep on top of your cash flow, budget and tax payments, build a network of clients, suppliers and supporters, and have a clear idea of why you’re going out on your own. If that sounds exciting rather than daunting, it might be time to try working for yourself.
Make sure you start your business on the right foot by automating and simplifying the financial side of things – get started with MYOB today.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.