Contrary to popular belief being employed and self-employed are not opposites. This means you can freelance!
Having a full-time salaried job while earning extra coin is likely to be welcomed in these tough and unpredictable times!
Perhaps you’re wanting to set up a business as a freelance or are thinking of offering your services elsewhere! But if you don’t quite have enough clients or bookings it may be difficult to make the jump just yet.
In other words, you need a full-time salary to provide your base income. While you put in a few evening and weekend shifts to build your freelance career.
If Covid-19 has rocked your financial world you might be wondering if your regular job is going to last.
With record redundancies in the UK this year and firms laying off tens of thousands of staff, it’s wise to have a back-up plan.
So, why not set up a little business that will help you earn some extra pocket money and prepare a potential plan should your regular job go sour?
Is it legal to be employed and self-employed? Absolutely! But here are a few things to look out for.
Check your contract
Moonlighting sounds fun and has obvious rewards, but you better check your boss is happy first. You don’t necessarily have to inform your employer of your newfound income stream, but you should check your contract to see if there is anything in there against it.
Some contracts prohibit side work even if there is no conflict of interest, whereas others specifically warn against working elsewhere in the same industry.
HMRC never informs your employer if you registered as self-employed. But if you form a limited company your details are publicly available. If you’re unsure or a bit nervous then a friendly chat with your line manager might not be a bad idea.
Taxing question if you freelance
The downside of earning more money is paying more tax. So, you should do your homework to see what the tax implications might be to your new part-time side role.
Whether you work as a sole trader paying income tax and National Insurance or operate as a limited company you will need some advice.
Limited companies pay Corporation Tax, VAT and tax on dividends, and working out how to pay the right tax at the right time can be a minefield. If you want more details about what limited companies need to file, we have recently looked at that subject.
You’ll need to register with HMRC no matter whether you are becoming a sole trader or whether you are setting up a limited company.
As a freelancer and an employee, you get the best of both worlds. You get the security of a base income with holiday and sickness benefits but you also have the flexibility to earn more and on your terms.
Plan well, get advice and see new opportunities open up as you create yourself a ‘new normal’.
If you are exploring the idea of freelancing while being self-employed, you can contact us at Concept Accountancy for help.