So whether you’re just starting out on your own or you’re a seasoned pro, there will come a time that you’ve asked yourself why the freelance life seems so attractive.

It’s an exciting step, but getting to grips with your finances is the key to making sure your move to working for yourself is successful.

A survey of over 500 self employed workers by GoSimpleTax across several industries including architecture and engineering, arts and culture, education, finance, healthcare, legal, IT and telecoms and HR saw 14% call out budgeting as one of the main tasks essential to their success.

Yet it’s not all numbers and finances…

The research found that flexibility (70%) and owning their own schedule (65%) were called out as two of the perks of being self employed as well as earning more (14%), ability to travel (8%) and paying less tax (6%).

So there are benefits to being your own boss and choosing when, how and where you work (as well as who for!), and GoSimpleTax has gathered tips and advice for you across business growth, finances and taxes.

Building a business as a freelancer

Getting started as a freelancer, a sole trader or just working for yourself can be one of the most daunting parts of going it alone. Yet it doesn’t have to be.

Whilst GoSimpleTax’s research found that one in ten (10%) of self employed workers found themselves lonely, nearly two thirds (65%) loved owning their own workday and 70% enjoyed the flexibility.

Nigel Sarbutts from The PR Cavalry has given his top tips on navigating the world of business when you go it alone.

Setting up

There is a world of good practical advice about whether to incorporate or getting an accountant (do both) but fundamentally you need to have a real honest talk with yourself about three things:

• Is freelancing a positive career choice?
  If you see freelancing as a stopgap while you search for a full-time role it probably isn’t for you. If you see freelancing as second best to a “real job” it definitely isn’t for you.
• Are you comfortable with financial risk?
  There is no guarantee of income and you have to create your own safety net to carry you through lean periods (and then you have to build another one straight afterwards)
• Get comfortable with the idea that freelancers have to kill their own dinner
  The perennial challenge for freelancers is the requirement to choose between time spent hunting for work and time spent doing the work. It’s a lot of rapid gear changes each week or month.
  Too much hunting and you go hungry next month when you come to invoice. Too little hunting and you go hungry the month after next. Are you good at swapping between roles and selling yourself?

Building a pipeline

Having a steady income and knowing where to find work are two of the first things you’ll need to be confident in when you set up as a sole trader. To find work, there are three main sources of new client work:

• There’s ‘word of mouth’ which will always be your primary source of clients. You can influence this but only slightly, simply by being bloody good at what you do; so good that people are happy to recommend you. Do good work, ask for introductions. Don’t ever be shy of good work.
• There’s your marketing of your personal brand
  This is the stuff you invest time and money in – working your LinkedIn as a combined research/blogging/and outbound sales tool, plus working your other social channels as research and promotion, blogging, going to networking events etc etc.
  This is expensive in time and money, so you have to be disciplined in how you divide your time between the many options here. It can be a massive time drain and we all know how easy it is to kid yourself that an hour scrolling through Twitter is research.
• Finally there are market places, like PR Cavalry, which are more passive new client sources
  There are some general marketplaces and platforms which are highly price driven so look for ones that are deep and niche in your sector. Some charge you to be there whether you get work or not, some take a mighty big bite out of your fees so study the small print carefully.

Marketing yourself

As well marketing your personal brand you need a business development plan – they are two different things! Dig deep into your contacts (look at your sent items, that a treasure trove of people you’ve forgotten you know) and list them in three columns:

• Column A is close friends and family and you should never ask them for work, instead consider who they might introduce you to and then ask them. Be specific and direct about who wants the intro to and why.
• Column B is people you’ve had professional contact with and who will know enough about you to form an opinion of your abilities. These are your real targets and approach them with a personal, specific offer to start a conversation
• Column C is people you know of but they don’t know you so you need to work on gradually moving them into Column B. For example by commenting on their LinkedIn posts and building a rapport.

For each column you need to define your offer – are you an industry specialist or are you a specialist in a type of work that can be applied across different industries. Be precise and now you have a grid of people to approach with a specific and relevant offer.

Selling yourself

Remember that people pay more for specialist skills and experience and generalists are in a race to the bottom.

It’s hard to turn work away but clients who are not “in your wheelhouse” cost you money because you have to put in more of your own time to get up to speed on their sector and the chances that you have to re-do work at your own expense is higher. You can quite quickly get into a spiral when you resent doing the work and that’s the quick way to disputes and losing a client.

Pitch your fees at a level that makes you a bit embarrassed to ask. You’ll lose some opportunities on price but the ones you do win will make up for it and doing the work will make you happier and that will be reflected in the quality of your work and the chances of you being hired for more work or be referred by the clients.

How being freelance can affect your finances

Getting to grips with money and budgeting is one of the parts of being a sole trader or working for yourself that you can’t skip unfortunately. It’s also important to think about your finances in terms of your future too. This can mean your mortgage, your pension and even investments too.

The research from GoSimpleTax found:

• more than half (57%) of self employed workers have savings
• only a quarter of the self employed (25%) have a will
• less than a third (31%) have life insurance
• less than two out of five (37%) have a pension for their future
• only a quarter (25%) have investments for either income or capital growth

Serena Smith from Mortgages with Serena has shared her top tips for getting a mortgage now you’re no longer on payroll:

1. Have an accountant and make them aware you intend to purchase a property, this way they will be aware your net profits are essential for this process and they can also assist with projected accounts.
2. Have at least one year of accounts for when you’re ready to apply for your mortgage or re-mortgage, without this you have no proof of earnings. There are over 100 UK lenders and some may ask for SA302 whilst others will want to view your Tax Year Calculations and Computations. It’s important to have a responsive and timely accountant on your side with this who can make sure you have it all to hand.
3. Sometimes you might be asked for more proof, which can seem more difficult but the same affordability assessments are conducted. It’s just that instead of 1 to 3 months payslips we have to prove further stability to our income.
4. To make yourself appealing to mortgage lenders, have a separate business account and ensure you conduct yourself well regarding borrowing and credit commitments. Be prepared for more questions and be timely with responses on all matters.
5. My top tip is to always consider using a Mortgage Broker with a whole market offering, not all lenders have the same appetite for Self Employed vs. Employed so having an expert can be invaluable.

Don’t let tax be your downfall – how to get ahead financially

Being your own boss means you’ll also be in charge of your own tax too, and this can mean you need to get to grips with what HMRC expects of you and when.

Firstly you’ll need to decide whether you’re going to be a sole trader or set up a limited company. There are advantages and disadvantages to both, but ultimately being a sole trader is the step that many self employed workers take first as it’s quick and easy to set up and allows access to all of your own hard earned profits. In fact, research found that more than half (51%) of the self employed keep themselves profitable by turning to two or more sources of income as a sole trader.

Yet whilst accessing your own money is great, with it comes budgeting. GoSimpleTax found that finances, taxes and self assessment are often seen as the ‘admin’ of the job – and usually left to the last minute. In fact, their self employed survey found:

• 58% of self employed workers don’t know how much their next tax bill will be or have money set aside to pay for it
• Almost a third (32%) say they have ‘some idea’
• More than a quarter (27%) will wait until they complete their return to find the money to pay it.

Here at GoSimpleTax we have put together some guidance and advice for making sure your tax isn’t a headache and that you get it done in good time. Here are our top tips for making it simple, hassle free and keeps HMRC happy:

• Keep everything
  You will need lots of different documents when it comes to setting up and filing your tax return, so make sure you keep:
  – Your UTR
  – Your National Insurance number
  – Information on untaxed income for the year
  – Records of expenses relating to self-employment
  – Any charitable or pension contributions
• Get all your documents and admin together ready for self assessment
  When it comes to the form itself, the key is to have everything you need to hand and ensure you’ve been collating records (i.e. receipts and invoices) properly throughout the tax year.
  There are two sections you’ll need to fill out – the main one is SA100, with other supplementary pages applying for different circumstances, such as being an employee, self- employed, landlord or a foreign national.
• Use the HMRC website for guidance if you’re unsure
  There’s also lots of information online via the HMRC website to help and guide, and using a digital tool can often simplify it too so it won’t seem so confusing once you come to submit. If in doubt, you can make your life easier with tools such as GoSimpleTax self-assessment software, as you’ll be prompted and advised when you input your earnings, which section to fill out, as well as getting an answer on what you owe and advice on the benefit of any tax reliefs you may be entitled to.
• Be prepared and early is always welcomed
  The secret to submitting your self-assessment tax return on time and correctly is to be extremely organised, ready for the impending deadline in January, and to be completely clear about what HMRC is looking for. Otherwise, the whole process can turn out to be both stressful and slightly overwhelming. This means giving yourself time to get it done, and not leave it until 10pm on January 31st where you’ll feel panicked and under pressure to get it submitted.
• Do it in stages if it feels too overwhelming
  The entire process can seem complex but, take your time, use the option to fill it out in stages, save your changes and then go back to it, and ensure your house is in order throughout the tax year (as much as you can). Whatever you do, don’t leave it until the very last minute on the last day of January, as financial penalties can apply if you miss the midnight deadline.
• Don’t panic if you can’t pay everything you owe
  The important thing is to submit your self-assessment tax return and be on time. The earlier the better, and then if you think you’ll be short come January 31st you might be able to set up a Time to Pay Arrangement with HMRC.
  This lets you spread the cost of your tax bill by paying what you owe through affordable monthly payments based on your income and expenditure.
  Time to pay is based on an individual’s specific financial circumstances, so there is no ‘standard’ time to pay arrangement.

Dates for your diary to keep you organised

Getting organised is one of the key elements of being successful when working for yourself, and that means knowing what is coming up in future.

We’ve put together a guide for the freelance calendar and dates you need to know:

• January 31st 2024 – Self assessment deadline
• January 31^st2024 – Balancing payment of any tax due for 2022/23 tax year
• January 31st 2024 – First half (50%) of payment on account due
• April 6th 2024 – Start of new tax year
• June 18th 2024 – National Freelancers day
• July 31st 2024 – Second half (50%) of payment on account due
• October 31st 2024 – Register for self assessment online (new sole traders only)