There’s a downside to self-employment that doesn’t get talked about much: the significant lack of perks.
You’re the boss, the employee, the accountant, the marketing department and administrator all in a package of one. If you are off sick, work can grind to a halt and no one will cover your sick pay. Want to take a two-week holiday? That’s not just two weeks off unpaid but two weeks of no income.
Is there a way for you to get the perks of employment whilst you’re self-employed? A bit of foresight, planning, and creativity and you absolutely can…
Pension
First up, your pension. The ONS found that 35-54-year-olds who are self-employed are more than twice as likely as their employed peers to have no pension accrued. Employees are automatically enrolled in the Government’s workplace pension scheme (unless they choose to opt-out) meaning their employer contributes an additional 3%.
There’s no such scheme for the self-employed. But if you set up your own you’ll get up to 25% tax relief on your contributions. Of course, if you contribute enough national insurance you’ll get a state pension too, but it’s worth setting up your own as well. For that, you have three options:
- An Ordinary Personal Pension
- A Self-invested Personal Pension (aka SIPP)
- A Stakeholder Pension
We recommend speaking to an independent financial advisor to discover which option is best for you. Not only because you’ll get tailored advice to your own situation but in the unlikely event that your provider goes bust, you’ll be protected.
Whichever you choose, set up regular payments and check in regularly to make sure it suits your needs as you grow your business.
TIP: Don’t forget to check whether you have any pensions from previous employment, as you could consolidate them when you set up your self-employed pension.
Paid holiday
Taking a holiday is one of the toughest things for self-employed. The lack of earnings, while you’re off, can put you off taking anything more than a couple of days at a time. But it’s so important to take regular breaks to ensure you don’t burn out and that you maintain a good work-life balance.
If you’re employed and work full-time for five or more days a week, you’re entitled to 28 days paid holiday, not including bank holidays (which some employees pay, some make you take them from your annual entitlement).
How can you get a similar level of time out without it crippling your cash flow?
- Give yourself at least 28 days allowance and commit to taking it.
- Plan your holiday at the start of the year. Get your calendar and block out your holiday days, preferably with at least one to two-week chunks every 6 months.
- Whenever possible, put money into savings to cover your holidays. If you know you’ve got a two-week break in six months time, can you squirrel enough away to cover your outgoings whilst you’re on holiday? This will make taking holidays much easier on your bank balance and your conscience.
TIP: Lots of employers now give their staff their birthdays off as a bonus day. Why not start your own tradition and take it off too?
Sick pay
Statutory sick pay (SSP) is £94.25 per week if you’re employed. Self-employed? It’s £0.00.
Not getting SSP when self-employed often leads to entrepreneurs powering through illness and continuing to work. That’s a road to burnout and could cause more serious health problems down the line.
Putting something in place to cover you if you’re not well (minor or serious) is really important. If you’re injured or too sick to work for a prolonged period of time, it could have dire consequences on your business finances and your personal finances.
It can be avoided though, with one, or both of the following:
- Income protection insurance. Pay into this type of insurance scheme monthly and if you find yourself sick or injured, they will pay you 50-70% of your pre-tax profits generated by your business
- Savings. You can create your own cushion of cash for illness or injury by making regular savings which you only call on when sick.
TIP: Prevention is better than cure. Look after your health by eating well and exercising regularly. If you can afford to, take out a private healthcare policy that offers an annual health-MOT to help you keep your sick days to an absolute minimum.
Flexible working
This is probably the easiest perk for the self-employed to put in place. Flexible working is often offered by employers to help them fit childcare, caring responsibilities and studying around their work. You’re the boss and when you work for yourself, you get to choose your hours and pattern of work. So, want to start early and finish early? Do it? Need to pick the kids up from school every day? Schedule it in!
And don’t feel guilty for doing it! It’s one of the biggest perks of self-employment – you can break free from the 9-5, so embrace it and make it work for you!
Training and development
Good employers invest in their staff’s development and progression by offering training and study options. When was the last time you invested in your own development?
It doesn’t have to cost you money to broaden your skill set. With websites like Skillshare, Udemy and the Open University’s free OpenLearn portal you can keep your own CPD up to date without breaking the bank.
Hopefully, you can see how easy it is to have all the benefits of employment and self-employment without having to go to work for someone else. It just takes a bit of planning, foresight, and saving.
