Being your own boss can be brilliant. You get more control over what you do, who you work with and, sometimes at least, when you do it.
The less glamorous bit is that you also become the finance department, payroll team, pension manager, invoice chaser and chief tax worrier.
That’s why we’ve launched our brand new Good Guide to Self-Employed and Small Business Finances, in partnership with EQ Investors. It’s designed for freelancers, sole traders and small business owners who want to get a better grip on their money, without having to become an accountant in the process.
Why managing money is different when you work for yourself
Self-employed finances come with their own particular pressures.
Income can vary from one month to the next, and tax bills have an irritating habit of arriving when you’d much rather spend the money elsewhere. And many of the financial protections employees barely have to think about, including employer pension contributions, paid sick leave and holiday pay, disappear when you go it alone.
Then there is the business itself. Are you charging enough? Should you be a sole trader or limited company? How much should you put aside for tax? Are you properly planning for quieter months?
Our guide tackles these questions in plain English, with practical steps you can actually use.
Small habits can make a big difference
You don’t need a complicated financial system to start feeling more in control. Some of the most useful habits are surprisingly simple: keeping personal and business money separate, putting tax aside as payments arrive, building a cash buffer and spending 20 minutes each week checking invoices, expenses and cashflow.
We also look at Making Tax Digital, VAT, allowable expenses and payments on account, as well as how to work out what you really need to charge once pension contributions, holidays, admin and non-billable hours are factored in.
All this is crucial because being busy is no guarantee that your business is paying you properly.
Don’t forget about future you
When you work for yourself, it’s particularly easy for pensions, investing and financial protection to slide down the list behind whatever needs doing today.
The guide explains how to build your finances in layers, beginning with emergency savings and tax reserves, then protection, before moving towards longer-term investing through pensions, ISAs and other investments.
There’s also expert guidance from EQ Investors on financial planning for business owners, sustainable investing and what to think about before, during and after selling a business.
Make your business money match your values
For Good With Money readers, there might be another question on your mind: what is your business money helping to fund?
If you care about the suppliers you use, the clients you work with or the environmental impact of your business, it makes sense to look at your bank, pension, savings and investments too.
You don’t have to overhaul everything at once. The aim is to make thoughtful choices that support both your financial security and the kind of business you want to build.
Read The Good Guide to Self-Employed and Small Business Finances here.
