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Is It Better to Be Self-Employed or Work For a Company?
Posted by: Richard Firth on: 20 September 2021
When you’re nearing the end of your MLP training with us, you’ll be thinking about finding work as a gas installer once you’re qualified and on the Gas Safe register. One of the first decisions you need to make is whether you’d like to find a job with a company or set up as a sole trader.
There are pros and cons for both options.
For many, the idea of being your own boss is the dream. It’s a popular choice in the UK with some 3.5 million people registered as self-employed in 2020.
The advantages are clear. You can work where you want, when you want and once you’ve established a good reputation, tailor the work to suit what interests you most. It’s satisfying working closely with your customers and building up relationships with them so that they come back to you, year after year.
You’re also free to take your business in any direction you fancy and react quickly to changes in the market. However, there are downsides.
You’re on your own for a start, so the buck stops with you and as well as working on gas installations, you’ll have a business to run with responsibilities for everything, from finding work to keeping your accounts. This means that when you’ve finished working on boilers and heating systems during the day, your evenings and weekends may well be taken up with phone calls to arrange future jobs and admin relating to your business.
Before you start, you’ll need to register with HMRC as self-employed. This is straight forward – you can fill in a form online. Once you’re up and running you’ll need to keep your own accounts and take responsibility for your tax return and the tax and National Insurance payments you’ll be required to make, based on your earnings. You may also need to file quarterly VAT returns, so there’s a lot of record keeping and paperwork to deal with.
Your monthly earnings are likely to fluctuate, particularly in the beginning, so budgeting can be an issue. It’s more difficult to raise finance when you’re a new sole trader, so if you’re looking to get a mortgage, for example, you’ll need at least three years of accounts before any building society or bank will even look at you.
As a sole trader, you have unlimited liability for debts. There’s no legal distinction between private and business assets, so if you get into financial difficulties, private assets such as your home will be at risk.
Although you can set your own rate of pay and work as many hours as you want, another problem is that you only make money when you’re working. This can make taking time off for holidays tricky and you’ll need to budget for the breaks you take as well as lean months, where you might not have as much work as you’d like. Similarly, when you’re sick and unable to work, there’s no sick pay to fall back on.
Another consideration is your pension. Companies are required to pay into their workers’ pensions every month, but when you’re a sole trader, you need to set up your own pension arrangements to save for the future.
Many would argue that what you give up in terms of freedom of choice, you more than make up for in benefits. Being employed by a company means that there’s a structure. You don’t have to think about where the next job is coming from and you don’t have to take your work home with you at the end of the day.
As well as this, you don’t have to worry about your tax and National Insurance, these are automatically taken off your weekly or monthly salary and your employer contributes to your pension.
You’re also entitled to other benefits such as holiday pay, sick pay and maternity/paternity allowances that far outstrip those offered to the self-employed.
Another advantage is that when you work for a company, like British Gas, for example you’ve colleagues and the support of a boss to fall back on when things go wrong – or when you just need a bit of advice. Having trained as an installer, you’re equipped with the skills you need, but there’s nothing like having other mates around, with more experience, to help you build a bit of confidence when you’re starting out.
You can see, there are advantages and disadvantages in both cases, so have a think and work out what’s most important to you. Is it your freedom or a sense of security?
Whichever you choose, we’re here to help you on your way, stepping out into the world as a gas engineer.