Benefits of being self-employed

Why go self-employed?

Work is a huge part of life and very few people enjoy not having ultimate control over theirs, which is why more and more people are turning to self-employment. The benefits of self-employment are numerous, so it’s easy to get drawn in by the promise of flexibility, autonomy and – let’s face it – more money.

Every upside has a downside though, and being self-employed can also mean long hours, loneliness and an unstable income. My Health Assistant helps to combat these common problems with our comprehensive support platform. You can track and analyse your profile’s performance, network with fellow professionals, and fill slots in your calendar, helping to ease your peace of mind.

You might feel more comfortable going self-employed on a part-time basis at first. This way, you can continue to work for an employer part of the week while you build your confidence and client base, before deciding whether to take the plunge full-time.

Reasons to go self-employed

Working for yourself has huge benefits, with some of the most popular reasons for going
self-employed being as follows:

Maximise your income

Set your own rates and keep 100% of profits

Enjoy greater flexibility

Having more control over your calendar means working and taking time off when it suits you, not your boss

Follow your passion

You can do whatever you’re interested in and only accept projects that you’re excited to work on

Have more autonomy

Running a business means you get to make your own decisions, including adapting your hours depending on the amount you want to earn

Work from anywhere

You’re not tied to a physical location when you’re self-employed

Claim tax relief

If you work from home, you can claim tax relief on some of your household bills

Once you’re convinced that self-employment is the way
forward, the next step is to consider how you want to operate.

Get started

Deciding whether to set up as a sole trader or limited company

While there are multiple forms of business entity, the two main ways of working for yourself are as a self-employed individual, or as an employee of your own limited company. It’s important to think through carefully which one is right for you, as your choice will impact your personal liabilities and the way you pay tax.

Here’s a breakdown of the differences between working as a sole trader versus a limited company, including the pros and cons of each.

What is a sole trader?

A sole trader is an individual business owner who has complete responsibility for the company’s operations. It’s often assumed that sole traders can’t hire employees, but this isn’t true. Being a sole trader means you technically employ yourself and are also free to employ others.

The main difference between working as a sole trader and setting up a limited company is that sole traders are personally liable for any losses or debts incurred, whereas limited company owners are not. In law, a sole trader is the same entity as their business. This means that any issues your business runs into are your personal responsibility, but it also means that you get to keep all of the profits after tax.

Benefits of being a sole trader

Easy to start

Registering as a sole trader tends to be the easiest route for anyone who decides to work for themselves, as you can usually start work as soon as you find a client. Just make sure that you’ve registered as self-employed by the October following your first tax year of self-employment.

Only one set of taxes

There are few rules and regulations to be aware of as a sole trader, with the biggest responsibility being remembering to register for Self Assessment tax. You’ll be given a unique tax reference (UTR) which you’ll use to pay taxes once a year by 31st January.

Little admin involved

As a sole trader, there are limited admin tasks. Aside from your Self Assessment tax return, it’s a good idea to stay on top of your management accounts with monthly invoicing and payment tracking. Other than that, there is little else you need to worry about.

Drawbacks to being a sole trader

You have personal liability

The most significant downside of being a sole trader is that you’re liable for your business’ debt. This means that, should your business incur any losses, your personal assets (such as your house and car) might need to be sold in order for you to pay off your debt.

Limited scope for expansion

While scaling your business as a sole trader is possible, it often proves to be difficult. This is because being a sole trader limits your management and capital capabilities.

Challenges raising finance

As a sole trader, you can fund your business with your savings or with help from family and friends. In some instances, it’s possible to take out a bank loan, but this is usually a lot more difficult than it is for limited companies.

What is a limited company?

A limited company is a private company that consists of an individual owner or of multiple owners and directors. It’s most common for limited companies to be operated by multiple people, because there can be a lot of paperwork and other business admin for one person to manage on their own.

All limited companies must be registered on Companies House to legally trade in the UK. You can start a business with a capital payment of as little as £1.

Once the business is registered on Companies House, it becomes a separate entity from its owner. This means that the business is responsible for its own actions and you, as the owner, have limited liability for its debts or losses.

Benefits of being a limited company

Shared responsibility

If your business incurs losses or debt, it’s not your sole responsibility to deal with these. All shareholders are responsible for the debt up to their invested share capital amount, which means that your personal assets are protected.


Reduced personal liability

A limited company is a separate legal entity from its owner(s) and director(s). This means that you don’t need to worry about having an insurance policy in case you’re personally sued. In any legal dispute, the worst outcome is that your company will be sued, not yourself.

Tax efficiency

Limited company owners can pay themselves in whatever form they like. Dividends have a lower tax threshold than a salary would, so many limited company owners choose to pay themselves through a combination of dividends and salary. Paying yourself a small salary ensures your National Insurance contributions are met, which is why most don’t pay themselves through dividends alone.

Drawbacks to being a limited company

Preparing annual accounts

As the owner of a limited company, the responsibility falls on you to prepare annual accounts for your business. These accounts must be made available on Companies House. A sole trader, on the other hand, isn’t legally obliged to file any company accounts.

Rigid tax rules

Limited company owners or directors can’t freely draw money from their business bank account. Further to this, any losses made by a limited company can only be used against the company’s own profits. Comparatively, a sole trader can use a loss to reduce their overall income tax.

Financial admin

Owning a limited company comes with a fair amount of financial admin. You need to make sure that you’re compliant with Making Tax Digital, the government’s movement towards a digital tax system. You also have to file corporation tax returns, annual accounts, and confirmation statements. On top of this, each director will need to file their own personal Self Assessment tax return.

What our members say about the benefits of working for themselves:

Are you looking to go self-employed?

Speak to one of our team to see how we can help you get set up.