The workplace is changing more rapidly than ever before, and the number of people who are choosing to be their own bosses if steadily growing.
Even when you work for yourself, you need to make sure to take care of the legal aspects of the business, and work out the best scenario for yourself. Most people go for either registering as self-employed, or as a limited company.
There are pros and cons to both of these options, so let’s go through some of them to help you make up your mind.
This is the simpler solution than actually forming a company. There is less administrative work involved, and you can do it yourself or hire an accountant to keep an eye on the finances, so you have more time to work. Even if you do make a mistake with the paperwork, the penalties will not be too harsh.
It also means that you are in control of the business, and there is nothing to distract you from the work. You don’t have to discuss your business with anyone, and you can easily abandon the venture if things don’t work out.
The clearest risk of this type of registration is that you risk losing your personal belongings if you end up in debt, something limited companies are never faced with.
Another important question to consider is how many of the big players will trust you if you don’t work for a company, and are a one man show. You can of course work around this, but bear in mind that some businesses will always prefer to work with a company rather than an individual.
Being a limited company means that you look more reputable in the eyes of many, but you can also retain some of the benefits of working alone.
The first clear benefit of this type of company formation is the fact that if you go bankrupt, you will only be liable for what you have actually invested in the business, and your personal belonging will stay out of it.
Another important thing to consider is the taxes you will pay as a limited company – so make sure you look into the specifics before you start the registration process. The fact is, you might actually end up paying less tax.
You will need to invest a certain amount of money in the registration process, but it will likely not be too much, and some of the benefits we listed could outweigh the costs. This investment is the amount you will be liable for down the line as well.
As with any big decision, you need to consider your future plans before you come to a definite one. If you are looking to work with some of the bigger names in your industry, you might want to form a company, to provide them the sense of security they are looking for. On the other hand, if you are still in it for the smaller fish, then being self-employed might also be a feasible option.
Your choice will mostly depend on the kind of work you do and the people you work with – designers and writers can often get by by simply being self-employed.
Remember that you do need to sort your status out legally, and that you can’t just remain a freelancer forever – some sort of legal arrangement is necessary for you to be able to reap all the benefits of the shifting workplace.
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