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As many know, employees have rights on how many hours a week they must work on average. Most employees do not work more than forty-eight hours a week and receive overtime pay for additional hours put in. When self-employed, however, these rules do not apply. A self-employed person could work seventy hours a week, if that is what is needed, and would get paid no overtime or nothing else additional. Because they work for themselves, their wages depend on what they bring in.
Another responsibility that is given to the self-employed is taxing their income. A self-employed person must allot for his or her own tax payments and follow the guidelines set by the government. Normal employees depend on their employers to do this task for them and are not required to worry about this.
Well there are pros and cons to each. A private company means you will have to have all your accounts audited by an accountant which will cost you around £500.00. However, there are substantial tax benefits from being a limited company as you can save on paying National Insurance Class 4 contributions.
Here are some examples:
Being an LTD company also protects your personal assets should your business get into financial difficulty. If you're starting out a capital is restricted and you expect to earn under £20,000 then it may worth sticking to being self employed and then move over to being a private limited company when have more money available to you.
Typically, self employed people get a bad deal with getting competitive mortgages. The reasons why are obvious; to the lender they are a risk, an unknown quantity. They could earn £100,000 one year, but only £10,000 the next year, so it's clear why lenders are cautious.
Traditionally self employed people had to go for self certified mortgages which means you need no proof of income. It may sound ideal but the rates are much less competitive, usually 1% to 4% above normal mortgages which is quite costly.
Over the last few years with more and more people working on casual contracts and freelance work lenders are becoming more flexible. If you can prove your income over the last three years then you stand a very good chance. Proof will need to be provided by a certified, or better yet a chartered accountant. Many lenders will accept your tax SA302 form which show your income declared to the tax office.
For those with less than 2 years proof may find it difficult to get anything other than a self-certified mortgage. If you are self-employed and your partner is on fixed income then this will make your chances of securing a competitive mortgage much improved.
All businesses have to comply with certain legal requirements. This can include requirements in relation to Health and Safety, Trade Descriptions Act, Data Protection Act and Employment Law, to name but a few.
As well as being a legal requirement, good health and safety practices pay for themselves by improving your reputation with customers, the local community and most importantly your own employees. If you employ five or more people, you are required to prepare a statement of policy on health and safety at work and to make arrangements to put this policy into practice.