Freelancing and being self-employed.
working in the Gig Economy - a basic guide
Whether you are thinking about working for yourself or applying for a position that
requires you to be self-employed, the following information may be useful.
Self-employment & Freelance definition
A freelancer is a person who is self-employed and is not committed to a particular
employer long-term. A freelancer can either be totally independent managing all their
own work or can be represented by a company or an agency that resells their labour
and that of others to its clients, with or without project management.
Fields in which freelancing is common include: music, journalism, graphic design,
filmmaking, webdesign, management consulting, illustration and translating.
Whether you're employed or self-employed depends on the terms and conditions of
your work. It's important to know your employment status because it affects
employment and benefit rights, and how you pay tax and National Insurance. It is not
always clear cut which category applies. More information can be found at:
Note for international students.
If you are a student from outside the European Economic area and here in the UK on
a student Visa you are not allowed to work on a self-employed basis.
Things to think about
Tax and National Insurance
Unlike being an employee, where tax and national insurance is deducted at source
by your employer, a self-employed person gets paid in full for the work they have
completed and then at a later date they have to pay income tax on any profit they
have made. They are also responsible for paying their own national insurance
contributions.
If you are self-employed you need to register with HM Revenue & Customs (HMRC)
When you start to trade to avoid a penalty being imposed. A short webinar by
HMRC explains about registration:
For more information you can visit the HMRC website:
Record Keeping
When self-employed it is a legal requirement to keep records of all income and
expenditure. These records do not need to be complicated but they do need to be
adequate to track all transactions, and to record VAT if you are registered for VAT.
They can be paper or digital based, and you must keep the records for 6 years.
HMRC have a short introduction video on record keeping here:
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HMRC have also introduced some simpler schemes for small businesses, to make it
easier to record income and expenditure. More details can be found here
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Contracts
It is good practice to sign an official contract that ensures both parties are clear on
the agreed work to be completed. It might address issues such as payment rate,
time scale, and intellectual property ownership of any work completed. If you have
any concerns about the detail of the contract it is recommended that you take
professional advice.
Invoicing
As a Freelancer you will need to invoice your customer for work completed. All
invoices should contain as a minimum:
Your company name and address
A unique reference number
The date of supply (tax point)
A clear description of what you are charging for
The amount to be paid
The payment terms and ideally a due date for payment
If Vat registered additional information is required such as your VAT number,
net amount charged excluding VAT, VAT rate
Depending on your individual business you may want to include other information,
such as your bank details to enable BACs payments.
Insurance
You need to ensure you have adequate insurance cover. If you are freelancing for a
company check with them if you are covered under their insurance or if you need to
have your own.
Some types of insurance you may need:
Public Liability: Relates to any claims against you if you or your business has
caused injury or death to a member of the public or damage to their property.
Professional indemnity: Covers businesses giving advice or providing services in a
professional capacity. It protects against legal liability for losses suffered by
customers as a result of negligent advice.
This is just a very brief introductory guide to some of the issues involved in being a
self-employed freelancer. If you require more advice on being self-employed or
starting a business LAUNCH.edis a free and confidential service available to all
current students and alumni within two years of graduation. Full details of the
services they provide, and the link to book an appointment with an adviser, can be
found at:
Further information
Other links that you may find useful are:
General advice on self-employment and starting a business:
Detailed guide to self-employment, produced by AGCAS:
Scottish Institute for Enterprise:
Cultural Enterprise Office:
Alison Gee
Launch.ed
March 2017