What Does Being Self-Employed Actually Mean?
As the name suggests, a self-employed person is someone who works for themselves rather than a company or business. Instead of working under a company, those who are self-employed earn their income by contracting with businesses directly.
Whilst someone who is self-employed may engage in a variety of different occupations, they are commonly specialised in a particular type of work. Some examples of jobs filled by self-employed people include the following:
Being self-employed can come with an array of different benefits, one of the main ones being flexibility within their job and working hours. However, whilst providing great benefits, this job type can also come with some negatives, including a volatile, unstable income.
Self-Employed vs Sole Trader – What’s the Difference?
The main difference between a sole trader and someone who is self-employed is that the former is used to describe a type of business structure, whereas the latter signifies someone who works for themselves.
It’s common for people to get confused by these two terms, as technically sole traders are self-employed. However, a sole trader is not the only business structure those who are self-employed can choose from, meaning all sole traders are self-employed, but not all who are self-employed are sole traders.
Some examples of sole traders jobs include:
What Can I Claim as Self-Employed Expenses?
Running your own business will come with various different running costs, some of which you can deduct to reduce your taxable profits. The U.K. government lists the following as allowable expenses, all of which have to be relevant to the business:
- Office costs – e.g. phone bills, stationary, rent, insurance.
- Travel costs – e.g. fuel and parking as well as train, bus, air and taxi fares.
- Clothing expenses – e.g. uniforms, costumes (if an actor or entertainer) and protective clothing needed for your job.
- Staff costs – e.g. salaries for employees and staff members, pensions and bonuses.
- Things you buy to sell on – e.g. raw materials and stock.
- Financial costs – e.g. bank charges and insurance.
- Costs of your business premises – e.g. lighting and heating.
- Advertising or marketing – e.g. website costs, free samples and adverts in directories or newspapers.
- Training courses – for courses that help to enhance skills relevant to your business.
Whilst those listed above are examples of what you could deduct from your taxable profits, they are not the only things you may be able to include. For more details on all allowable expenses covered in these 9 areas, please visit the gov.uk website.