Employment vs Self-Employment: Which One’s Right for You?

Being your own boss sounds exciting – and for many people, it’s a great move. But it’s not always the easy option, and it’s definitely not for everyone. So how do you figure out whether employment or self-employment suits you best?

The truth is, it depends. Your industry, financial goals, lifestyle, and attitude toward risk all play a part.

At SBX Accountants, we work with both people making the leap into self-employment and long-time business owners looking to grow. Here’s a look at how employment and self-employment compare – the pros, the cons, and what you need to know before making a decision.

The Basics: What’s the Difference?

At a glance, it’s simple. Employees work for someone else and get a regular wage. Self-employed people work for themselves and run their own businesses.

But under the surface, the differences are big – especially when it comes to tax.

Employees have tax and National Insurance automatically deducted through PAYE. If you’re self-employed, you’ll need to manage this yourself – tracking income, filing tax returns, and budgeting for payments. That’s where we come in. At SBX, we help clients stay on top of their records so tax time isn’t panic time.

Self-Employment: Pros and Cons

The Perks

• Flexibility to choose when and how you work
• Control over who you work with
• Potential to earn more by setting your own rates
• Ability to scale your income as you grow

The Challenges

• You wear all the hats – marketing, admin, invoicing, and more
• No holiday or sick pay
• You’re responsible for tax, insurance, and planning ahead
• Income can be unpredictable, especially early on

You’ll also need to:

• Keep proper records (especially with Making Tax Digital already in place for VAT and coming soon for Income Tax)
• File Self Assessments each year
• Budget throughout the year for your tax bill

And if you’re unsure whether to go sole trader, limited company, or something else – expert advice can make a big difference.

What About Earnings?

People often ask us: “Will I earn more if I go self-employed?”

Sometimes yes – especially in industries like consulting, design, or trades, where freelance rates can be higher than employed salaries. But it’s not guaranteed. Many people start by building a side hustle alongside their job before making the full switch.

We’ve helped lots of clients take that step with financial planning and realistic budgeting, so they’re not taking unnecessary risks.

Don’t Forget the Perks of Employment

Being employed often comes with benefits you might not notice until they’re gone:

• Paid holidays
• Sick leave
• Pension contributions
• Parental leave
• Sometimes even healthcare or training budgets

If you go self-employed, you’ll need to plan for these yourself – but it is possible. You can:

• Set up your own pension
• Save regularly for time off
• Claim expenses for travel, tools, and work-related costs
• Access support like Maternity Allowance if you’re eligible

Stability, Security and Client Work

Employment usually feels more secure – you get a regular income, and protections like notice periods and redundancy pay.

Self-employment gives you more control, but it also means finding your own work and clients. That can be daunting at first, but many people find that once they’re established, it’s actually more stable than it seems from the outside.

Getting a Mortgage When You’re Self-Employed

It’s true – getting a mortgage can be trickier when you work for yourself. Lenders will want to see proof of income and good financial records.

That’s where we can help. At SBX, we work with self-employed clients to keep their accounts clear and well presented – so when it’s time to speak to a mortgage broker, you’ve got everything ready.

What About Work-Life Balance?

One of the biggest attractions of self-employment is the idea of having more freedom – to work around family, travel, or just enjoy a better rhythm.

In reality? It takes discipline. Without structure, it’s easy for work to bleed into evenings and weekends. But with the right systems (and a good accountant in your corner), it’s absolutely achievable.

When Do You Need to Register as Self-Employed?

As soon as you earn more than £1,000 in a tax year from self-employed income, you’ll need to register with HMRC. But your responsibilities will vary depending on whether you operate as a sole trader or a limited company.

Not sure where to start? That’s what we’re here for.

Thinking About Going Solo?

Whether you’re just weighing things up or ready to dive in, SBX Accountants can help you plan with confidence.

We offer:

• Business structure advice
• Startup services from £32.70/month
• Tax returns and bookkeeping
• Friendly, ongoing support whenever you need it

Get in touch today or book a free consultation to chat things through.