Being self-employed but working for an employer can be confusing.

The situation may differ from one professional to another. For instance, an individual may work with a single company without earning via PAYE as employees do. In another case, a professional may work full-time with an organization, yet have their start-up.

If you’re considering either situation, understanding it in depth is important. It will help you manage your taxation and give you a realistic view of what it is like to be self-employed yet working with an employer.

We have enclosed all that information in this informative guide. We have reflected on both aspects individually and collectively to offer you a comprehensive view. By the end of it, you will learn about taxation and the negative and positive sides of doing both simultaneously.

The Basics of Employment and Self-Employment

Before you explore what it is like to be self-employed but work for an employer, it is essential to distinguish these two terms.

1. Employment

Professionals, irrespective of their career level, tailor their marketing documents, such as a resume, cover letter, and LinkedIn profile. For instance, they create their well-formatted executive CV according to the job they apply for. Once they receive the call for an interview and ace the interviewing stage, they are offered the position.

The applicants operate under a contract and provide services in exchange for a specific wage or salary. The contract is mainly fixed, but their numbers may influence it. Nonetheless, they receive a particular income at the beginning of every month.

1. Taxation: In this system, an employee isn’t responsible for the taxation. The employer bears Income Tax and National Insurance contributions via the Pay As You Earn (PAYE) system.
2. Pros: While the benefits package varies depending on the company, position, and field, the common ones are holiday pay, sick leave, and pension contributions. It may also include health insurance, life insurance, disability insurance, and vision insurance. You have complete control over which organisation you want to work at as an employee. Your employer will provide you with many training and development opportunities to grow professionally.
3. Cons: Balancing personal and professional life is challenging for professionals, especially mothers, and employees looking after their sick families. It is also difficult for those who study alongside their work. Overworking, large workloads, and pressure from management may cause stress, anxiety, and other health issues. Long-term employees may face trouble with salary growth.
4. Supervision: As an employee, you will work under the direction of your supervisor, manager, and employer. They will control your activity regarding tasks and working hours.

2. Self-Employment

While working in a self-employment model, you will be responsible for your success or failure. Whether you provide services as a freelancer or start your own business is up to you. You wouldn’t involve yourself in the traditional recruitment process. Yet, you will hunt for clients and pitch your proposals. The more orders you get, the more earning opportunities you will gain.

1. Taxation: You will become subject to calculating and paying your Income Tax and National Insurance through self-assessment. The taxation can be more or less depending on your earnings.
2. Pros: The earning potential is relatively high. You have complete control to boost your income. You will also have the creative freedom to test and try different innovative strategies. Self-employment offers the flexibility of routine. This enables you to plan your routine per your work and personal commitments. You don’t have to say no to anything important when you have complete authority over your schedule.
3. Cons: Unlike employment, where you receive a fixed salary monthly, self-employment doesn’t offer consistent income. You may hit the jackpot one month while you live from hand to mouth the next. Independent contractors might also have to bear higher taxes and isolation. There are also no employee benefits, such as insurance or medical coverage. Plus, the responsibilities and pressure are comparatively higher.
4. Supervision: You are your boss. You decide how many hours you work daily, at what time, and from which location. You also have the freedom to choose clients and recruit professionals for your team when your clientele grows.

However, you would still need a well-made resume to attract clients. Consider professional CV writing to ensure your document highlights your qualifications, experiences, and skills effectively.

What It Is Like to Be Self-Employed But Working for An Employer

Working with a company as a self-independent worker or being an employee while still having a business in the UK is perfectly legal. However, you should meet specific criteria for self-employment standards set by HMRC (Her Majesty’s Revenue & Customs).

Additionally, many self-employed individuals work with a single client for an extended period. They require careful consideration in the UK, especially after IR25 legislation. The purpose of this law is to identify all ‘Disguises employees.” Its objective is to identify self-employers who work similarly as employees to avoid taxation so that they contribute correctly to their due taxes.

For this, authorities have mentioned factors that determine the self-employment status, such as:

• The level of freedom over how, when, and where the individual works
• The capability to delegate work to others
• A contract between the client and a self-employed contractor

Note: Any misclassification may result in massive taxation and penalties. Therefore, check your status set by HMRC through the Tax (CEST) tool or consult with a professional for clarification.

Perks of Dual Employment Status

Being self-employed but working as an employer can drive you many perks, such as:

• A chance for additional income, leading to financial stability and a better lifestyle
• Gain an extensive skill set that can be applied to diverse roles
• The opportunity to test and try different strategies for running the business while having job security
• The flexibility of self-employment comes with a stable income

Drawbacks of Dual Employment Status

Like a coin has two sides, dual employment status comes with its own set of drawbacks, such as:

• While balancing both work commitments is rewarding, it can easily cause burnout. The individual has a lot on their plate, which, if not managed well, can cause excessive anxiety and other health issues
• Understanding the applicable tax laws and meeting them requires perseverance to stay from unfavourable outcomes
• At times, there might be work restrictions when signing employment contracts. Staying aware is vital for ensuring you perform without any conflicts

Final Verdict: Self-Employed and Employed At the Same Time?

If you still have this question after all the above discussion, then one short and simple answer is:

“Yes!”

Nonetheless, you should explore its legalities and taxation rules by visiting government official websites or via professional consultants. Once you know them, strictly abide by them to protect your earnings and maintain integrity.

Lastly, if you want to impress your potential employer, strengthen your resume. Back it up with relevant facts and achievements. If your composing skills fall short, seek the assistance of an experienced CV maker.