Owning a business in the UKThe first thing you need to know about owning a business in the UK is that you have three different options available to you. You can be a sole trader, own a limited company, or be in a partnership. Whichever option you end up choosing, you’ll still be considered self-employed, and you’ll have to register with HMRC. Owning a business/ working for yourself can vary greatly and can include anything from being a freelance copywriter to owning a large corporation. There are many different options out there, so while there may be certain distinct advantages and drawbacks that come along with owning specific companies, there are a few pros and cons which can be applied to the general owning of a business in the UK.
What are the benefits of owning a business?
- Flexible hours- One of the most celebrated benefits of working for yourself and owning a business is that you have flexible working hours so you can work when suits you. You can schedule meetings and appointments around whatever else you may have going on in your life. This is why being self-employed or owning a business is great for people who want to spend more time around their families.
- Control of your finances- When you work for a company, you don’t get a say as to where the profits go. When you have your own business, you can decide how much to pay yourself, your employees (if you have any) and what to reinvest back into the business. Although you have colour somewhat between the lines, you do have a lot of freedom when it comes to controlling the business finances.
- Potential to make a lot of money- While working a job does give you the opportunity to climb the corporate ladder, at the end of the day, the amount you can make is pretty much capped at a certain amount. When you own a business of your own, there is much more opportunity to make impressive sums of money. While what you make may fluctuate each month, it is very exciting to tweak certain aspects of your business so that you can make more.
- Follow your passion- Many business owners choose something that they are passionate about. While this does not apply to all business owners, entrepreneurship and self-employment do give you the opportunity to start profiting off one of your talents or passions, which can make working very enjoyable.
- Don’t do tasks that you hate- If you are a business owner and there is a task that you really don’t enjoy doing, you can always delegate it to an employee or employ someone to do it for you.
What are the drawbacks of owning a business?
- Financial risk- Starting your own business means that you’ll need a fair amount of capital, which usually needs to come out of your own pocket. Unless you get the interest of outside investors, you may find yourself in a position that puts you at a financial risk. The other thing you need to remember is that you may not be making a profit for the first few months, so you may need some sort of cushion so that your finances are covered during this beginning period.
- No set working hours- While not having set working hours can be seen as an advantage at first, not having this structure can make it exceptionally difficult to maintain a work/life balance, especially for those who are workaholics. You may find yourself dedicating all of your free time to improving your business and helping it grow. And while this could be good news for your business, it may definitely begin to take a toll on your personal life.
- Admin heavy- Owning a business requires a lot of admin. Setting up a business is an exceptionally admin-heavy task with tons of paperwork to fill out and forms to submit online to ensure that you’re all above board. Record keeping and accounts need to be meticulous; otherwise, you could find yourself having to pay hefty fines. Of course you could always hire someone to handle admin for you but that’s going to come with an additional cost.
- Taxes- When you have a job, your taxes are automatically taken off your salary by your employer. Owning a business means that you have full responsibilities for your taxes. You’ll have to pay tax on your personal income, as NICs and potentially VAT when your turnover exceeds a certain threshold.
- No benefits- Unfortunately, when you are self-employed, it is almost impossible to receive benefits like maternity leave, medical aid etc. When it comes to pensions, you’ll have to create your own pension fund and take responsibility for it yourself.
- A massive responsibility- Owning a business is a huge responsibility, especially if you are an employer. The success of your business is important to your livelihood and others. This can put many business owners in an incredibly stressful situation, and the importance of effective stress management cannot be emphasised enough.
Having a job in the UKHaving a job can come in many different forms, but the biggest divide between jobs in the UK is probably part-time jobs and full-time jobs. Just like owning a business, there are many different types of jobs that you could have. Having an official job means that you have signed a contract with your employer and certain tasks are expected of you, and in exchange, you will receive weekly wages or a monthly salary.
What are the advantages of having a job?
- Receive a set monthly income or weekly wage- One of the best things about having a job is having money that you can rely on each month. This makes budgeting and saving for things like cars and holidays much easier as you can plan for the future, unlike business owners that may be making fluctuating amounts each month. Having a steady income means that you know exactly how much you can spend.
- Have your taxes done for you- When you have an employer, it is their responsibility to register with PAYE and have your salary automatically taxed. All of the admin is completely their responsibility, and all you have to do is sit back, relax, and receive your salary at the end of every month.
- Enjoy a team environment- Being a business owner or entrepreneur can be quite a lonely profession, but being an employed person often means that you’ll be part of a team and (hopefully) get to work alongside like-minded individuals. This social environment may introduce you to new people and help you extend your network of friends.
- A decisive work/life balance- Having a job usually means that you have very clearly defined working hours, and when you get home, you can forget about work and take time to relax, spend with your family, and focus on your hobbies. Your work life and personal life are separate, and this separation has proven to be healthy and help employed people maintain a good work/life balance.
- Benefits- Full-time employees can enjoy a wide range of benefits in the UK. Depending on the company you work for, you should enjoy paid holidays, sick leave, medical aid, pension, maternity leave, and more. You may even have free access to career guidance and psychologists, among other professionals. The benefits associated with having a full-time job is one of the top reasons that make it so attractive.
What are the drawbacks of having a job?
- Not as much opportunity to increase how much you earn- While you can attempt to climb the corporate ladder and find ways to get promotions and wages, most times in a company,,, there is not much opportunity for growth, and you may be stuck in your position for life. This can be very frustrating, especially for people who want to see themselves grow and learn new things.
- Helping someone else achieve their dream- At the end of the day, being an employee usually means that you are helping someone else achieve their dream. Even if you’re in a job that you truly love, you may begin to realise that the company’s ethics don’t align with yours, and you could find yourself in a bit of a predicament.
- Being told what to do- It may seem trivial, but one of the things that many employed people complain about is being told what to do. Your happiness in the workplace depends quite heavily on your boss and how they treat you. Having an unkind or unfair superior can quite quickly start driving you mad. As an employee, you don’t get any say of who you have to work with, and personality clashes and differences in opinion can be explosive.
- Rigidity- If you are someone who values flexibility, a full-time job may not be for you. Signing a contract means that you fully agree to the strict and often rigid terms and conditions that come with maintaining your job. The routine of going to work and coming home at the same time every day can become monotonous, and you may find yourself losing motivation.
- Long commute- Job opportunities are few and far between, and the job you end up landing may possibly be a long way from where you live. This may force you to commute, adding extra hours to your already busy day. Certain commutes can also be very costly.
Can I have a job and own a business?In the UK, you can have a job and own a business simultaneously. Even if you are still officially employed while starting up your business, you’ll still need to register with the HMRC as self-employed if you want to operate legally. Starting up your business part-time while still maintaining a full-time or part-time job is a great way to get a feeling for entrepreneurship while still getting a steady wage or salary, so there is less risk involved.
Is it better to have a job or run a business?Deciding whether you want to run a business of your own or hold down a steady job is a very personal decision, and the right decision for you will depend heavily on your specific situation. Some factors to consider when deciding whether starting a business could be right for you include:
- If you are in a position to take a financial risk and perhaps not earn a profit for the first few months
- If you have capital at your disposal to start things up
- If you have an innovative business idea that fills a gap in the market
- Can you work well without set working hours, objectives etc.?
- What resources (car, equipment etc.) you have available to you
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