# Switching to freelance could be a smart finance move as the end of furlough scheme approaches’
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-10-23
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Expert Tips for Transitioning to Freelance Work in 2021
Meta Description: Thinking about freelancing? Learn the essential steps to make the switch, from developing a business plan to understanding financial buffers. Get expert advice
URL: https://financedigest.com/switching-to-freelance-could-be-a-smart-finance-move-as-the-end-of-furlough-scheme-approacheshtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/flexibility-10-1736838775012-compressed.jpg)

_By **Paul Aveyard** is Head of Digital at_ _Markel Direct_ _, experts in professional indemnity insurance._

As the end of government support schemes near, many employees will find their financial futures become uncertain. Freelancing is an attractive option for those who may find themselves out of work for a period of time – increased flexibility, the autonomy of ‘being your own boss’ and the freedom to work on only the projects you want to – but it’s important to fully understand the steps required to switch to freelance.

Markel Direct have outlined the key considerations for those who want to make the move:

1. **Develop your business plan for the short and** [medium term](https://www.financedigest.com/ab-inbev-aims-for-core-profit-growth-of-4-to-8-over-medium-term.html "AB InBev aims for core profit growth of 4% to 8% over medium term")
2. **Plan your [marketing to potential](https://www.financedigest.com/functional-extracts-market-potential-growth-share-demand-and-analysis-of-key-players-forecasts-to-2029.html "Functional Extracts Market Potential Growth, Share, Demand and Analysis of Key Players – Forecasts to 2029") clients**
3. **Give yourself a financial buffer (where possible)**
4. **Decide on a business structure and accountant**
5. [**Insure your freelance business**](https://www.financedigest.com/business-insurance-what-does-it-cover.html "Business Insurance: What does it cover?")
6. **Take time to rest so you don’t burnout**

Let’s run through each step in more detail.

**Business plans**

[Developing a business](https://www.financedigest.com/dan-hodgson-joins-verasity-as-director-of-business-development.html "Dan Hodgson joins Verasity as Director of Business Development") plan for the short (12 months) and medium (3 years) should be the first step. Some basic considerations for your plan should include:

- What [services will you offer](https://www.financedigest.com/barclays-sets-up-taiwan-subsidiary-to-offer-brokerage-services.html "Barclays sets up Taiwan subsidiary, to offer brokerage services")?
- What will be your differentiator from the competition/unique selling point (USP)?
- What will you charge?
- How will you [market to potential](https://www.financedigest.com/modified-starch-market-potential-growth-share-demand-and-analysis-of-key-players-forecasts-to-2032.html "Modified Starch Market Potential Growth, Share, Demand and Analysis of Key Players – Forecasts to 2032") clients? (More on this below)
- How much do you expect to turnover?
- How much will you pay yourself?

You can find more help on writing a business plan on GOV.UK.

**Marketing**

Ensuring you have a pipeline of work is essential when freelancing – not just for staying busy, but also for managing cashflow.

To attract clients, raising awareness of your business through social media can be a cost-effective way to reach audiences that may be looking for your services. Make sure the content you are [posting clearly](https://www.financedigest.com/post-brexit-insurance-reform-clear-before-december-says-boes-woods.html "Post-Brexit insurance reform clear before December, says BoE’s Woods") illustrates your expertise in the space.

Useful guides, hints and tips articles and even free consultations that act as a hook to larger projects are great ways to attract clients. [Invest time](https://www.financedigest.com/a-guide-to-luxury-property-investment-in-the-time-of-covid-19.html "A guide to luxury property investment in the time of COVID-19") and money into a professional website that will pay dividends in the long run.

**Financial Buffer**

One of the main pain points for freelancers is [cash flow](https://www.financedigest.com/xerox-shares-slide-as-annual-revenue-cash-flow-forecasts-take-a-hit.html "Xerox shares slide as annual revenue, cash flow forecasts take a hit"). [Clients don’t always pay](https://www.financedigest.com/impact-com-closes-2021-with-new-google-pay-integration-150m-in-funding-and-51-increase-in-clients-yoy.html "impact.com closes 2021 with new Google Pay integration, 0M in funding and 51% increase in clients YoY") on time, so if you have the funds available, it’s useful to have a pot of money to help you through months where you don’t get paid on time.

![Paul Aveyard](https://mk0globalbankin3xg02.kinstacdn.com/wp-content/uploads/2020/10/Paul2-357x500.jpg)

Paul Aveyard

You should also think about seasonality – for example, workload can slow down over the summer and festive period whilst clients may not be in the office as much, and so work may be harder to come by. Having a cash reserve can help you weather those quieter periods.

**Business structures**

From a tax and legal perspective, freelancers are different to employees. Whilst there are many different [ways you can structure your business](https://www.financedigest.com/five-ways-businesses-can-prepare-themselves-for-the-digital-economy-be-kaler-pilgrim.html "Five ways businesses can prepare themselves for the digital economy – Be Kaler Pilgrim"), most freelancers choose to operate as:

- **Sole trader** – as a sole trader, you are the business and so all profits (after tax) are yours.
- **Limited company** [– the business](https://www.financedigest.com/lane-change-assist-systems-market-overview-business-growth-development-factors-application-and-future-prospects.html "Lane Change Assist Systems Market Overview – Business Growth, Development Factors, Application And Future Prospects") is a separate legal entity and you will be a shareholder. Assuming you will be a director of the company, you’ll be paid as an employee, and any profit the company makes will be subject to [corporation tax](https://www.financedigest.com/irish-corporate-tax-boom-breaks-more-records-in-november.html "Irish corporate tax boom breaks more records in November").

Some clients prefer to work with you as a limited company, so you may find it helps to bring in new work – however, there are additional costs and responsibilities attached to this.

Talking to a [specialist freelance or contractor accountant](https://www.financedigest.com/b2b-specialist-pr-agency-the-digital-voice-announces-four-key-account-wins-as-it-celebrates-its-tenth-birthday.html "B2B specialist PR agency The Digital Voice announces four key account wins as it celebrates its tenth birthday") could help you better decide the best route to go down.

**Insurance**

Arranging freelancer insurance is a vital part of making the move into self-employment. This cover will help protect your [business against a range of unexpected scenarios](https://www.financedigest.com/extracts-and-distillates-market-overview-high-demand-recent-trends-future-growth-business-scenario-technology-2022-2029.html "Extracts and Distillates Market Overview, High Demand, Recent Trends, Future Growth, Business Scenario & Technology 2022-2029"), including:

- Providing incorrect [advice or inadequate services](https://www.financedigest.com/award-advice-financial-services-can-qualify-for-tax-shelters.html "Award Advice – Financial Services Can Qualify For Tax Shelters") to clients (professional indemnity insurance)
- Causing injury to a [third party](https://www.financedigest.com/why-a-replacement-to-third-party-cookies-is-key-to-post-pandemic-recovery.html "Why a replacement to third party cookies is key to post-pandemic recovery"), or damage to third party property (public liability insurance)
- Tax investigations and contract disputes (legal expenses insurance)
- Vital equipment you use in the course of your business, such as laptops and smartphones ( [business equipment](https://www.financedigest.com/surgical-equipment-market-high-trend-opportunities-offers-future-business-growth-by-2030.html "Surgical Equipment Market High Trend Opportunities Offers Future Business Growth by 2030") insurance)
- Illness or injury suffered by employees of your business (employers’ [liability insurance)](https://www.financedigest.com/bionics-guide-to-product-liability-insurance.html "Bionic’s Guide to Product Liability Insurance")

It can be easy to assume the above won’t affect you, but it’s invaluable to have the peace of mind that if something does go wrong, your policy could help.

Many prospective clients will require that you have [insurance in place before you start working](https://www.financedigest.com/working-from-home-heres-how-you-can-save-money-on-your-auto-insurance.html "Working From Home? Here’s How You Can Save Money on Your Auto Insurance") with them.

**Time-out**

Give yourself time to rest and refresh as it’s vital for success. Burnout can decrease productivity, and more importantly, impact your [mental and physical health](https://www.financedigest.com/how-to-maintain-physical-and-mental-health-while-working-from-home.html "How to maintain physical and mental health while working from home"). Look after yourself by taking regular breaks throughout the day, join a freelance community on [social media](https://www.financedigest.com/meet-the-founder-of-the-web-3-decentralized-social-media-metaverse-and-on-achieving-guarantees-of-green-for-a-proof-of-impact-future.html "Meet The Founder Of The Web-3, Decentralized, Social Media Metaverse; And on Achieving ‘Guarantees of Green’ For A Proof-of –Impact- Future") and schedule holidays well in advance to enjoy the fruits of your labour.


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---