That said, if you have ever considered freelancing and working for yourself get ready for a bumpy ride. Freelancing means that you can choose what you want to do, when you want to do it, and where you want to do it. However, to play safe, you need a plan. In this article, we break down everything you might need to know about freelancing in the UK, from getting started to staying organized and managing your money.

What is Freelancing?
Freelancing simply means that you work for yourself, rather than being an employee for a company. You can be a sole trader that is pretty much a straight forward way to do business. If you want to operate with one or more partners, then you can form a partnership or limited company. However if you’re a sole trader, then the personal and business finances get a little more entangled. Well let’s have a look at how you can set yourself up for success.

Registration as a Sole Trader
The first thing you have to do to have a freelance is register with HM Revenue and Customs, HMRC. This is how the government tracks taxes. You’ll need to submit a form for self-assessment. Again, you’ll need your National Insurance number handy. You have to do this by 5 October in the year you’ve started your business. And if you fail to do this by that time, you’ll be facing fines up to £100.

Once you have registered, you receive a Unique Taxpayer Reference (UTR)-a special 10 digit number that you will use to make all your tax payments in the future. If you already were registered for self assessment then you probably already have a UTR.

You have also been a sole trader, thus you have to keep proper records on business expenses and earnings. You will have to file a tax return every year showing how much money you have earned and what kind of expenses you have incurred.

Don’t forget to save for taxes!
One of the important freelancing rules is that you are required to save for taxes. As self-employed, it really means that you need to pay your tax by January 31st and July 31st of every year. In case you miss a payment, you will be penalized or charged extra interest.

One smart and simple way to ensure you have enough money set aside for your taxes when payment time comes is to save part of each pay. If you cannot figure out how much you can save, then you can use the HMRC tax calculator to guide you on how much to set aside. The savings can be kept in a high-interest savings account or premium bonds in which you can later cash it in to settle your tax bill.

Working from Home: The Best Choice!
When working on a computer, working from home is mostly cheaper, especially when you are just starting out. Ideally, you should have a separate room to use as the office. This helps keep your work and your life there separate. Try to set specific hours for work if it’s not possible to have a separate room for your “office”.

While shared fancy co-working spaces with free coffee might be a swanky thing, it gets pricey. And if you need a change of scenery, most cafes have areas set aside for freelancers that charge a small fee to work.

Tracking Your Expenses
When you do your tax return, you can claim business expenses. Business expenses are costs incurred by you in running your business, such as working from home. So whether you are a sole trader or company you can either record every little expense incurred, or for ease and simplicity, claim a flat rate reflecting the number of hours per week worked from home. For example, if you work about 35 hours a week from home, you can claim around £312 a year in home office expenses.

Just recall that this flat rate does not include your telephone or internet charges, so factor that in as well. Other legitimate expenses you can claim are training, advertising, website costs, and traveling expenses. If you purchase equipment, such as a computer, you can claim what is often termed as capital allowances.

How to Get Paid: Don’t Work for Free!
This is your artistic tradition. Be wary of people who insist you do the work for free, as part of a compromise to receive some “”exposure”” or dubious promises of future job assignments. It makes your work sometimes worthless. You should have a clear payment stipulation before accepting a job. Another common request is to be paid within 30 days after the final day of working.

If someone doesn’t pay you then yes, of course, send nice reminder letters or make a telephone call. To ensure proper progress, send him a letter before action, and this can be found at Rocket Lawyer-type websites. Amazingly, sometimes simply mentioning how adding interest or compensation to the outstanding balance can bring a delinquent back in line.

Consider Hiring an Accountant
Maybe hiring an accountant can be the best investment for freelancers. They can deal with your business accounts as well as prepare tax returns so that you will have more time to focus on what is important: running your business! Besides, if you are planning to get a mortgage, it makes a significant difference if you have certified accounts; lenders like to see proof of stable income, and professional accounts tell them that your business is financially healthy.

Saving for Your Future: Pension Plans
State Pension As long as you are self-employed, you are also entitled to a State Pension, provided that you have at least the basic amount of National Insurance built up. This form of business has a downside- you will have no employer adding to a workplace pension on your behalf.

Most people need to set up a personal pension in order to have adequate savings for retirement. This provider will claim tax relief on your behalf. That adds up to your pension savings. If you are in a higher tax bracket, then you probably want to claim that in your self-assessment tax return.