Earning a Living Online: UK Self-Employment Guide
Earning a full-time living online is a dream for many people who are already familiar with online earning opportunities on a purely casual basis. They enjoy making money online, but they're fully aware that it's nowhere near enough to replace a full time salary and that a more serious, full-time effort would be needed to have any hope of achieving that aim. Most aren't in a position to do anything about it, anyway. They have too many other real-life commitments and responsibilities to even contemplate spending any more time online than they already do. For others, it's possible.
Having been self-employed for most of my adult life, with the latter few years dedicated to online work, I've written this Hub for anyone in the UK who wants to advance beyond the casual approach to online earning and do it full time on a self employed basis - (i.e., registered in the UK as self employed). Hopefully those from other countries will also find some of the advice useful, even if the focus and legalities are UK-based.
Don't Quit your Day Job - Just Yet.
As you know, it's not feasible to quit your day job and expect to immediately replace your salary with online earnings. You need to start part time and work around your day job or other commitments. Keep in mind that doing this work part time is not the same as doing it casually. It's exactly the same as doing it full time in terms of commitment, organisation and focus - but over a shorter number of hours. You can think of it as having two jobs.
Your eventual aim if you want to go full time and make online earning your sole source of income is to reach a position where you're earning enough to quit your day job. You also need to know you'll be able to use the extra time to make up the lost salary with more online earnings. Depending on the time and effort you put into it, that position could be a long way off, and to be brutally honest, it's a day that never comes for most people who try it. In the meantime, keep your job.
If you do quit your job, (or didn't have one to start with but aren't registered as unemployed), your legal position in the eyes of Her Majesty's Revenue and Customs (HMRC) at that point is that you are now a sole trader and self employed, and you're supposed to inform them of that fact in a timely manner. It's simple, just a quick phone call, and then you'll receive a couple of follow up letters regarding tax liability and National Insurance contributions. Those are among the more mundane realities of self-employment.
What Can You Do?
You may already have a few online income streams or you may be starting completely fresh with no clear idea of what work you can do or how and where to find it. Obviously, you first have to look to your particular strengths and abilities. Do you have any specialised knowledge of any subject? That's where to start. Here are some common online earnings activities that people do.
Producing and Selling
If you can produce something you can try to sell it on a site like eBay or on a (free or paid) site of your own. It could be handmade items, e-books, photos, advice, tuition, ornaments, clothes, music, artwork, anything at all. But first you need to assess the practicalities, such as how much time and money it costs to produce, to ship, and how it compares in both price and quality to similar items already being sold online. There also has to be a demand for what you're selling. If you produce designs (artwork, photos, graphics, etc), you can join zazzle.co.uk and put your design on any of their products (T-shirts, coffee mugs, wallets, postcards, greetings cards, mouse pads, etc). Zazzle will offer them for sale on their site. When they receive an order, they'll manufacture the product with your design, and you get a percentage of the sale.
Buying and Selling
If you can't produce anything saleable, then buy stuff (new or second-hand) and sell it for a profit. You need to find a good cheap source of items to buy and then sell them at the going rate. eBay and Amazon are two of the best known and safest sites for buying and selling items. Many people buy items from markets or even the Pound Shop and then sell them on eBay.
Items to Sell
Where you can sell
Your own Photos
Microstock Photo Sites: Shutterstock, iStockphoto, Fotolia, Dreamstime, Clashot
Your own recorded music/ sound effects
Microstock Audio Sites: iStock Audio, Audio Micro
Your own designs and artwork
Own Site/ Skype (Live)
You can write articles, like this one, on sites, like this one, that pay a share of the advertising revenue they receive. Alternatively, you can write to order for sites like Textbroker UK, where you earn a one-off payment of around a penny a word for articles on topics requested and paid for by Textbroker UK's clients. If your writing is good enough to impress clients enough to hire you privately, you can command much higher rates.
Testing Services and Products
Whatusersdo.com will pay £8 for testing websites' usability for their clients. Each test takes around 15-20 minutes. There are also sites that will send you products to test by post. Sometimes you get to keep the product.
Earn from Advertising
You can set up your own website or blog and enable adverts to be placed on it via ad networks such as Google Adsense, Chitika or Kontera and be paid according to ad views and clicks, or you can become an affiliate with sites such as Commission Junction and get a commission on sales made through your site. First you need good content on your blog or website that is likely to get good traffic and also meet the approval criteria of those ad networks and affiliate sites. You can't just have ads and nothing else as you'd never get approved, and no-one would ever visit such a site anyway. On the other hand, if you offer a service or goods for sale then selling them via your own site enables you to combine these two streams very neatly. Some free sites such as those offered by Weebly.com can be used for this purpose as they allow you to place Adsense ads on them, but eventually you'll want your own site for complete control.
Multiple Income Streams
While some people stick to one type of activity such as selling goods or services, others (like me) prefer to build a network of streams. Each stream produces a lesser amount of revenue but in combination can produce an equally profitable income. The attraction for me, personally is the variety of work that income streams offer. This is where personal preferences are important. You have to actually enjoy the work you're doing or you're unlikely to keep it up. You still have to be realistic, though. The most enjoyable streams may not be the best paying ones, so you need to manage your time properly to ensure the best paying ones are given the most attention. You also need to avoid spreading yourself too thinly, as that prevents you from giving sufficient attention to all of the individual income streams.
Your Hourly Rate
For certain types of work, such as 'writing to order', it's possible to check the hourly rate that it works out at. It lets you know if a particular type of work is worth doing.
Here's an example. Writing music reviews for Slicethepie.com
Slicethepie (STP) pay you between 5 & 25 US cents for a short review of a song that you can write while listening to the first 90 seconds of it. When you add in the few extra seconds needed to finish off your review, to rate and submit it and to start playing the next song, you're unlikely to be able to do more than 20 songs in an hour. Even if you were to receive a higher than average rate of 20 cents for each song, your hourly rate would be $4:00 - and that's dollars, not pounds! It would be around £3 per hour.
The UK legal minimum hourly rate depends on your age. It's £7.20 in October 2016 for over 25s. So this is NOT a viable type of work. You'd earn at least twice as much wheeling shopping trolleys at a supermarket. Does it mean you shouldn't do any reviews for STP? Not exactly - If you enjoy it, then you can do it in your free time and at your leisure, but not in your serious work time; that would be silly.
For other types of work, such as selling, it's not possible to gauge your hourly rate as there are too many factors to consider - but you'll soon get to know when a particular income stream is unprofitable.
Promoting your Business
Three ways to promote your business are:
- Via Social Media - Spread the word through Facebook, Twitter, Google+, etc. but not to the extent that you annoy everyone.
- Search Engine Optimization (SEO) - If you have your own site or written text on another site, you can make it more attractive to search engines by knowing how search engines promote some sites and penalise others in the search results. This is a big subject but very useful to learn as search engines can potentially bring you more traffic than all the social media sites combined. WriterFox here on HubPages has an excellent article on SEO called "What is SEO?"
- Advertising - You can advertise your products, sites or services on an ad network like Google Adwords. Your ad will appear on relevant Adsense-enabled sites where readers are more likely to be interested in what you're offering, but you should wait until you're much more experienced, otherwise you're likely to be paying out for ad clicks and getting very little in return.
Government Financial Help
There are various grants and other payments that are available to anyone setting up their own self-employed business. One is called Working Tax Credits. You can receive a weekly payment from HMRC paid directly into your bank account. There are different rates for different circumstances, such as age and hours worked. If you work over 30 hours per week, you can get the highest rate. At first, you won't have 30 hours of paid online work, but you should still claim it as you will also be doing research, accounts, promotion, maintenance and anything else work related. It all counts towards your 30+ hours per week. To renew it every year, you need to re-apply and declare your earnings for that year (as with income tax). The weekly amount you're awarded on each renewal will depend on how little or how much you've earned in the previous year.
Depending on where you live, your local council might be currently awarding grants either directly or indirectly through a partner agency to new businesses, including sole traders. (I got £1,000 from an EU city regeneration scheme).
The best sources of information are your local Citizens Advice Bureau and the UK Government website, gov.uk, (see link below) which is also a good source of info on the legalities of self employment.
From Unemployment to Self Employment
For those entering self employment from unemployment, there's even more help available in the form of back-to-work, one-off payments worth a couple of hundred pounds or more. Enquire at your local Job Centre for details. Unemployment benefit will stop, of course, but you can make up the loss with Working Tax Credits as mentioned above.
As a self employed person, you're supposed to keep accounts and a total of your income and work-related expenses and payment receipts so that you can accurately submit your yearly profit (or loss) figure to HMRC for income tax assessment purposes. If you don't, HMRC will present you with a tax bill based on their estimate of your earnings - and you don't want that to happen as it's bound to be higher than your true earnings, and depending on how long they've waited for you, there may be also be late payment and interest charges.
Work-related expenses should be recorded so that you can claim them against any tax due at the end of the tax year. For a typical home-worker, these can include: Stock costs and Post & packing charges (for sellers), a portion of heating and lighting and Internet bills, stationery, printer ink (if you send out printed invoices or receipts) and more.
Don't be put off by accounting or tax self-assessment to the extent that you hire an accountant. That's just giving money away. The self-assessment procedure isn't difficult and there's lots of information on the government website Gov.uk (see link below) on all things to do with self-employment in the UK including income tax. If you're smart enough to manage online income streams, then you're certainly smart enough to handle a few online tax forms. Hopefully, in future, you'll be in a position where you'll actually need an accountant.
The Right Attitude
You have to run your business professionally or it will fail. That is, it will fail as the sole means of providing a sufficient income. If it's not your sole source of income (e.g., you've still got your day job) and you're happy with the way things are, then that's fine. Carry on.
Otherwise, you have to apply yourself and focus more strongly on what you're doing. Divide your time smartly between earning and looking for new online earnings opportunities. Join forums such as Moneysavingexpert.com, where people happily share information on new earnings opportunities they've discovered.
Keep in mind, too, that you need a good amount of self-discipline so as not to abuse the perks of self employment, which include choosing when to work. Of course, being your own boss, you can take days off whenever you like, but the reality is that most successful self-employed people work longer hours and more days than employed people.
Set a work schedule that suits your particular circumstances and keep to it. Whether you have a room set aside as an office or just a table in the corner of a room, keep it well organised with everything you need close to hand so that you'll work more efficiently.
Self-Employment Help and Information from HMRC
Get full, accurate and up to date details on all aspects of self-employment including tax, tax credits and National Insurance contributions from the UK Government website: Gov.uk.
© 2015 chasmac
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