Self Employed

Self-Employed? Here’s How to Plan Your Finances

If you’re self-employed — whether you’re freelancing, or running your own business —you already know that managing your money can feel like a full-time job in itself.  No steady salary, no employer pension, no HR department to sort things out.  Just you and a whole lot of responsibility.

Don’t worry—financial planning doesn’t have to be complicated. Here’s a simple, no-jargon guide to planning your finances when you’re self-employed.

Get Friendly With Your Taxes

First things first: taxes. Unlike employees who get their taxes sorted through PAYE, you’ll need to handle this yourself. That means:

  • Registering with HMRC for Self Assessment
  • Keeping track of your income and expenses
  • Paying your tax bill by 31 January (and a second payment by 31 July)

Set aside 25–30% of your income in a separate savings account for tax and National Insurance. That way, you won’t get caught off guard when the bill arrives

Know What’s Coming In (and Going Out)

Start with the basics: track your income and expenses. You don’t need fancy software—an Excel sheet or a budgeting app can do the trick.

  • Income: Record every payment you receive.
  • Expenses: Track business costs (like software, travel, supplies) and personal expenses.

This helps you see patterns and plan ahead, especially during slow months.

Pay Yourself a “Salary”

Even if your income fluctuates, try to pay yourself a consistent amount each month. This helps you budget your personal life and keeps your business finances separate.

Open a separate business bank account. It makes everything cleaner and easier when tax season rolls around.

Build an Emergency Fund

As a self-employed person, you’re your own safety net. Aim to save 3–6 months of living expenses in a separate account. This rainy day fund is your buffer for slow periods, surprise expenses, or even taking a break without stress.

Start a Pension

No one’s going to set up a pension for you—so it’s on you. Look into:

  • Self-Invested Personal Pensions (SIPPs)
  • Stakeholder pensions
  • Providers like NEST

Even small monthly contributions add up over time, and you’ll get tax relief on what you put in.

Get Insured

You might want to consider:

  • Income protection insurance (in case you can’t work)
  • Professional indemnity insurance (if you give advice or services)
  • Health and life insurance

It’s not fun to think about, but it’s better to be safe than sorry.

Being self-employed gives you freedom, but it also means taking charge of your financial future. With a little planning and consistency, you can build a solid foundation that supports your business and your life.

Don’t be afraid to ask for help. Sometimes, a good accountant or financial adviser can save you time, stress, and even money. They can help with:

  • Tax planning
  • Choosing the right business structure (sole trader vs. limited company)
  • Long-term financial strategy

If you have any questions or are interested in discussing your financial planning options, please contact us to see how we can help.

 

Tax Planning is not regulated by the Financial Conduct Authority.

The tax treatment is dependent on individual circumstances and may be subject to change in future.