Being your own boss comes with particular challenges, but you don’t need to face them on your own, says Samantha Kaye from Wellesley Wealth Advisory
At the Women in Business & Tech Expo 2021 in October, I was delighted to meet so many like-minded professional women who have made incredible success of their individual paths – from climbing the ranks in their company to working for themselves. It’s clear that more and more women are doing the latter – we currently make up around a third of the self-employed.1
Being your own boss can give you a real sense of freedom, both pro-fessionally and personally. Yet being a self-employed woman can also present challenges – for example, earning 43% less than our male counterparts.2
But how can “girl bosses” thrive?
It all starts with these three areas of personal finance…
It’s far trickier to budget or plan ahead when you have a changeable workflow. Start by making a plan for regular spending needs, such as your mortgage and living costs, and set up a direct debit to ‘pay yourself’ each month based on an average of what you earn. Next, concentrate on longer-term needs – for example, planning for retirement, building up investments, the potential for a period of maternity leave or childcare costs, if you decide to have children.
Think beyond the amount that you take as income – it’s just as important to consider the most tax-efficient way of doing it. On the whole, paying into a pension from your company will be the best way of maximising your income while minimising your exposure to tax, as you’ll be taxed on earnings after pension deductions. The drawback is that you can’t access money in a pension until the age of 55 (57 from 2028). The advantage, however, will be that you’ll have control over how much income you withdraw, and therefore how much income tax you will be subject to.
Most entrepreneurs employ an account-ant to deal with their own tax return and that of their company. While an accountant can work wonders with Income and Corporation Tax, a financial adviser is often more geared up to help with savings goals, pensions, inheritance issues, investments and insurance ‘protection’ that pays out if you become critically ill or die.
I’ve previously written in Dynamic about how having a trusted financial adviser in your ‘power team’ will ease the load and bring a level of tailored specialist support – this is something
I can’t stress enough!
Women often feel they have to do everything themselves. However, outsourcing financial planning can mean you have one less thing to organise. Don’t feel like you’re alone – let’s start a conversation today!
1 Coronavirus and self-employment in the UK, Office for National Statistics, April 2020
2 Men earn 43% more than women in self-employment, IPSE research reveals, IPSE, March 2020