Move to self employed

Over the last year more people seem to be making the move to self employed.

There's a number of reasons why this might happen. I've seen situations ranging from people being offered contracting roles from a potential client, or offered a business partnership, right through to employers encouraging their staff to take up the self employed mantle and go out on their own to contract back to their business.

However it might happen, making the move from employee to self employed can be risky but rewarding if you get it right.

And whatever the motivation you may need to check out a few things to ensure you're making the right decision.

Why am I really doing this?

A bad day at the office isn't going to be a good enough excuse to go out on your own.

List all the reasons why you are making this decision, then critique them. Then review this again with someone close to you and then a professional. If you're unhappy with the work you do then doing it on your lonesome may not fix the problem.

When I'm working through this with people, occasionally, on closer inspection we've decided that it's purely something that can be resolved with their current employer so they've decided to have a chat to them first.

What am I currently earning?

You'll need to do some sums and work out the real value of earnings you're giving up now.

This includes taking into account paid holidays, sick leave, KiwiSaver, and other perks like use of computers, tools or vehicles and fuel.

You may be surprised about how much you actually earn when these are added back.

Working through this exercise will also set the profit figure in your budget for your self employed role.

If you need to invest in large amounts of gear then additionally you'll need to factor in a return on your investment as well.

- Jeremy Tauri is an associate at Plus Chartered Accountants