One of the questions a person who is setting up in business must ask is am I truly self-employed or am I an employee. As the wrong interpretation can prove to be very costly for the 'employer' and the individual.
You are probably self-employed if you:
1. run your own business and take responsibility for its success or failure
2. have several customers at the same time
3. can decide how, when and where you do your work
4. are free to hire other people to do the work for you or help you at your own expense
5. provide the main items of equipment to do your work
You are probably employed if you:
1. have to do the work yourself
2. work for one person at a time, who is in charge of what you do and takes on the risks of the business
3. can be told how, when and where you do your work
4. have to work a set amount of hours
5. are paid a regular amount according to the hours you work, and get paid for working overtime - even if you do casual or part-time work, you can still be employed
You can also be employed and self-employed at the same time, perhaps by working for an employer during the day and running your own business in the evenings. Think about each contract separately - you may find that you are self-employed for one but employed for another.
Fortunately, HMRC has developed an online tool that can be used to indicate whether a person is employed or self-employed. This can be found at:
