The different types of self-employment are:
Sole Trader
A sole trader runs their own business as an individual. The individual keeps the profits made after tax, but they are personally responsible for the business’s debts and obligations. This is the simplest and most common form of self-employment.
Freelancer
A freelancer works independently for a range of clients. They will usually work on specific projects or contracts for a period of time. Freelancers can work in a wide range of industries, such as consultancy, IT, photography, writing, design, architecture and more. A freelancer can operate as a sole trader or via a limited company.
Contractor
A contractor is hired by a business for a specific time period or project as opposed to being permanently employed. Contractors work through their own limited company, but some can operate as a sole trader. Their tax position will depend on factors like the nature of their work or the contract that’s been agreed.
Limited Company Director
You can run your business through a limited company. The company is legally separate from you, and you may pay yourself through a combination of salary and dividends. You’re technically the company director as opposed to being a sole trader, but people will commonly refer to themselves as self-employed when they run their own limited company.
Business Partnership
A business partnership involves two or more people running a business together. They’ll share profits and responsibilities, but each partner is generally responsible for their share of the business. There are different types of partnerships, such as traditional and limited liability partnerships (LLPs).
Gig or Platform Worker
People who earn money through platforms or apps can also be self-employed. This does, however, depend on their circumstances. Examples of this include certain delivery drivers, tradespeople, couriers and online service providers. However, employment status isn’t determined by what someone calls themselves. Working arrangements will determine whether someone is a worker, an employee or genuinely self-employed.
