Starting your own business can be a great way to return to work after having children, offering the flexibility to set your hours around their needs. While this flexibility is a huge advantage, there are several important factors to consider before becoming self-employed. You’ll need to manage administrative tasks, maintain self-discipline, register your business with HMRC, and stay on top of taxes and National Insurance contributions.

This page highlights key points to consider to successfully balance running your own business and raising your children.

Is being self-employed right for you?

Advice for starting your own business

Registering as self-employed

Claiming benefits while working for yourself

Natasha’s story

One of the benefits of working for yourself is the ability to set your own hours and work around your childcare commitments. It’s also rewarding to pursue something you’re passionate about. Plus, you have the flexibility to adjust the amount of work you take on and the size of your business. For example, you could start small and gradually expand as your children grow older.

However, there are also challenges to being self-employed. You’ll need to manage an income that can be unpredictable and inconsistent. Staying on top of paperwork, taxes, and finances is essential. Unlike traditional employment, you won’t have benefits such as paid holidays, maternity leave, or a workplace pension. Additionally, working for yourself requires discipline and self-motivation, and you might find yourself working longer hours or weekends.

If you’re unsure about diving into self-employment, you can start by balancing both an employed and self-employed role. If you’re already employed, you could explore flexible or reduced hours to test the waters with your new business before leaving your job completely.

Starting a business involves many considerations, but there’s also a wealth of advice and support available to help you along the way:

1. There’s tons of information on gov.uk about working for yourself, including how to set up a business. You can also get free expert support through the government’s Business Support Helpline. 
2. You’ll find lots of useful guidance in this step-by-step guide to starting a business, plus more information and ideas for small businesses on smallbusiness.co.uk.
3. The tax office (HMRC) has lots of free email updates, videos and webinars explaining how to run a business and to give you the confidence to get started.
4. If you need funding for your business, gov.uk also has a free search tool that lists grants, loans and other sources of financial support.
5. You might be able to apply for a government-backed Start Up Loan to start or grow your business. You’ll also get free support to write a business plan and free mentoring.

If you’re unemployed or claiming benefits, your work coach can give you help on how to start or develop your business.

Once your business is up and running, you’ll need to register as self-employed with HMRC. For most people, this means registering as a sole trader, though another option is to set up a limited company.

As a self-employed individual, you’re responsible for managing your own tax and National Insurance contributions. HMRC offers plenty of helpful resources, including short videos on self-assessment and how to complete your first self-employed tax return. They also provide an online calculator to help you budget for your taxes and National Insurance. Alternatively, if it’s within your budget, you can hire an accountant to take care of these tasks for you.

If you’ve been receiving benefits, you’ll need to inform the relevant office that you’re now self-employed. Some benefits, like Jobseeker’s Allowance, may end, but others may continue.

If you’re receiving tax credits, be sure to notify the tax credits helpline about your self-employment and whether you’re claiming childcare costs. You must do this within a month of starting your business. It’s best to notify them as soon as possible, as you might be eligible for more financial support than before. For more details, visit our page on tax credits.

Some benefits may stop or change once you start working, increase your working hours, or earn more money. This could affect the amount of Housing Benefit, Council Tax Reduction, or Support with Mortgage Interest you receive, or whether you’re eligible for them at all. However, your council may offer an additional 4-week extended payment at your current rate. You don’t need to apply for this; your council will assess your situation and inform you if you’re eligible.

Universal Credit

You may be eligible for Universal Credit while working for yourself, depending on your earnings.

Your monthly Universal Credit amount is based on what the government expects you to earn, known as the minimum income floor. This is typically the amount someone would earn working at the National Living/Minimum Wage for your age group, based on the number of hours you’re expected to work or seek work.

If you earn more than this, your Universal Credit will be based on your actual income. If you earn less, it will be calculated as though you’ve earned the minimum amount.

However, the minimum income floor doesn’t apply to everyone. If your children are very young or disabled, or if you’ve recently started caring for another child, you might be exempt. If you’re unsure, talk to your work coach. For more details, check out our page on work-related expectations for Universal Credit.

You’ll be exempt from the minimum income floor for one year after you’re assessed as being ‘gainfully self-employed’—meaning self-employment is your main job, you have regular work, and you expect to make a profit. During this year, you won’t need to look for other paid work. However, you’ll need to attend a review every 3 months to show you’re making efforts to increase your income.