You don't "need" to get any insurance, unless you employ others, and then you need compulsory employers insurance.
Remember what insurance is, and what it is not.
Insurance is not a system of government regulation. It is a contract where you agree to pay money so that when you lose all your stuff, someone else will pay you some money.
So, what is the first question to be asked?
"How much stuff do i have?", surely?
I mean, what the hell is the point in insuring your stuff IF YOU DON"T HAVE ANY STUFF???
Now, the second question is "How much stuff do i have to have before it is worth insuring?"
If you have "stuff" you cannot afford to lose(a van full of expensive tools), get insurance for it.
What about public liability?
Public liability insurance is a scam on many levels.
The law is actually a lot more human than most people think. Judges are pretty groovy folks. They are not going to take your house. They might take your second house, but by the time you are buying a second house, you will be operating as a limited liability company and so it will be safe anyway.
So..... why get insurance at all?
The only answer that makes any sense is when you need to have PLI in order to get a contract. In other words, if you don't have it, you can't get the work.
So then you have to get it, but for gods sake get the cheapest and nastiest public liability insurance you can find. get one of those online policies for a hundred quid that will never pay out when push comes to shove.
Why? BECAUSE IT ISN'T FOR YOU.
To understand why big firms demand that smaller firms get PLI, you have got to understand a legal doctrine called "the deep pockets theory".
It works like this: when shit happens on a work site and some folks get squashed or burned or otherwise TFU, SOMEBODY MUST PAY.
The court is going to make someone pay the medical bills, and the lawyers fees. Bet your fur on that. Judges love to be big heros and show the working man what nice chaps they really are. To be fair, they sometimes really are nice chaps.
But the point is, when industrial stuff goes down, the bills are huge, and the court finds fault and blame with the richest guy in the room. This is the deep pockets theory: blame the guy who can afford to pay.
This also applies to suing folks. Always sue the rich guy, OR THE GUY WITH INSURANCE.
Do you get it now? Why you should always have a shitty or non existent PLI policy?
You do not have to have it under law, and the only reason big firms want you to have it is because they know that if shit does go down and someone gets squashed, THEY WILL PAY.
Unless, of course, their lawyers can make you pay.
The only way a judge will ever make you, a freelancer, account for an industrial accident is IF YOU HAVE A BIG INSURANCE POLICY.
If you don't have one, nobody is even going to sue you. What would be the point?
Think about insurance. Think about what it is for, and whom it serves.
If you are a working man and you don't own three houses, you already pay your insurance when you pay tax on everything you buy.
Working people, freelancers and employees, pay a vast amount of money to the state, and the state tells us that it is going to make everything cool and groovy when things go wrong.
That sounds like PLI insurance to me, and so when the government lower taxes, then we can discuss donations to the public good from the purse of the working man.
All freelancers should get familiar with the UK small claims procedure.
It is your friend.
How much is your time worth? Because I can tell you that every freelancer has tales of scumbag clients who steal money, and the time wasted on these issues is the worst part of the loss.
So think of suing these folks like taking out the trash. It is just a job that must be done from time to time.
Most freelancers cannot afford lawyers, and in my experience most UK lawyers are so class obsessed and lazy that they are a waste of money in small claims (under £50,000) anyway.
But the procedure for suing folks in the small claims court is really pretty straight forward. Anyone who makes the effort to do it once will be able to do it much, much faster the second time. That is the thing to remember. It is like with invoices, you keep all your document templates and then change the names and dates and so on with the next client.
And the process, once you understand it, is actually quick and cheap. You'll get change from fifty quid and you always claim your court costs back.
And if you do this, you will always get paid. Nobody wants to go tell a judge why they didn't pay a working man his due. Nobody sane, anyway.
So like I say, how much is your time worth?
Taking to lawyers is a waste of time, and complaining is the sport of chumps.
Learn to sue, and do it yourself, and do it with a smile. Don't let stress win.
Learning to drag a scumbag company through the courts is no harder than learning to keep your books, do invoicing and deal with insurance. It is really one of the core business skills. If you are serious about being a freelancer, you have to know how to do it.
Otherwise you just get angry, and lose money, and waste your friends time with sad stories about the hard world. Nobody needs that.
The 2007 budget has raised some fairly thorny issues concerning the transfer of tax debt for freelancers.
Without going into the detail, this means that a lot of firms will require (when their lawyers get around to reading the budget) verification of a freelancers tax status.
If you trade as a company (very foolish after the 2007 budget), your tax status verification is your registered company number. Stick that puppy under your company name on the invoice and it is all good. You should also include your registered office address, although with a company number anyone can get that from the web, so don't let anyone lecture you about your invoice because of an address. The number is the key.
If you trade as a sole trader, you must have a tax reference number on your invoice, your NIC number.
This tax reference is linked to your status as a sole trader by the HMRC. This is done when you complete and register your CWF1 form.
The CWF1, as we all know, is the form you must send to the HMRC when you become a sole trader. Right? Right.
On the other hand, under english law you can still agree verbally to do work and then accept cash payment.
As long as you and the client write the correct ledger entries in your respective books, jesus loves you. So the only real with invoices, as far as a sole trader is concerned, is to make sure they get paid.
The best way to get your invoices paid is to always sound confident when you ring up to ask when it will be paid. Sound like you totally expect it to be paid when they say it will be paid. Get offended if the format is questioned.
A lot of business play power games with freelancers, holding your money and watching you react. Partly this is to punish you for earning more than the norm, partly it is to show who is the boss.
I have other tips for making sure invoices get paid, but they are more legal advice on contracting, and not really forum discussion stuff.
The rules for collecting VAT are based on how much you invoice for in a given year.
At the moment, you only need to register and collect VAT if you invoice more than £64,000 in a tax year.
If you are a sole trader, that means between the first April 6th after you start trading and April 6 the following year, if your are trading as a company it means the first full year from your incorporation date.
In short, your accountant will tell you when you need to register for VAT, so you do not have to worry about it. Assuming your accountant is doing his job properly.:eyes
VAT sucks. It makes you an unpaid tax collector for the state. It is one of the reasons I burn flags on weekends.
