At the beginning of their careers, many taxi drivers have a huge decision to make: should they work for or with a firm, or go self-employed and try to make it on their own? There are hundreds of reasons to give both models a try, and here in the UK most cabbies have their own motives for why they do what they do. However, if you have never done it before, it can be a difficult decision, so here’s our guide to the pros and cons of being self-employed or for working with a Hull taxi firm:
The Legal Difference
The biggest difference between being self-employed and working for a taxi company is the way which you’re treated under the law. Of course, the nature of your job probably won’t change much day-to-day and you won’t even notice your business model most of the time, however a self-employed person is, legally, paid directly by their customers and pockets all their earnings after expenses.
On the other hand, if you are employed by a business, they legally collect all of your earnings (except for tips) and then pay you a salary. Some firms also hire self-employed staff: this model is known as franchising and is a way of using an established company’s marketing and goodwill to boost your earnings, but you’ll still largely be self-employed.
The Freedom of the Road
For self-employed drivers, the biggest attraction is being able to control their earnings and the potentially boost their income by working extra hours; the more fares you pick up, the more you can earn on a day-to-day basis.
This means you can decide on your working hours, take holidays as and when you please and choose how you market your cab and take bookings. Being able to make your own decisions on how to run your business is something that appeals to almost every cab driver.
Security and Employment
On the other hand, there are those who like a little security in life, and it certainly offers more secure to work with a larger firm. In example, you’re more likely to be guaranteed a good income as larger businesses tend to take on more customers at once, but you’ll also reap the benefits of having a full employment contract.
Employees tend to take Sick pay, holiday pay and compassionate leave for granted, but if you’re self-employed there’s no such thing. Working for a company can help you gain experience as a cabbie and still provides a safety net should something unexpected happen.
Ownership of your Vehicle
One of the bigger questions when choosing if you should go self-employed is whether you can afford to run your own vehicle. Most taxi firms will lease you a vehicle, which can often be inclusive of taxi insurance, but will retain the ownership of the firm. Obviously, this will put a big dent in your monthly take home pay, but it will mean you won’t have to fork out for your taxi up-front.
On the other hand, if you own a car which can be used or you can afford to purchase one, this will reduce your outgoings each month. Don’t forget to account for vehicle maintenance and fuel usage, however, as these can still be substantial. Your car also needs to be in mint condition, so don’t underestimate the power of a valet!
Tax and Finance
If you’re good with numbers, being self-employed is relatively easy enough, but you will still need to submit a self-assessment tax return every year. This isn’t too difficult, but it does require you to keep organised records of income and expenditure. You also pay national insurance in a different way, so make sure you factor this in when looking at costs.
On the other hand, as an employee means you will fall under the PAYE regime. This means it is the responsibility of your employer to sort out just how much tax and national insurance you are required to pay and then pay it for you. This means more time earning money in your taxi and less time sat at home with a calculator!
Whether you choose to go self-employed or work for a taxi Hull firm is very circumstantial, and it can change throughout your career. For drivers who are just starting out, working at a company is an excellent way of guaranteeing an income, but you may desire more freedom as you become more experienced and comfortable attracting fares.