If you are like millions of self-employed workers, it is probably your dream to work for yourself.
For several reasons, self-employment is popular with independent-minded folks who want to control their own lives.
First, it can improve your work-life balance, reduce the amount of time and money you spend commuting and even increase your income.
If Being Self-employed is So Great, Why Doesn’t Everyone Do It?
The answer is that it’s not as easy as it looks.
That doesn’t mean it’s not possible, however, because it is. According to the Bureau of Labor Statistics, about 10% of workers in the United States are self-employed. That means that there are roughly 16 million people who are making it work right now.
If You Are Considering Self-employment, Here is the Essential Guide to Get You Started:
1. Self-employment Insurance
How do you know what kind of insurance you need when you’re self-employed?
Finding the right insurance broker can be the first step in getting the right policies in place.
Business insurance coverage for self-employed workers is complicated. No matter what kind of work you do, you need insurance to protect you from business disputes and other risks and challenges that you might face when you work for yourself.
It’s so confusing that you might be tempted to ignore your insurance needs, but it’s crucial to your long-term success to protect yourself with general and professional liability policies.
Accidents happen, and mistakes can be made. These policies can protect you when the property is damaged, and people are injured.
If you have commercial property and vehicles, you must also protect those assets.
You will also have to provide your own health insurance and worker’s compensation insurance.
Business insurance for self-employed people is less expensive than you might think, and it depends greatly on the kinds of risk factors in your industry.
Once you find the right broker, getting the policies you need is easy. Everything from getting quotes to filing claims can all be done online.
So even though it feels overwhelming to get the right insurance when you’re self-employed, it is actually simple when you partner with the right company.
2. Self-employment Taxes and Accounting
This is another area of self-employment that many find difficult to navigate.
The first thing to know is that self-employment taxes will be different from the payroll taxes that you’ve seen on your paycheck at work.
Half of your Social Security and Medicare taxes are paid by your employer.
When you are self-employed, you are responsible for 100% of these. You will also need to pay your estimated taxes quarterly based on your tax table.
To make it easier, most freelancers and self-employed workers set aside 25 to 30% of their income to cover their taxes.
Take some time to visit the IRS Self-Employment Tax Center so that you are familiar with the ins and outs of paying self-employment taxes. It’s also a good idea to hire an accountant to help you.
Even if you decide to do your taxes without an accountant’s expertise, you must keep accurate accounts of your income and expenses throughout the year.
You can do so by learning and following the MTD for Income Tax Self Assessment guide.
Be thorough in this because it’s better to have too much information than not enough when it comes time to file taxes.
3. Self-employment Marketing
How do you get more clients? This is a common question from people who decide to work for themselves.
There is only one good answer, and that is to market yourself.
Not everyone is comfortable at first with marketing their own work. You’re going to want to get good at this fast, though, because finding new clients can take up a lot of your time until you get established.
There’s a reason why large corporations spend big money on their ad budgets.
So invest some time in learning more about digital marketing and develop a marketing strategy that works for you.
4. Self-employment Time Management
One thing that is almost certain when you make a move to become self-employed.
You will learn to value your time more than you ever have. As the American entrepreneur and author Jim Rohn stated, “Time is more valuable than money. You can get more money, but you cannot get more time.”
Here are a few ideas to make the most of your time.
- Plan ahead how to spend your time in the next few days, weeks, and months.
- Outsource tasks that other people can do for less money.
- Stay on top of administrative tasks, like accounting and emails.
- Rest is important and can make you more productive.
Other Considerations When You’re Self-Employed
There are many other considerations when you’re self-employed.
For some, it can be difficult to separate your work life from your personal life.
If that’s you, make sure that you set aside time to take a break from work and try to draw clear lines to separate work from fun and relaxation.
You won’t get paid leave unless you factor that into your rates and plan ahead for it. Paid leave is important. We all need to get away sometimes.
Your income won’t be steady. If you are used to having a regular paycheck, it can be hard to adjust to the ups and downs of self-employment.
Being self-employed can be stressful. If the reason you want to be self-employed is that you think it’s going to be easier and less stressful to be your own boss, you might want to reconsider.
There’s a lot to know when it comes to working on your own. To get started, take some time to work on the issues in this essential guide to self-employment.
Remember, over 16 million people in the US are already doing this, and you can do it, too.