Becoming self-employed comes with many benefits and, in the digital age, it’s more common than ever before. However, there are still some things to keep in mind before you make a career change. Continue reading to find out what you need to know before becoming self-employed.
You Will Be Responsible for Business Finances
If you are running your own business, it’s important to understand that you will be responsible for all the finances. This means you will have to establish a budget and remember to pay your taxes to avoid any trouble with the IRA. This can be a big undertaking and add a lot of stress, so it’s important to know this beforehand.
Find a Health Insurance Plan
Unlike many 9 to 5 jobs where you will get health insurance as part of your benefits, you will be responsible for finding your own benefits as a self-employed individual. Health insurance is something everyone should have, but it’s important to find the right one for you and, potentially, your family. Do some research and ask around to find a plan that works with your budget.
Set Up a Retirement Plan
The next thing you have to think about is retirement. When you are self-employed, you have several options for how you can save. Common self-employed retirement plans include:
- Solo 401K
- Traditional or Roth IRA
- SEP IRA
- Simple IRA
- Defined Benefit Plan
The type of business you are running can help you determine what retirement plan is best for you. Are you the only one working for your business? Are family members involved? Is there a limited number of employees? These are all questions you should ask yourself, so you can start saving for retirement.
Be Prepared to Work Hard
Becoming self-employed will also be a different working experience if you have never done it before. Don’t be surprised if you end up working long hours—the work can be more challenging than what you are used to. However, the benefits that come from all the hard work is something many self-employed individuals see.
Get a Side Hustle
The final part of what you need to know before becoming self-employed is to not put all your eggs into one basket. While you should not be afraid to fail, the reality is you also want to have another source of income. While this could mean a lot of long days, you will be in a better place with your ambitious full-time job when you also do some freelance work or other jobs on the side.
