Many people prefer or aspire to be self-employed because being your own boss is admirable and empowering. And women are more powerful than ever, making up almost 40% of all self-employed workers. I’m self-employed myself so I can attest to the benefits, but like everything in life, there are two dueling sides to every coin. If you’re considering making the leap from a nine-to-five job to being self-employed, there are a lot of things to consider before quitting your day job completely.
From my own experience, here are some things you should know before starting your own business.
1. Recognize that self-employment is not entrepreneurship.
There are important differences between being an entrepreneur and being self-employed that many people confuse and confuse. The terms are often used interchangeably, but they definitely mean the same thing. do not have same.
Self-employed individuals act like employees and often provide services or human resources to business owners, nonprofits, or organizations. Entrepreneurs typically provide goods and services to clients and customers, register their businesses for tax purposes, and benefit from resources such as business bank accounts, loans, and investments.
If you’re self-employed, you often don’t get paid unless you work as a freelancer or on a project-by-project or client-by-client basis. If you are an entrepreneur, you can successfully scale your business and profit from it, whether you are actively working on it or not.
While it is certainly possible to set up a sole proprietorship (i.e. as a limited liability company or LLC), there are requirements associated with that, particularly regarding taxes. There are also other things to consider, such as your lifestyle, goals, and risk tolerance. Entrepreneurs do not have the same annual and financial obligations as self-employed people, including additional taxes, filing fees, and mandatory financial reporting.
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(Some entrepreneurs may be reading this sideways, but not all self-employed people. work Others may simply not want the extra management or responsibility that comes with having a registered business, even with the perks. )
While we are not advocating that self-employed people start their own businesses, it is important to know the difference between the two. Because the differences between the two determine how you approach your work, your expectations for your lifestyle and requirements, and your benefits. It may be given to you.
Many entrepreneurs are able to hire people, expand their businesses, obtain capital investment, and even take days, weeks, or months off without actually working and still make a profit. You can get For self-employed people with higher salaries, this is often not the case. roughly It depends on actual hours worked, invoices paid, and strategic budgeting.
2. Inform yourself about tax obligations and other financial changes that may occur after becoming self-employed.
When you work a 9 to 5 job, your company takes care of removing taxes from each check. This does not apply to self-employed people. There are quarterly schedules to follow for federal taxes, and there are other regulations based primarily on the state you work in (even if you work remotely). If you’re used to a hands-off approach to taxes (other than going to the tax office once a year), you’ll definitely want to change your expectations and learn all you can about self-employment taxes.
Also, if you’re self-employed, budgeting may be a little different. For example, if you’re always living on the edge or are used to a guaranteed paycheck every two weeks, you need to change the way you look at your household’s money flow.
Being self-employed can result in periods of inconsistent paychecks, and many companies deal with invoices that are paid 30, 60, or even 90 days after you finish work. . Keep this in mind and plan based on the industry you will be working in.
Speak to a tax or personal finance professional to find out how your finances and tax obligations are likely to change after you decide to become self-employed, and plan to avoid slipping up on tax day. Please stand up. Although the process is different if you are self-employed, this is an important aspect of the process and can save you a lot of money and stress in the long run.
I learned the hard way to negotiate upfront a fixed period of service (if applicable and reasonable) and set the price in the contract. do not have This is based solely on my previous salary, but includes additional costs such as WIFI, travel, health insurance that I have to pay out of pocket, home office technology and tools, and the actual time it takes to complete the task. I’m considering it. The pandemic has driven home how incredibly important this is, as as a freelancer you can easily be cut off by someone without any compensation or warning.
3. Know your true strengths and weaknesses when it comes to work ethic, skills, environment, and motivation.
Self-employment is definitely not for the faint of heart. It can be a constant hectic job at first, and if you’re not careful, you might find yourself wondering how you’re going to pay your rent or car transportation just because you don’t have clients or work scheduled. . It’s good to be self-motivated and very organized. You’ll also want to hone your marketing, communication, and sales skills, as you’ll need to sell yourself and your background to land projects and clients.
meanwhile do a full-time job, take some courses or find a self-employed mentor to strengthen your skills in the areas you need to improve (like pitching, online marketing, social media branding, project management, etc.). By interning or working on the side, you can learn a little more about yourself, something you might overlook while working as an employee.
Being self-employed means that you are responsible for multiple departments. For example, your current company may provide support such as an assistant, an accounting department, a legal team, and IT, so you may not be used to having to handle all of this yourself. For some, this may be overwhelming, but the challenge is exhilarating and worth the sacrifice if it means gaining autonomy, financial and time freedom. Some people think.
Self-employment may also be too isolating for people who want to do their best work by being surrounded by a team or working in an office. Sure, there are groups and co-working cultures you can join, but it’s not the same as having the built-in camaraderie of colleagues working full-time at a company. Keep these things in mind to realistically make choices that fit the life you want to live and the work experience you want to have in order to be successful.
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4. Create an emergency fund just for the transition.
Create a separate savings account while working a 9 to 5 job just For transition. Anything can happen between quitting your job and landing your first freelance job, client, or project.That’s what I thought when I first set out to become self-employed. of It was my dream client, but I realized it wasn’t really a good fit and after six months I was looking for a new client. This may happen several times before you really hit the ground running, find what works for you, build a reputation, and get a steady job.
Having a financial cushion in addition to your regular emergency fund helps protect you from lost clients, late bill payments, unexpected work-related expenses (i.e. replacing a computer or repairing broken equipment), etc. It can help soften the blow if something happens.
Being self-employed has certain up-front costs, such as renting office space, investing in new technology or other tools, travel expenses, or hiring other self-employed professionals (such as consultants, web designers, and tax professionals). may be included. So, it’s best to prepare wisely and keep your receipts.
5. Understand the why.
Every great and sustainable journey starts with good things reason –-The “reason” that drives a person forward. When you know your why, you’re less likely to give up easily when things get tough, and you’re less likely to make costly mistakes that are mentally and physically draining. I decided to become self-employed full-time after working in my field for over 10 years, at which time I felt really burnt out, started to resent not getting promoted as quickly as I had hoped, and felt that I was Because I felt like I needed to get a job. You may make more money by outsourcing your skills and talents than by working full-time for one company.
I also liked that I could choose the people I worked with and align my values to the projects I was involved in (as a full-time employee, I wasn’t bound by contracts or the company’s so-called values). (rather than being forced to do so) or the company. )
I’ve made quite a few mistakes over the years, but the reasons haven’t changed. In difficult times, I am reminded of the overall peace, flexibility, and autonomy I have in serving the millennial female audience I want to serve through journalism. And communication.
6. Make sure you are providing competitive service and expertise that will last for years to come.
If you are considering self-employment, make sure your skills are competitive and in demand in the future. We knew 10 years ago that many in the media industry would go the freelance route, but today, layoffs are the norm, budgets for full-time employees are being cut, and contract work is becoming mainstream. I see the changes in this industry happening far away, and just like my early forays into digital media before publishers monetized it, I’m sure it will eventually become a free I thought Lance’s work would be plentiful and well-liked.
If you already have a job that is in high demand, or if you offer a niche and unique job, working for yourself may be an option. But if you find that your current skills may become obsolete in the next 2-5 years, learn another skill, change the way you work, or tap into a different passion to make sure Make sure you can provide something of value. A market that desperately needs it.
Self-employment can be both joy and pain, and for many of us, it’s the only option for self-care, mental health, and financial freedom. If you’re considering taking the leap, take these tips into consideration to ensure you’re well-informed, prepared, and move forward with bold confidence.
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