Self-employment can be rewarding. It can give flexibility in schedule, unlimited earning potential, and the ability to create the business you want. There are a few things you can put into practice early on to set you up for success as you grow. Here are some tips we have found to be helpful:
- Save for your self-employment (SECA) tax. You will pay 15.3% of your net income for self-employment tax. Normally as an employee of a company, you pay FICA tax (7.65%), which is half this amount. Get in the habit of saving this, and you won’t be surprised at the end of the year when your tax bill is higher.
- Find a good CPA. A good CPA will be your best friend if you’re self-employed. They will help keep you in good standing with the IRS and make sure you come out on the right side of things at tax time. This will also allow you to help focus on the right thing—your business.
- Save for retirement with a plan designed for the self-employed. Being self-employed gives some additional retirement savings options. You have access to SEP IRA’s, Solo 401k’s, and a few other plans, depending on your situation. These will potentially allow you to save more in taxes than normal individual retirement accounts.
- Budget your profit. Budgeting profit before expenses is huge in a business. This is not the normal way most business owners think. Budgeting your profit will allow you to join an exclusive club of savvy business owners by making sure your business is profitable from the start! One of the best resources we have found for this is the book “Profit First” by Mike Michalwicz.
If you own a business and need a plan of action going forward, our financial advisors who deal with business owners every day (because they are business owners), would love to get together with you. We know you’re busy, and time is very important, so we have designed our services specifically for you! Feel free to schedule a short video meeting with us below.