6 Things You Need to Know Before Becoming Self-Employed
Whether you’re a graphic artist, a content creator or a web developer, you may be considering starting a business of your own. Unfortunately, many people take the leap too soon – they leave their traditional jobs with the hope that they’ll soon be earning a full-time income as a freelancer.
Don’t set yourself up to fail. Consider these 6 things you need to know and do before you start your own business.
1. You’re going to be working long hours.
Don’t be fooled by the blogs. Many freelancers are under the impression that freelance “work” involves rolling out of bed at noon, writing a few blog posts then shuttling off to a wine tasting.
It’s just not so. You’re going to be putting in very long hours when you work for yourself. In fact, 15% of self-employed workers put in over 50 hours per week. It’s just the way it is.
Later in your career, you’ll be able to budget your time in a way that tackles the higher-paying projects first. But in the beginning, expect early mornings and late nights.
2. Set up bank accounts for your business.
No matter what country you live in, you’ll want to open a separate bank account. This doesn’t necessarily have to be a formal business account as those can carry very high fees and minimum balance requirements.
Opening a secondary bank account will allow you to keep your personal and your business expenses separate, and avoid confusion at tax time. All records and invoices will be accessible in one place. All you’ll have to do is turn them over to your accountant.
3. About those taxes …
If you live in the United States you’re required to make quarterly estimated tax payments. Don’t fail to do this! Doing so can result in fines and a huge headache when taxes come due in April.
Use Form 1040-ES in the United States. If you do business in another country, check with your local tax representative to find out if you’re obligated to pay estimated taxes.
4. Set up a dedicated workspace.
A benefit of self-employment is that you can literally work from anywhere. Taking a trip to the Andes? Great! Bring your laptop. But you’re going to need a place to call home.
Set up a dedicated workspace, either in your own home or in a rented office space. This will serve several purposes.
- You’ll have a business address.
- You’ll free yourself from inevitable distractions.
- Your work and home life will be separate.
- Your home office may be tax-deductible.
5. You’ll need a plan.
Obviously, the plan is to become a freelance writer, or designer or whatever it is you do. But how?
First, you’ll need to gather ideas for your marketing strategy. Will you reach out to businesses which are local to you? Will you join a platform like ilmosys? Create an outline of how you’ll market yourself and make adjustments as necessary.
Secondly, will your startup cost money? In some cases, you’ll need little more than a laptop and a WiFi connection. But how about professional memberships, software and business cards? How will you fund your business?
Finally, you’ll need to consider your situation. Will you need to arrange childcare? Rent an office space? Do you need a P.O. box? Visualize what you’d like your business to look like in six months, and plan accordingly.
6. Commit to your business!
If you treat your freelance career as a full time job, it will soon become one. Don’t begin your enterprise thinking that you’re going to be able to shirk off work any time you like. It’s not going to be easy. But the benefits of self-employment are awesome!
- You’ll save money. Think gas in your car, work lunches and even childcare costs.
- You choose your clients. Never again will you have to work for a boss you don’t like.
- You’ll enjoy flexible hours. Need to make a doctor’s appointment or schedule an oil change? You don’t have to ask your boss. Just do it!
- You control your income. In a traditional job, you’ll earn a predictable paycheck. But when you’re self-employed you can make as much as you want if you market yourself right.