Self-Employed for a Few Months? What You Should Know

Business Income Enjoying a trip together

If you lose your job or are disgruntled at work, the temptation is to strike out on your own. Be your own boss, and you’ll never lose your job again – plus you don’t have to report to anyone, you can work whatever hours you like, and keep whatever you make for yourself rather than having it all go to your employer.

If you have recently taken the steps of becoming self-employed, here are some tips for you on how to survive the ups and downs of starting a business.

  1. Consider combining working and self-employment. When you begin a business, the revenue stream isn’t always steady. It’s good to have part time or intermittent employment to fall back on to pay the bills, at least until you get your business reliably generating income. It may take burning the midnight oil as you work two jobs at once, but it won’t be forever.
  2. Plan for success, or you’ll plan to fail. Though you can get a business going without a solid business plan, sooner or later you’ll hit a wall. That’s because keeping a business going and expanding it will require careful planning and monitoring. Once you have a business plan drawn up, run it by others in similar businesses to yours to see how realistic it is. Use social media to find other business owners who would like to meet with you to support each other for mutual success.
  3. Hunker down and tighten your belt. The less money you are spending on your day-to-day living expenses, the more at ease you’ll feel with the income fluctuations of your own business, especially in the early months. And when you do create a surplus, don’t loosen your belt until you have several months of living expenses socked away in savings. That way, you’ll be able to survive periods of underperformance – and believe me, they will come – without panicking.
  4. Pay attention to the details. It’s a lot more fun to run a business than to record the transactions of that business, but record-keeping is an absolute necessity if you are going to succeed. Without those records you won’t know the score of how you are doing.
  5. Don’t ignore Uncle Sam. Self-employment taxes can gobble up a whopping 15.3% of your bottom line net income, and that’s on top of income taxes that you must pay on your income. Estimate the taxes that are due and make estimated tax payments each quarter so you don’t get caught short at the end of the year and owe penalties on top of the taxes.

If you are self-employed don’t worry.  TurboTax has you covered at tax-time.  TurboTax will ask you simple questions about your business and help you effortlessly file your taxes.