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Best Self Employment Ideas To Start Making Money On Your Own

Best Self Employment Ideas To Start Making Money On Your Own

The 9-5 schedule may not suit everybody. Many of you must have thought of being self-employed at one point in life. Starting your own business is not easy. It has its pros and cons. However, the pros outweigh the cons when you have a great idea and are willing to work hard for it. It can be a very rewarding experience to be self-employed. All you have to do is play to your strengths and be well aware of your weaknesses. Let’s read more about different kinds of self-employment ideas that can help you make money on your own. You might be having a job, but if there is something that drives you to get up, turn it into your profession. No, you don’t have to give up your job all of a sudden. You can start small, once you think that your business is flourishing, you can take it to the next level.

What Are the Benefits of Being Self-employed?
Being self-employed can make you feel great about yourself and it has many benefits associated with it. Here’s how being self-employed can be advantageous for you –

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You will have the potential to make an unlimited amount of money.
You can save money as per you conveyance.
You will be your own boss.
You can work on your own schedule.
You will get the benefits of tax deductions.
You get to follow your passion.
By being self-employed and hiring other people, you actually help them.
Yes, there are risks associated with being self-employed, but these benefits are pretty great to tip the scales in self-employment’s favour.

Self Employment Ideas to Start Your Business in India Today
India is a booming economy and finding work is relatively easy as compared to a lot of other countries. Since the internet, the country has become a lot closer, and a lot of opportunities have opened up for everybody. If you want to start something of your own, here are some potential ideas for you –

1. App Development
Almost half of the world’s population has access to mobile phones, so the possibility of making apps are endless. There is a high requirement for app developers around the globe, and it is possible to work remotely as well. Since there are apps available for almost everything now, ranging from ordering food to running errands, you can try your hands at this. This industry is booming and the money is good, so you can consider this idea.

2. Baking/Cooking
From the comfort of your kitchen, you can bake cakes/pastries or even various dishes, if you like to cook. This is a good self-employment idea for homemakers. There are multiple ways to make money. You can start a cooking channel on Youtube or conduct baking classes at home. You can write your own recipes and publish your own cookbook too if you are good! Working as a food consultant with restaurants is a great option as well.

3. Blogging
Blogging is possibly the most common type of self-employment idea. All you need is a laptop and access to the Internet, which we assume that most of you have. There are different industries and topics that you can write about, but if there is something you are very passionate about, blogging is a great way to share your thoughts with the world. Although it is a slow process, you can definitely make money through blogging. If you are good and people start noticing your work. Advertisements are a common way to monetize this self-employment option.

4. Web Designing
As everything is going on social media today, it is critical for almost all businesses to have a presence online. This includes not only social media but also a legitimate, professional-looking website. From individuals who run their own enterprise to multinational companies, the requirement for websites is very high. Lucky for you, simple websites are easy to create. The learning curve is mild, and you can probably pick up the basics in no time. Once you work on the basics, you can make a lot of money from the comfort of your home.

5. Interior Designing
Do you have an eye for colours, textures, and spaces? If yes, then interior designing is something you should consider. Living in an urban environment helps because you can take the help of real estate agents, builders, and architects who might use your services to set up a space that they are working on. You get to handle everything to do with how space looks from the floors to the tiny curios on desks. Interior designers also get paid a fair sum for every project. You can do a course in interior designing and make this your profession.

6. Enter the World of Comedy
Imagine a world where you can get paid to crack jokes. Well, many comedians and aspiring comedians do just that. By doing stand-up shows at venues or skits on Youtube, you can make a lot of money. If you have stage fright, fear not because there are writing jobs as well in this industry.


7. Delivery Service Business
A delivery service business is often underrated, but if you think about it, you will realise that it is so much in demand. Millions and millions of things get delivered on a daily basis. There is a huge opportunity there ranging from food, groceries, to commercial deliveries. Pick up and drop services, medicines for the elderly; the possibilities are endless if you can put together a small team.

Delivery service business

8. Nutritionist
If you are heavily into fitness and nutrition but have not considered making money out of it, you should, because more and more people are becoming conscious about what they eat because of the wide presence of processed food. Many people don’t have the time or do not check the nutritional content in what they eat. Hence, they are willing to pay good money to someone who will help them plan out their meals. You can do a course in it and become a certified nutritionist.


9. Editing/Proofreading
If your language is very good and you have a knack for grammar, proofreading is a job you can do from anywhere. With so many books, magazines, and e-chronicles being published every month, it’s not very hard to find work. There are many businesses that hire multiple editors to proofread articles, blog posts, novels, etc. You can also contact freelance writers who require your services or put you in touch with someone in the same line of work.

10. Photography
The photography business has gained a huge popularity today. If you are good at taking pictures and have an eye for detail, photography is a good option. Avenues in which you can shoot include weddings, events, food, travel, etc. Other options include selling your photos online or taking photos for websites. You can charge by the day, by the hour, or by the project. Whatever it might be, you stand to make a lot of money in this profession.


11. Freelancing
Much like the editing work, there are various online websites that are content driven. These jobs are widely available, and there are many companies that provide project-based work. Resume writing is big in the corporate world for young people who are just starting out and also pays good money. You can start off by doing some sample articles to get used to it and work your way up from there.

12. Wedding Planning
Today, more and more people are willing to spend on weddings. People love to have a big wedding, but not everybody can manage the work it involves to plan a grand wedding. Outsourcing that job to a planner makes their lives easier and gives an opportunity to the people who like to plan weddings. Wedding planning involves arranging and organizing everything or parts of a wedding from start to end. It’s hard work, but it pays a lot of money, so if you love planning and weddings, you should look into this.


Wedding planner

13. Life Coach
If you think you are doing well in life, you could consider passing on those skills to other people. Many people do not know how to manage their finances, social life, downfalls in their career, and look for suggestions from other people to help them manage everything. You can start by working with people who are between jobs and help them out and work your way up from there.

14. Tuition Centre
Skills and subject knowledge must be passed on, and tuition is a great way to do it. If you think you are good in a particular subject, you can start tuition classes of kids or adults who are looking to better themselves. This is a great self-employment idea for ladies who are homemakers. It’s better to start slow by teaching kids English and mathematics in and around your neighbourhood. Once you are more comfortable with the idea, you can move on to other topics and subject matters.

15. Buying and Selling Second-hand Items
Many websites today give you the opportunity a second-hand market, and it is possible for you to sell things there. If you have a knack for buying things at a low price, you can flip it for a profit on most e-commerce websites. A lot of people do this from the comfort of their homes. If you have any collectables and are willing to part with them, you can sell them and make money!

16. Digital Marketing
This is a good self-employment idea for many people. Digital marketing involves promoting business and brands via electronic media. Digital marketing is different from traditional marketing. To start a digital marketing firm, first, you will have to do a short course in digital marketing. Once you understand the basics of it. You can work in an established firm to understand everything in detail. If you have a great idea and right skills, you can start this business.

17. Candle Making
The market for candles is very lucrative and they’re used all around the world as not only a novelty for homes or rooms, but also in birthday parties, functions, and events. Making candles is easy from the comfort of your home if you are a stay at home mom and also a good way to make a little bit of money. Start by reaching out to some other candle makers and ask their help. You can also learn it online. Start small; sell some candles in retail outlets. If people like your work, they will come directly to you.

A woman making candles at home

18. Beauty Parlour
If you understand makeup and know what it takes to become a beautician, this is a great option for you. From your home, you can start a local parlour for beauty treatments. It is a profitable idea because many women go to beauty salons. You can get a certification from a local institute and you will be ready to go!

19. Travel Experience Curator
If you have managed to travel a lot in your life, this is a great way to make some money from home. Many people look for someone who will help them plan their trips or suggest a rough itinerary. If you have contacts in those places, you can arrange their accommodation as well as sightseeing activities. If you live in a big city, and people come to visit it, you can also become a travel guide. You would be well aware of all the tourist places in your city, so you would be able to guide them the best. You can earn a reasonable amount with this business.

20. Tiffin Service
Selling homemade food is common in big cities where most bachelors and bachelorettes do not have time to cook at home. Since eating out every day is not only unhealthy but also expensive, many people turn towards someone in their neighbourhood who provide tiffin service on a daily basis. If you like cooking, you can make some extra food along with the same lunch you are making for yourself and start a small weekly menu. Display some posters in and around your locality to gain some traction.

21. Pet-daycare Business
Nowadays, many people have a pet or two but don’t have the time to really take care of them because of their jobs. If you think you are great with pets and can take care of them like your own, you can even start a pet-daycare. Start small; you can start a dog-daycare centre, if you care take care of dogs. Feeding the dogs on time, taking care of them, and of course making sure that they stay happy will be some of your responsibilities. Although you will need a good knowledge about animal behaviour, canine CPR, canine first aid etc, but if you don’t have, you can always learn by volunteering at a vet clinic. Learn, then you can start a pet-daycare centre.

22. Start a Jewellery Business
No, you don’t have to sell gold and silver jewellery, we are talking about customised jewellery. Today, women like to wear different kind of jewellery made of different materials like metals, beads, or shells. If you have a little bit of capital and an artist in you, you can make jewellery with beads or shells and sell it. Make earrings, necklaces, rings and bangles made out of different materials and sell them. This is a business that you can run from home while making a handsome profit as well.

A woman making jewellery at home

23. Publish an Ebook
If you have always had a flair for writing, you should be out there publishing your own E-book for direct selling. Various online platforms have made it possible for each and everyone to publish their work. Gone are the days where you had to hunt for publishers in order to get your work published. Many E-book authors make money by selling their published work online. You can do it too and get paid for it if your stories are good.

24. Sell Handmade Items
If you have a flair for creating things, you can start selling handmade items. It is easy to start at home and you can sell on various websites online or even from your house as well. You can sell sculptures, paintings, jewellery, crafts, stationery items, etc. There is always a market for something or you can create your own market. It’s a good chance to let your creativity flow and make money out of it.

25. Food Truck Business
If you think you are a good cook and can make satiating foods like sandwiches, dosas, idlis, and even tea and coffee, you can start a food truck business. You will need to rent a food-truck initially and will have to pay a driver for driving around the truck across the hot spots of your city, but once people notice you and enjoy what you cook, you can settle at one spot and people will come to you. Food truck business has gained a lot of popularity in the past couple of years and will continue to do so, so try your luck.

There are multiple opportunities available in case you are looking to branch out and become self-employed. Using a skill you have to make a living is very satisfying. It’s not often you get to tell people that you make money out of what you love. You also get a lot of time to yourself, which is great for personal development. Give yourself a chance and try to be self-employed. Who knows?

How to Run a Successful Self-Employed Contracting Business

How to Run a Successful Self-Employed Contracting Business

Becoming a self-employed contractor has many advantages. Starting your own business, being the boss, and calling the shots are all very attractive to anyone with an entrepreneurial urge. It can also be one of the easiest ways to transition from full-time employment to running your own business, provided you have solid skills and experience in your profession.

There are other forces compelling people toward self-employment. The freelance market is booming as many businesses today (even very large ones) require a more flexible “just-in-time” workforce and prefer to employ contractors rather than full-time employees. In many professions becoming self-employed is no longer a matter of choice.

However, self-employment has its challenges, and you should fully understand and prepare for all aspects of entrepreneurship in order to avoid unpleasant surprises down the road. Here’s what you need to know to start and build a successful business as a self-employed contractor.

Be Sure You Want to Be Self-Employed
Woman looking thoughtful as she researches the pros and cons of self-employment

Not everyone is suited to be their own boss. Before you make this leap, ask yourself two important questions:

Does self-employment suit your life circumstances?

If you are fortunate enough to have (or be able to get) well-paid, secure employment with benefits and reasonable job satisfaction, it may not make sense to become self-employed, no matter how great your desire to become an entrepreneur.

Organizing vacations, making major purchases, and planning retirement are much easier (and less stressful) when you have a steady paycheck and regular working hours, particularly if you have dependents.

Thoroughly examine your lifestyle, financial situation, and future retirement goals—and discuss them with your family—before making the jump to self-employment.

Is your personality suited to self-employment?

Being your own boss has many advantages, but it also means all the responsibility for the success of your business (including income) rests on your shoulders. If your personality is such that dealing with the uncertainties of self-employment is likely to cause you a great deal of stress and anxiety, then being an entrepreneur is probably not for you.

Get Financing in Place Beforehand
Man working on two computer monitors to plan his business

How much capital (if any) will you need for business premises, machinery, equipment, etc.? Capital financing may not be an issue for a computer consultant who can start a home-based consulting business with only a laptop and mobile phone, but starting an excavating business, for instance, may require hundreds of thousands of dollars in equipment.

In addition to capital financing, you will need to cover business and personal expenses until your business generates income, Even if you already have clients when you start the business, it may be months before you get paid for the completion of your first project.

Before you make the move to become a contractor, perform a complete review of your finances and estimate your needs as closely as possible, then (if needed) consider possible sources of financing, such as family, friends, or business loans from financial institutions (spoiler alert — it is virtually impossible to get financing for a new business from a bank unless you have sufficient collateral in the form of personal assets).

If financing is required and you intend to seek loans or capital investment from equity investors, then you will need to have a comprehensive outline of your financial requirements as part of your business plan.

Create a Business Plan
Close-up of a hand writing “Business Plan” on a brainstorming sheet

Do you need a business plan? If, for example, you are fortunate enough that you can leave your current full-time job and be immediately rehired as a contractor, or are starting a business with clients already in place and no financing requirements, then perhaps not.

For most startup businesses, however, there are many reasons to have a business plan:

To test the feasibility of your business idea by performing market research
To describe how you will market your products and services to customers
To obtain financing or attract investors
To forecast future expansion such as acquiring new equipment, hiring employees or subcontractors, etc.
Having a solid business plan and updating it on a regular basis gives you a blueprint for success.

Name, Register, and Insure Your Contracting Business
Man reviewing paperwork to register his business

Before you open your doors and start taking on any clients as a contractor, you will need to:

Decide how your business will be legally structured—do you need to incorporate or can you operate as a sole-proprietorship? In many professions, being incorporated is a requirement. If you intend to incorporate, do so before signing any contracts with clients.
Decide on a business name and register it if required.
Insure your business as required. For example, will you need general liability insurance? Professional liability? Errors and omissions? A claim against your business that is not covered by insurance could be financially catastrophic, especially if your business is not incorporated. Be aware that home insurance will not cover business activities from home.
Get a business bank account.
Market Your Business
Woman handing a business card to a potential client

When starting a new consulting business, the major challenge is usually getting the first few paying customers. If you have transitioned from a full-time job in the same profession, you may have potential clients already. If not, you should reach out to friends, family, and business contacts prior to opening your doors. Advance word-of-mouth can help you gain clients much more quickly, in addition to getting feedback about the potential of your business idea.

If you have to start from scratch, put together a marketing plan and implement some simple, inexpensive marketing strategies (such as a social media plan) to get your first clients.

Be Your Own Accountant, for Starters
Close-up of a calculator, pencil, and ledger paper

During the startup phase of your business, ​you can save money on accounting fees by using free time to organize your books, create systems for invoicing your customers, and learn basic accounting.

Accounting software can greatly simplify your bookkeeping chores. Many of the new cloud-based accounting software packages such as FreshBooks and Zoho offer ideal starter packages for self-employed contractors that include invoicing, expense tracking, simple reporting, and mobile applications for around $10 per month.

If you are loath to do your own bookkeeping, you can always hire a bookkeeper or accountant to perform these duties once you become busy with clients.

Be Professional at All Times
Professional-looking woman leading a team meeting at a white board

Whatever your profession, look and act the part at all times. Potential customers who don’t know you will be turned off by inappropriate dress or behavior on your part.

Being professional also means answering the phone properly, using voicemail, and responding promptly to messages or emails. In today’s world of online reviews and social media, developing a reputation for poor customer service can quickly become disastrous for your business.

If you intend to conduct business from home and need to meet with clients, make sure you have a separate, properly equipped and furnished home office space.

Build Your Reputation With Best Practices
Man shaking hands with two happy female clients

The ideal client is one you keep for the life of your business. To do so, you need to rise above the competition by:

Developing a reputation for honesty and integrity
Under-promising and over-delivering
Making good on all mistakes
Treating every client as special and finding ways to thank them regularly
Over-extending yourself and making impossible promises is a sure way to lose customers in the long term.

Avoid Potential Tax Issues by Having Multiple Clients
Multiple hands exchanging business information

One of the biggest advantages of self-employment is the ability to deduct expenses from taxes. Unfortunately, abuses of the practice can lead to scrutiny from the tax authorities. If you work exclusively for a single employer (even if you are incorporated) you risk being considered an employee by the IRS or a Personal Services Corporation by the CRA and losing the ability to claim the small business deduction and other standard business deductions. You are especially at risk if you have converted from an employee to a contractor and continue working for the same company on a full-time basis.

The easiest way to ensure that you retain your status as an independent contractor is to have multiple clients. If you are unsure about your status as an independent contractor, discuss the issue with your accountant.

Don’t Try to Do Everything
Businesswoman with her hands full of documents, phone and coffee in office

If your business is growing and you are finding that there are not enough hours in the day, consider sub-contracting some of your non-core tasks. Do you really want to be your own web designer or manage your business social media postings? Or deliver product to customers yourself? Or make your own travel arrangements? Or keep your own books and do your own taxes?

Outsourcing some of these ancillary tasks can free up more time to focus on your core business activities. If you have family members that can perform some of these duties, that may come with some tax benefits.

Be Sure You’re Ready Before You Expand
Close-up of a red “help” button

Many successful contracting businesses reach a point where further expansion would require hiring additional people to handle the increased workload. For example, a self-employed IT contractor may have to decide whether to bid on a contract that requires a multi-person team to complete or to pass on the opportunity.

Hiring (or contracting) additional personnel is a difficult decision, and many self-employed contractors prefer to remain solo for a number of reasons:

The more specialized your business, the more difficult it may be to find qualified people.
Advertising, vetting resumes, and interviewing is very time-consuming. Once you make your hires, training, supervision, and related paperwork will require more of your time on an ongoing basis. Paperwork is particularly problematic with hiring employees rather than contractors, as payroll requires tax (and other) deductions and increases your accounting overhead.
Unless additional personnel generates more income than the cost of their employment, your profits will not increase.
The reputation of your business may suffer if whoever you hire does not perform at the expected level.
Many contractors find it easier (and less stressful) to stay small, keep their workload within manageable limits, and maintain a positive cash flow by controlling business costs.

On the other hand, if your ambition is to build a larger business and you have the time and energy to put into expansion then, by all means, take the plunge.

Don’t Forget the Rest of Your Life
Group of friends and a dog enjoying time outside of work

Try not to let your business become your entire life—a well-balanced, healthy lifestyle includes a proper diet, exercise, and time for personal relationships with family and friends. Putting all your time and energy into your business to earn money for retirement or other purposes is pointless if it leads to declining physical or mental health.

Be a great entrepreneur—but be an even better person.

How to start a business or become self-employed

How to start a business or become self-employed

What to think about when starting a business or becoming self-employed?

Top tip
The key to working for yourself or starting a successful business is to plan, plan and then plan some more.

Working for yourself can be very rewarding:

Do something that interests you or you’re passionate about.
Choose your own hours.
Work around other commitments like your children.
Have more control over your income.
But there are also some downsides:

Working long hours and weekends.
Dealing with an irregular income.
Having to do your own bookkeeping and tax return.
Limited or no access to employment benefits like paid leave.
HMRC have created an easy to use Interactive guide for anyone looking to start a new business in the UK.
Find out more about setting up your own business and becoming self-employed on
What help is available if you become self-employed
Fortunately, when it comes to self-employment, there’s plenty of help and advice out there.

Government-backed advice services around the UK will help you with everything from creating a business plan and researching the market, to finding finance and recruiting staff.

So, depending on where you live, they should be your first port of call.

England – Great Business
Wales – Business Wales
Scotland – Business Gateway
Northern Ireland – InvestNI
Different kinds of self-employed businesses
If you’re thinking about starting your own business or becoming self-employed, one of the first things you will need to think about is your business structure.

Sole trader
This is the simplest business structure. You will run your own business as an individual and keep any after-tax profits.

However, your personal and business assets are not considered separate. This means you’re personally responsible for debts associated with the business. You can reduce this problem through insurance, or by choosing one of the other business structures mentioned below.

But, don’t be put off by the idea of being a business. A sole trader is just that – one person, you, working for themselves. You don’t need to be a shop owner. You could be a taxi driver or hairdresser. Becoming a business is just the official term.

To become a sole trader, all you need to do is register as self-employed with HM Revenue & Customs (HMRC).

A partnership, as the names suggests, is when you go into business with one or more other people and have shared responsibility for the business.

It’s important you draw up a partnership agreement, so everyone involved knows how the profits are split up.

Business debts are dealt with under what is known as Joint and Several Liability. This means all members of the partnership are responsible for the debts either in full, or individually, depending on how much they can afford to repay.

All partners will need to submit a Self Assessment tax return for their own share of the profits, and a nominated partner will have to submit a partnership Self Assessment for the business.

You can find out more about setting up a partnership on the website.
Private limited company (Ltd)
A private limited company (Ltd), is its own legal entity and is completely separate from the people owning and running it. It will need to be registered (or incorporated) with Companies’ House, must have a suitable name and an address.

The company will have a director (usually the person who started the business) who is legally responsible for running the company, and at least one shareholder (also known as a member).

A Ltd will have to pay corporation tax on any profits, and the after-tax profits are divided up among the shareholders.

The company will need to submit its annual accounts to Companies’ House and a tax return to HMRC. The director will also need to fill in a Self Assessment tax return, but will only pay tax on the money they earned by running the business, not the profits.

While these are the easiest to set-up and understand, there are some other options.

Limited partnership
A limited partnership must have at least one general partner and one limited partner. The general partner is responsible for running the business and the partnerships’ debts. The limited partner is only liable for the amount they originally invested in the business.

Limited liability partnerships (LLP)
LLPs are a hybrid of a partnership and a limited company. Like a partnership, it can be set up by two or more people, but like a Ltd, it must be incorporated with Companies’ House, have a suitable name and address and is legally separate from the individuals running it.

It must also have at least two shareholders (or members) and each shareholder pays tax on their share of the profits. Partners liability for the business debts are limited to the amount of money they invested.

Learn more about Limited Liability Partnerships.
Thinking of buying a franchise?
If you’re interested in becoming self-employed or starting your own business, but don’t want to start from scratch, a franchise might be worth considering.

A franchise is where you buy a licence from a business owner to use an existing business idea and brand name. Some well-known franchises include American fast food chains McDonalds, Burger King and KFC, but there are thousands of other franchise opportunities available from global names to local organisations.

The start-up costs can be quite high, but you will be buying into an established brand and the deal should include training and guidance on setting-up, running and growing your franchise.

But be aware of scams. Check that the brand is established and that the franchiser is marketing the brand actively.

How to Become Self-Employed: 10 Steps for Taking the Plunge

How to Become Self-Employed: 10 Steps for Taking the Plunge

How to become self-employed
You know that you would like to start a business and become self-employed, but where exactly do you start? Not to worry: we’ve outlined the steps that will take you from “thinking about it” to “doing it” in no time.

Here’s what you need to do to become self-employed:

Make the decision
This will be the first of many decisions you’ll have to make on your own. And it may feel strange at first, especially if you’re used to getting direction from your current boss, colleagues, or teachers. All that goes away when you’re self-employed, and you suddenly realize that you’re the person who has the final say on just about everything.

So the first step to becoming self-employed is to decide to do it. To quote Aaron Sorkin’s HBO drama Newsroom: “In the old days we did the news well. You know how? We just decided to.“

Do you know what separates all the people who want be self-employed from the ones who actually do it? Deciding to. So make the decision to make the leap. It sounds simple, but there’s nobody else who can do this for you.

Choose your niche and narrow it down
Google can afford to be in the business of just about everything—but you, as a newly self-employed person, won’t have that kind of global reach (at least, not at first!). That’s why it’s important to pick a specific niche.

Consider these questions: What will your area of focus be? What will your product or service solve? What kind of knowledge and experience do you already have that you could parlay into a business?

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Once you have the answer, narrow it down even more: get as specific as possible about what you plan to do. Rather than limiting your options, being specific gives you more options because you can focus on addressing one slice of the market vey, very well rather than spreading yourself thin trying to do it all. And the more specific you can get about your niche, the better off you’ll be as you identify your target market and build out your advertising and marketing.

Get specific about your target market
Who are the people you will serve with your product or service? This is where a lot of self-employed people go wrong: they’ll say something like, “Well, I will serve anyone who would benefit from a product/service like mine!” That’s not a helpful answer, because it doesn’t give you any actionable insight into your target market.

Being successfully self-employed isn’t about putting your business out there and then waiting to see who it attracts. It’s about building a very specific solution for a very specific set of people.

So who are they? If you say “women between the ages of 25-35,” that may feel specific but is actually very broad. Dig deeper. What do they care about? Are they stay-at-home moms who want a little free time to themselves? Are they women pursuing a new career after taking time off? The more specific you can be, the better you can serve this market.

Set your goals so you have a blueprint for success
You’re about to pour considerable effort into being self-employed, so how will you measure whether the time you’re putting in is actually paying off? How will you know whether to keep going, and whether to pivot in a new direction or to call it quits?

Here’s the thing about being self-employed: you not only have to offer a marketable product or service, but attract those first customers (who aren’t your family and friends), explain what you do in a coherent and compelling way, market it all effectively, and transform all your time, effort, and energy into an income. Becoming self-employed and then just “seeing how it goes” is not a plan you can actually work with.

Instead, set specific goals and refer to them often. Consider this: how many items/services do you plan to sell in the first year? How will you generate those sales? Which marketing strategies could you try? How will you position your product? What will you do if you don’t sell? All these questions are waiting for you out in the real world. Take the time to consider the answers before you have to face them.

Take care of the administrative details
Next, you’ll need to get to the business of setting up a business. How will you structure your business—as a sole proprietorship or as an LLC? How will you register it in your state? Do you need any particular licenses or permits?

Because there are so many administrative steps to take care of when you become self-employed and set up your own business, we’ve written about how to handle the process from start to finish. For specific action steps, check out 6 Things You Can Do Right Now to Get Your Side Hustle Off the Ground.

Invest in systems that will work for you
How will you stay on top of the day-to-day details of being self-employed? For example, how will you price your products and services? How will you bill your clients and customers? How will you keep track of your profits and losses, so that you know where your business stands at any point in time?

Think of the systems you’ll need in order to run your business effectively, and test out the ones that look promising. For example, you could use a CRM system to keep track of your customers, an email service for your email marketing campaigns, and PaySimple to stay on top of client payments and billing.

Decide where you’ll get your best work done
One of the best things about being self-employed today is that you have so many options when it comes to how, when, and where you’ll work. If your business doesn’t require a physical space open to customers, you have a lot of freedom here: you can choose to work from home, cobble together work time at local cafes, rent a desk or an entire office at a co-working facility, or secure your own office space.

Think about where you’ll be able to get your best work done, and start there. For example, working from home may seem like a great option, but what happens when the details of home life—like laundry, dishes, and miscellaneous to-do’s—intrude on the details of work life? It may be difficult to separate ‘home’ from ‘work’, in which case a third space—like a co-working office—may be a better fit for you.

Make connections and build your visibility
Every business is built on connections: you not only need a great product or service, but customers who are willing to pay you for it! And you not only need customers, but people in the community, people in your network, and people in the wider world who can support you and help you along your journey.

We suggest getting out there and making as many connections as possible with potential customers—but also with potential mentors, other self-employed people, and the greater community. The more visible you are, the more people you’ll be able to attract to your business. For an actionable list of ideas you can try out right now, check out our tips for networking within your community.

Market your business
How do you plan to get the word out about your business so that you not only attract your first few customers, but wave after wave of new ones?

Reach More Potential Customers
Get The Ultimate Guide to Marketing for Small Businesses and learn: content marketing, email, social media paid advertising & more!
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Marketing your business is an ongoing process, and there are many ways to do it. To get your bearings and get started, check out our Ultimate Guide to Marketing for Small Business, which walks you through the basics, gets you started with SEO, gives you valuable insights into content marketing, email marketing, and social media marketing, and offers tips on event marketing, direct mail, and simplifying your marketing activities.

Be smart about your most valuable resource: time
As a newly self-employed person, you’re going to be busy—after all, there’s a lot that goes into starting and growing a business. And since there’s only so much time in a day, if you’re going to be effective you’re going to have to use that time wisely.

That means saying no to repetitive tasks and busywork, and automating as much of your business process as possible—whether it’s having automated emails ready to go or simplifying everything from client scheduling to client payments. It also means learning to use your time wisely, from giving up multitasking to prioritizing what matters with the Pareto principle.

Now that you have the tools to become self-employed, the only question is: what are you waiting for?

9 Tax Tips for Self-Employed Folks Like Me

9 Tax Tips for Self-Employed Folks Like Me

If you are in business for yourself, here are some tax tips for self-employed people you must understand. This is an important guest post that I want everyone to read – even if you’re not self-employed. The reason is that many CPAs forget or overlook these simple ideas.

You have to remember that your tax preparer works with up to 500 clients. He or she loves you…but don’t expect them to remember every little detail. You’re responsible for your tax return…that’s why you sign it.

Here is a list of some tax tips and advice you can really benefit from – self-employed or not.

Matt Robinson is a tax accountant who has been helping taxpayers with major IRS tax debt problems for over 11 years. His firm specializes in tax debt settlement and resolution.

Approximately 10-12 million Americans, or 2/3 of all working Americans, are self-employed. Having financial independence is a great benefit if you can earn enough to provide for yourself and/or your family. Moreover, the tax code is designed to actually benefit the self-employed and small business owners in contrast to the average W-2 employee. For 2009, whether you were part-time or full-time, be sure to capitalize on many of the self-employment tax benefits provided by the Federal government or the IRS. Many expenses that you normally would incur as a W-2 employee can become legal, tax deductible business costs.

Tax Deduction for Self-Employment
The self-employment tax (15.3%) must be paid by self-employed individuals. The Social Security tax is comprised of Medicare (2.9%) and Social Security taxes (1%). If you are a W-2 employee, your employer pays half of the Social Security taxes (7.65%) due, which acts as a disincentive to self-employment as a whole. To combat this, the IRS allows you to adjust your gross income by half of your self-employment tax. Make sure you claim this deduction. If you are using TurboTax, ItsDeductible or another software program, it should deduct it for you, but double-check it because these software programs are not flawless.

Health Insurance Deductions
This is an above-line tax deduction in the sense that you can reduce your income tax with this but not your self-employment tax. If you paid for your health insurance yourself, you will be able to deduct those premiums as long as you were not able to participate in a W-2 employee or group health plan (like your spouse’s). Again, to figure out your allowable deduction, you need to take your self-employment income and deduct 50% of your self-employment tax (discussed above), as well as any IRA contributions, and what is left is your allowable deduction. In other words, if after the calculations you made only $2,500 but your total yearly premium cost was $3,000, you can only deduct $2,500. You would claim this deduction on your 1040 (line 29).

Retirement Plan Deduction
Self-employed retirement plans offer above-line tax deductions. If you made contributions to a qualified self-employment retirement plan (e.g. SEP IRA, Simple or Keogh Plan), you can deduct these contributions. For example, with a SEP IRA (common self-employment IRA) you can put away as much as 25% of your net income from self-employment (capped at $49,000) for 2009. To figure out your net earnings here, take your total revenue and subtract expenses, the 50% deduction for the self-employment tax and the deduction you made to your SEP (the last subtraction from net income is confusing, so see page 16 of IRS publication 560). If you file for a tax extension, you have until October 15, 2010, to not only file, but to fund your SEP IRA. For 2009, the line item you use to report your SEP contribution is 29.

Home Office Tax Deduction
If you work from home and you have an office that you solely and regularly use for business, you can take this deduction. This deduction is applicable whether you rent or have a mortgage. This deduction would be applicable to rent, your mortgage, property taxes (if applicable), home insurance and utilities. Take the percentage of total square feet your office or workspace represents and apply it to the expenses formerly mentioned. Use caution here because this deduction has a tendency to trigger audits, so be prepared to provide proof as to why you took this deduction. Moreover, make sure that your total home office deduction is not more than your total income. Your deduction is limited by what your income was from your business.

Phone Number and Internet Access
If you utilize your internet and phone for business, you can typically factor these in as business expenses. However, if you utilize your internet for personal use 10% of the time, then you would deduct 90% of your monthly internet costs. The same goes for your cell phone or business phone.

Capital Expenditure Deductions
Office equipment you use to run your business (e.g. computer, fax, printer, etc.) normally is depreciated over time, but there is a small business tax deduction you can take advantage of which will allow you to deduct up to $250,000 a year in equipment.

Meals and Entertainment Deductions
You can deduct up to 50% of meals and entertainment as long as these expenses were incurred for business purposes. It is a good idea here to keep a record of what you spent, when and why in case you are ever audited.

Travel Expense Deductions
You can deduct the full cost of traveling (so long as you traveled out of town). For any trip that included staying overnight, you can deduct the hotel cost as well. Remember, any meals or entertainment involved with that out of town trip can only be deducted by 50%.

Educational Online Memberships or Publications
If you subscribe to a trade journal or membership site in order to improve your business, you can deduct these expenses.

Tax Deductions and Benefits for the Self-Employed

Tax Deductions and Benefits for the Self-Employed

Throughout the years, legislators have written numerous lines into the tax code to soften the blow of the extra costs that self-employed persons must shoulder as the do business. However, the 2017 Tax Cuts and Jobs Act (TCJA) eliminated several self-employed tax deductions. Many of these changes are temporary and set to expire in 2025, but others are permanent.

The law affects small businesses in many ways, particularly via a complex 20% business income deduction for pass-through businesses—those that pay taxes through the individuals rather than through the corporation.

Some deductions that have been eliminated include:

Entertainment deduction
Domestic production activities deduction
Local lobbying expenses deduction
Employees’ parking, mass transit or commuting expenses deduction
A review of the most common self-employed taxes and deductions is necessary to help inform you of necessary changes to your business withholdings and income changes

The new tax year started on 6 April. While some allowance changes can help you save, are there any more ways the self-employed can cut costs?

Revealed: the best UK city for small business in 2019
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It’s the new financial year, which means there’s been a number of tax allowance changes. As some of these help you keep more of your hard-earned money, we thought we’d run through 10 further ways the self-employed can cut costs, saving money (and time) this financial year.

Use the tips in this article as a guide and be sure to speak to a professional before making any key decisions with your finances.

1. Make sure you know what expenses you can claim for
The online Self Assessment deadline for 2018-19 isn’t until January 2020, but to get as many deductions from future tax bills as possible, you should have your tax return in the back of your mind all year round.

It pays to keep a detailed record of all your allowable expenses so that nothing slips through the net when you fill in your next tax return.

Not sure what you can claim for? Here’s a list of the expenses the self-employed are allowed to claim.

And there are apps that make keeping track of your receipts a breeze. Take a look at some of the best accounting software available for small businesses.

2. Use your Personal Savings Allowance
If you’re in a position to put money away into a savings account you get tax allowances for the interest you receive.

For example, most people have a Personal Savings Allowance of up to £1,000, depending on the tax band they’re in. This is the amount of interest you get to earn tax-free:

basic rate taxpayers get £1,000
higher rate taxpayers get £500
additional rate taxpayers get £0
Some high-street personal current and regular savings accounts have good interest rates on savings – like the Nationwide FlexDirect current account (where you get five per cent interest on up £2,500 for 12 months) or the First Direct regular saver account (you need a First Direct current account, but the regular saver pays five per cent interest over the course of a year).

And keep in mind that banks often give incentives like cash or vouchers to switch to them. If you don’t have any reason to stick with your existing current account, it might be worth shopping around.

3. Be careful with credit cards
Credit cards can be a tempting option, especially if you’re in a bit of a financial squeeze, but using your personal card for business purposes can quickly lead to costly fines.

If you need a credit card for business expenses, look into getting one specifically for that purpose. And if you need financial help to launch your business, consider researching available business loans.

You could also look at your business bank current account to see if you’re still getting the best service possible. Check out the best business bank accounts here – some banks offer (time-limited) fee-free banking for switchers.

4. Check your phone and internet plan
This goes for both business and personal use, but it’s worth seeing if there are better deals available, especially if you’ve been with the same provider for a long time.

It’s also worth re-evaluating whether the type of package you have is right for your needs. If you find you’re often going over your call or data allowance, but rarely get through all your texts, for example, you could be costing yourself more in the long run than if you went for a plan with fewer texts but more data and minutes.

5. Make use of refer a friend schemes
Many companies these days will offer you benefits if you refer other customers to them, whether it’s money off your next order, free giveaways or simply some cashback to say thank you. It’s a great way to get extra out of something you’re already using and enjoying.

If you’ve found a product or service that you like, spreading the word can work out for you both. We do have our own refer a friend scheme, if you want to test out how one works – if you’re a Simply Business customer we’ll give you a £50 gift card for every friend you refer to us. Your friend will get a £25 gift card, too.

6. Plan your travel
Whether you’re driving or taking public transport, travel can quickly get expensive, both for business and leisure.

If you take the train, look into whether a season ticket is best for your needs, or whether you’re eligible for a railcard. They’re available for both younger and older business owners, as well as those with disabilities.

If you don’t take the train that often, planning far in advance will allow you to book advance tickets, which often work out far more cost effective than buying on the day.

And if you drive a lot, and your car or van guzzles petrol or is always in need of a service, it might be time to invest in a new one. You should also keep track of your mileage, as this can be claimed back against your tax return.

Nine essential tips for the (successfully) self-employed

Nine essential tips for the (successfully) self-employed

Being a successful freelancer is no easy feat. Avoid some of the common pitfalls with these top tips for a more productive and lucrative working life

In the UK, about 4.5 million of us are registered as self-employed. Given how many of us work for ourselves, it’s pretty surprising how little we are told about the working life of the self-employed – and how to survive it better.

Nobody teaches you how to be self-employed. Everyone just does it, and makes a lot of mistakes along the way. Over the past 17 years, I’ve learned a few things that might have saved me a grey hair or two (and a lot of money for the coffee fund) had I known them when I started out.

Here are a few pearls of wisdom that I’ve picked up during my years as a freelancer.

1. Behave as if you are at work
Because you are. This sounds obvious, but few of us do it. We slob around the kitchen in our pyjamas at lunchtime and send half-baked, error-filled emails while frying bacon. We make work calls from the toilet and do our self-assessment tax return online at 11.58pm on January 31st, while downing gin and weeping into the phone at the nice girl at HM Revenue and Customs.

None of this is very conducive towards producing good work or being offered more.

Even if you work from home, it’s just occasionally a good idea to pretend you are in an office. Get properly dressed, turn up on time, maintain an organised workspace and try to keep life and work separate.

2. Be a good boss
The most damaging trap that many self-employed people fall into is not treating themselves well. It’s obvious why; everything costs, and we pay for it all. There is no stationery cupboard to raid; no tech team who will fix a computer or magically replace a broken mobile phone.

So we try to cut corners at every opportunity. We scrimp, starve and deny ourselves the basics that we need to do our job well.

So be a good boss and treat yourself as you would expect an employer to treat you. If you travel for work, travel well. Don’t rent a cold, damp room with no desk or proper lighting, as I foolishly did one grim summer in Edinburgh. Stay in a hotel. Have a nice breakfast. You deserve this – it’s not a luxury and you don’t have to justify it or feel guilty.

3. Get paid
Securing the work and getting it done is the fun part. Actually making sure you get paid for it always feels like an extra chore. After years of freelancing, I think I’m owed literally thousands in unpaid work and expenses. I am just hopeless at keeping track and chasing people up for money, as are most of my self-employed friends.

Don’t let this happen to you. Keep a note of every piece of work you do and tick it off only when you have been paid. You don’t need a fancy spreadsheet to do this, though they do help.

4. Banish guilt
When I’m at work, I feel guilty about not being with my children. When I’m with my children, I feel guilty about not doing my work. It’s classic lose-lose situation, and so many of us do it. So stop doing it. When you work, work. When you don’t, don’t.

In my experience, men are (generally) much better at this than women. When they go to work, they are at work, whereas we pointlessly haul several tonnes of maternal guilt around with us on our aching shoulders all day. Learn from them: lose the guilt.

5. Take a break
You know what they say about running a business being like a millstone around your neck? Well I don’t know if you’ve tried living with a millstone around your neck, but I’m pretty sure it hurts after a while and results in very costly osteopath bills. So sometimes you need to take it off.

Take a holiday. Allow yourself sick leave. Have at least one day per week off, even if it can’t be at the weekend.

6. Get a raise
As your experience increases (and with it your skills and standard of work) this should be reflected in your pay. In an employee role you would have regular appraisal meetings with your boss at which point you would, every so often, ask for a pay rise.

The self-employed can, and must, do the same. Inflation is real and your income needs to reflect this, so don’t undersell yourself. How else are you going to afford the £400-a-week caffeine habit of the self-employed?

7. Use ‘work speak’
I learned this very late in the freelance game and it’s improved my professional life immeasurably. It applies especially to working parents, whose home and work lives have a terrible habit of running into each other and getting into a massive punch-up.

Here are some career-savers. Use them:

“I’m picking Ellie up from school” = “I am in a meeting from 3.30-4.30”.

“Jake is throwing up and can’t go to school for three days” = “I am on annual leave”.

“I can’t answer that now, I’m at gymnastics with Maisie” = “Let me ask my PA, when she’s back from lunch”.

Speak like a professional and you will be treated like one.

8. Learn to say no
Self-employed people very rarely turn down work and our employers know this. This is why they often treat us like desperate, drooling little puppets, throwing urgent work at us at the last minute, demanding it immediately.

Sometimes enthusiasm and efficiency are essential. But being occasionally unavailable often has the magical effect of making you instantly more desirable to potential employers and thus getting more work in the long run. Try it. Just say “no, I have deadlines to meet, so I can’t do it today. But I can do it tomorrow.”

9. Have a Christmas work do
Christmas can be a depressing time of year for the self-employed. Office Christmas parties spring up everywhere, with sparkly dresses, cocktails and hangovers filling everyone’s diary for weeks. And what do we have? Nada, that’s what.

So throw yourself a party. Decorate your kitchen, put on a party hat and some ankle-breaking heels, give a drunken speech thanking yourself for your excellent work and commitment to coffee-drinking this year, award yourself the Employee of The Year trophy, photocopy your bum and snog yourself in the understairs cupboard. Go wild. You deserve it.

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How to Prioritize Your Finances When You’re Self-Employe

How to Prioritize Your Finances When You’re Self-Employe

Freelancing is growing in popularity, largely in part to the amount of freedom it offers. Being self-employed, you have the flexibility to pick and choose which projects to work on, when to work, what to charge, and of course, the convenience of working from home.

While working for yourself certainly has its pros, finances can often prove a challenge for new and seasoned freelancers. Unlike a traditional 9-5 job, freelancers do not receive a steady paycheck or employer-paid benefits. The somewhat unpredictable nature of being self-employed requires you to manage your money very attentively.

Whether you are a new or veteran freelancer in 2018, here are a few tips on how to manage your finances.

Separate Personal and Business Finances
Separating your freelancing finances from your personal finances is key. By having separate accounts, you can more easily track your income and expenses. You’ll also have cleaner records to clearly showcase what business expenses you can deduct on your tax return.

Since you likely don’t have a regular stream of income and don’t pay taxes in the traditional sense, it is imperative to keep detailed records of your finances. Separating your business finances from your personal finances is the first step to ensuring that you are keeping as good of records as possible.

Create and Follow a Budget
Due to inconsistencies in income, creating and following a budget can be a challenge, but it is not impossible.

Since no two months result in the same income for a freelancer, you will have to base your idea of earnings on an average. Keep in mind, one bad month doesn’t define your business, but either does one successful month.

When you calculate your average income, you can then have a better idea of what to budget. Remember when budgeting to keep a record of all business receipts and to track all business expenses.

Because it’s up to you as a self-employed person to estimate your taxes every quarter, it’s essential to diligently track your income and expenses throughout the year.

Pay Yourself First
This advice seems to be the consensus among financial experts – pay yourself first. Making sure you get a cut of your earnings might seem logical, but many freelancers find paying themselves to be particularly challenging.

As a business owner, paying everyone before you pay yourself may seem like the most responsible thing to do. But refusing to prioritize payment to yourself can also bring serious personal financial consequences. In addition, paying yourself first will help to simplify your budget and reduce stress related to your finances.

Have Money Set Aside in an Emergency Fund
As a freelancer, your income is subject to regular ebbs and flows. That makes an emergency fund even more of a priority.

An emergency fund can be used for any sudden, unexpected expenses, such as medical bills or car repairs. Because your income as a freelancer is not completely predictable, an emergency fund can protect you and your finances. Ideally, you should have enough saved to cover six months of expenses.

Save for Retirement
Since freelancers work for themselves, it can be tempting to forgo enrolling in a retirement plan. But saving for retirement is necessary for everyone, and luckily, there are plenty of options. For instance, you can still contribute to an individual retirement account (IRA) or solo 401(k).

Continue to Pay Off Debt
In a way, those who are self-employed face more uncertainty about their future income. Because they do not always know what the next month’s cash flow income will look like, some hesitate to use their income to pay off debt. Instead, they like to save their money where it is easily accessible in the event that their business hits a rough financial patch.

If you have personal debt, do not forget to set debt repayment goals. Though you may feel like you have more pressing priorities, it is vital to continue paying down your debt. Paying off debt will decrease your interest payments, help raise your credit score, and allow you to then put the money you were paying to debt toward your business.

Don’t Forget About Insurance
Freelancers do not typically have individual access to employer-sponsored insurance plans, so it is their responsibility to make sure they are insured. Failure to obtain insurance can put you and your family at medical and financial risk. That’s why it is crucial to have proper coverage.

This includes health, life, car, and any business insurance you may need. While it may be tempting to forgo insurance due to the cost, it’s important to remember that insurance is one of the best things you can do to protect your finances.

Set Money Aside for Taxes
Taxes can be stressful for anyone, and unfortunately, taxes tied to your self-employment income can be even more complex. Because freelancers don’t have taxes withheld automatically from their paycheck like traditional employees, they have to make quarterly estimated tax payments.

That makes it necessary to set aside some of your earnings to make those tax payments.

One easy way to ensure you have enough money set aside is to create two separate business savings accounts. One account is where you can deposit money received for your freelancing services. Then, you can take a percentage of your earnings out and move it to the second account to act as an estimated quarterly tax account.

Plan for Ups and Downs
As a freelancer, you likely earn drastically different amounts from month to month. Even freelancers who earn a high income every year can attest that there are slower months in their business.

To be a successful business owner, it is integral to accept that not-so-good months will happen. You simply need to plan accordingly by creating a budget, building an emergency fund, and planning for taxes.

Have Confidence in Your Finances
When you are a freelancer and business owner, your finances will likely never be predictable or steady. Despite the inconsistencies, it is possible to take charge of your finances and build wealth. With wise money moves, prioritization of saving money, and responsible business practices, you can master your money as a freelancer. It is then that you can truly enjoy all the benefits of being self-employed.

Be Your Own Boss: 5 Valuable Tips For The Self Employed

Be Your Own Boss: 5 Valuable Tips For The Self Employed

Being your own boss can be great, but handling the finances can get complicated—especially come tax time! Here’s a how-to guide to help you out.
Being your own boss can be great. But when you’re self-employed, you also become your own human resources representative, office manager, and accountant. The finances can get complicated—especially come tax time! A little preparation will set you up for financial success.

Not sure whether you count as self-employed? According to the IRS, you’re self-employed if you meet any of the following conditions:

You’re the sole proprietor of a business, meaning you run an unincorporated business on your own.
You’re in a partnership that conducts business, such as an LLC.
You operate your own part-time business whether or not the business makes a profit. The IRS considers any activity with a “profit motive” a part-time business, as long as you’re working to further the interests of the business by purchasing supplies or seeking customers.
You’re an independent contractor. What’s a contractor exactly? An independent contractor is defined as someone whose client or payer can only control the results of the work, not what work will be done and how. Accountants, lawyers, doctors, dentists, and veterinarians are examples.
You’re a freelancer. If you get 1099 tax forms in the mail from your employer, rather than the W2 wage-earning form, you’re considered self-employed.
Read on to learn about five crucial areas for the self-employed to navigate, and some tips to master each one.

1. Save
You might have heard self-employment described as “feast or famine.” Sometimes business is booming and sometimes it slows to a crawl. Without an employer guaranteeing a consistent paycheck, how do you stay on top of your finances?

Start by setting aside a reserve or emergency fund. The idea is to have resources you can draw on if business is slow. Work towards eventually saving six months’ worth of living costs. Here are two possible ways to fill the fund:

You can calculate your average monthly expenses. Then whenever your income exceeds these expenses, save the surplus in the reserve fund.
Or you can save by adding a percentage of every paycheck, rather than a fixed dollar amount, to ongoing funds. These funds could include retirement accounts, student loans, taxes, or savings for big purchases. When you earn more, you contribute more. When you earn less, you contribute less. This is a smart way to live on a fluctuating income while still adding to cash reserves.
If your business is predictable—you know when the slow seasons and the busy seasons will be ahead of time—you can plan further down the line. Save extra funds in short-term CDs or interest-bearing checking or savings accounts. Don’t withdraw the money until you know you’ll need it. Short-term CDs may have penalties for early withdrawal. These accounts are a good option if you won’t need the cash for at least a few months.

2. Budget and manage cash flow
Do you have business expenses, such as equipment fees and employee salaries? Then it’s worth setting up a separate account exclusively for business. Not only will this make financial planning easier, it’ll help you figure out what tax deductions you can take.

Software to manage expenses, payments, and billing can be a lifesaver.

Expense trackers like Hurdlr show just how much you’re spending on the business and where. Hurdlr even tracks mileage if you go on a business trip.
Budgeting software gives you a straightforward picture of your cash flow.
Invoicing apps manage invoices for multiple clients, keeping track of who’s paid up and who still owes you. Each client’s payment schedule may be different and you want all their information in one place. With a smaller number of clients, you can track invoices in Excel or a similar program without springing for the software. Consider switching to an invoicing app as your business grows.
Payment processors are the easiest way to streamline payments from multiple sources. Paypal and Stripe are two of the most well-known processors, but there are plenty to choose from.
Two more tips to keep cash flow steady:

Bill in installments. If possible, request deposits up front for long-term jobs, or periodic payments as work is completed.
Vary your client base while building a solid network. One full-time freelancer I know advises not to let any client take up more than 30 percent of your time. This diverse network keeps you busy no matter what. While it’s essential to reach out, ideally you want to build several loyal, long-term client relationships. These relationships are most likely to be the heart of your business.
Consider working with an accountant to get a clearer long-term picture of your business needs. Accountants can be especially helpful for one of the trickiest and least fun parts of self-employment, which is…

3. Pay taxes
Self-employed workers, including freelancers and small business owners, don’t have taxes withheld from their paychecks. This means you’re in charge of figuring out how much you owe the IRS. And don’t wait for springtime. You should budget for—and pay—taxes all year.

As long as you earned $400 or more from self-employment, you’ll file a return. This applies whether you’re solely self-employed or you add a side business to a wage-earning job.

The amount and schedule of taxes came as a big surprise my first year of self-employment. I made a rookie freelance mistake: I didn’t set aside tax money.

The guidelines for self-employment taxes are different than for wage earners’ taxes. Keep these three rules of thumb in mind.

Rule 1
Stash away between 25 and 30 percent of your income for taxes all year round.

Seem high? The amount may be more than you need, depending on how many deductions you can take. But it’s better to be over prepared.

Rule 2
Figure out your estimated tax.

You’ll be paying two types of taxes:

Self-employment tax. This tax substitutes for the Social Security and Medicare tax withheld from wage earners’ pay. For wage earners the employer kicks in half of this tax. When you’re self-employed you are responsible for all of it. The self-employment tax rate may change from year to year. For instance, in the 2017 tax year the rate was 15.3 percent on net income. 12.4 percent went towards Social Security tax and 2.9 percent went towards Medicare tax. There’s an additional Medicare tax of 0.9 percent for high earners, or individuals who make $200,000 or more.
Income tax on your business profits. This tax is based on your net income. To calculate your net income, take the total revenue you earned—this is your gross income—and subtract any business expenses and deductions. We’ll talk about which deductions you can take in the next section. If your business expenses end up exceeding your income, for instance, you can deduct a net loss for the year.
If this is your first year paying taxes on self-employment, estimate how much you think you’ll earn during the year. You can make adjustments later if the estimate ends up being too high or too low.

The IRS 1040-ES helps you calculate your estimated tax. There’s a new form annually.

Rule 3
Pay taxes in quarterly installments—four times a year.

This one is hard to adjust to. But once you get the hang of it, quarterly tax payment actually helps with cash flow. You pay as you go rather than handing over a lump sum in the spring. Plus, you’ll avoid any penalties for late payment.

Once you figure out your estimated tax—self-employment tax plus income tax—divide that number by four. This is the amount you’ll pay the IRS each quarter or three months.

Check the Form 1040-ES for the payment dates. In general, they’ll be April 15, June 15, September 15, and January 15. The easiest way to pay is electronically at the IRS website. You can set up direct deposit for the due dates or figure out a monthly installment agreement if you can’t pay the full quarterly sum.

Miss a payment (or two)? You’ll get hit with a late fee, but there are ways to pay without interrupting your cash flow too severely.

4. Take tax deductions
This part makes the payments easier. And there’s some flexibility in what you can claim as a business expense.

First off, a business expense must be ordinary (something most people in your field use) and necessary for your line of work. You can only deduct the portion of an expense you actually use for business. For instance, if you have a car for both business and personal use, you can deduct mileage racked up on the job. This is where the separate business account and expense trackers come in handy.

Some of the most common self-employment deductions are:

The home office deduction
This one is complicated. You can’t always take a home office deduction even if you work from home.

To qualify, your home (or the area you work in) should be your regular and exclusive place of business. If you have a room or office you only use for business purposes, you can deduct it.

The home office also needs to be the principal or primary place of your business—your base. If you occasionally work or have meetings elsewhere, you can take the deduction as long as you use the home office consistently.

You can also deduct a percentage of your mortgage, property taxes, and home maintenance expenses. Deduct 10 percent of your utility bill, for instance, if your workspace occupies 10 percent of your home.

Since the calculations can get confusing, the IRS lets you take a simplified deduction. For this option you take accurate measurements of your work space. Then deduct five dollars per square foot for no more than 300 square feet. The maximum deduction is $1,500 using this method.

The simplified option doesn’t allow you to deduct home maintenance costs or depreciation, however. If your space is larger than 300 square feet or you want to take a depreciation deduction, use the standard option, not the simplified one.

It’s good to have space calculations on hand either way, since the home office deduction might flag you for an audit. Be prepared with measurements and a diagram in case the IRS asks.

Retirement savings, for you and for any employees.
Any contributions to individual retirement plans like SEP IRAs and solo 401(k)s are deductible.

Health insurance premiums
If you’re paying for a health or dental plan out of pocket. You can include yourself, a spouse, and any dependents if they’re on the same plan.

Self-employment tax
You can deduct half of the self-employment Social Security and Medicare tax. In other words, you’re deducting the half your employer would kick in if you were a wage earner.

Employee pay
If you have employees for your small business, you can deduct their paychecks.

Internet and phone bills
You can only deduct the portion or percentage of these services used for business.

Other deductions you might take, if your work requires travel and client meetings, include:

This only counts for business purposes. Use a mileage tracker if you drive frequently for work, so you’ll know how much to deduct.

Meals, entertainment, and travel expenses
The rules are pretty strict. You can only deduct 50 percent of meal and entertainment expenses. And you should prove you conducted business before, during, and after the event.

Similarly, a travel deduction should come with proof the trip was exclusively a business trip. Claiming these deductions raises the risk of an audit. Be prepared with records and receipts.

5. Plan for retirement
A retirement account is a smart, affordable investment even without an employer matching your contributions. There are two main types of retirement plans for the self-employed, and both are tax-deductible. They’re the Simplified Employee Pension IRA or SEP IRA, and the solo 401k. Which one’s the better choice? That depends mostly on your needs.

The SEP IRA works much like a traditional IRA or Individual Retirement Account. You contribute money to the account and get tax breaks as a result. You can open an SEP IRA with any amount of self-employment income, including a side business. And you can use an SEP IRA to supplement another retirement plan.

These accounts are easier to set up than 401(k)s and require less administrative maintenance.

How much can you contribute to an SEP IRA each year? It depends. If you’re a solo contractor or freelancer (your own employee) the tax-deductible contribution limits are the lesser of either:

25 percent of compensation, or an annual cap, which was $55,000 for 2018 and changes each year to adjust for cost of living.

The limits also apply if you have employees for your business and contribute to their SEP IRAs.

If you’re adding to your own SEP IRA account as a partner, proprietor, or employer in a small business, the IRS has special contribution guidelines.

Other things to know about SEP IRAs:

You can open an SEP IRA up until April 15 to claim deductions for the prior tax year.
You’re not required to contribute annually.
There’s a 10 percent penalty if you withdraw funds before turning 59 ½.
You can only contribute cash, not property.
You can convert the account to a solo 401k in the future if you want.
Unlike a traditional IRA, you can’t make Roth contributions.
You can’t take out a loan from an SEP IRA.
The Solo 401k
The solo 401k is only available to sole proprietors—business owners, contractors, or freelancers without employees except themselves or a spouse.

This account allows higher contributions than the SEP IRA. As a bonus, you can contribute twice to a solo 401k, both as an employee and an employer. There are two types of contributions, and you can make both in a given year:

Elective deferrals. This is an annual capped amount, set at $18,500 for 2018 but subject to change based on cost of living. Once you turn 50 you can contribute more (the 50-and-over cap was $24,500 in 2018). This limit includes any contributions you make to another 401k—for instance, if you have a 401k from a day job but you’re self-employed on the side.

Employer nonelective contributions. As an employer you can save up to 25 percent of your annual compensation. If you also want to make a nonelective contribution as an employee, the IRS lets you contribute 20 percent of net income. Take your business’s profit and subtract your self-employment tax deduction and any 401k contributions you made as an employer. Your limit is 20 percent of this total.

Complicated, I know. The solo 401k is the more paperwork-heavy of the two plans. But it’s a good choice if you want to contribute as much as possible to a retirement account.

Other things to know about a solo 401k:

You have until December 31 to open a solo 401k if you want tax breaks for the following April.
You can make traditional or Roth contributions.
Borrowing against your retirement plan is allowed via 401k loan (up to $50,000).
You can set up the plan to enable early access to funds through hardship distributions.
Once your plan assets exceed $250,000 you need to fill out IRS form 5500 annually.
You pay taxes on any contributions and earnings you withdraw from the fund.

7 financial tips for the self employed

7 financial tips for the self employed

If you’ve responded to the call of self-employment, congratulations! Self-employment is exciting, but it also comes with its fair share of financial challenges. Here’s how you can thrive financially as your own boss.

1. Master budgeting for the self-employed
An important thing to know is that a budget for a self-employed person is different than a traditional budget. This is because you most likely won’t make the same amount each month.

It can be difficult to budget appropriately when your income fluctuates. Here are some tips to make it easier:

Prioritize your bills: While your goal is to cover all your bills each month, sometimes that doesn’t happen. You should prioritize what needs to be paid first, such as your mortgage loan or car payment before your TV bill.
Make a bare-bones budget: You should have an idea of your non-discretionary expenses. This is what you’ll rely on during slow months.
Separate your expenses: If you’re self-employed, the line between your personal and business expenses will start to get grey if you’re not careful. This will make your life much easier, particularly at tax time.
Organizing your finances while self-employed may be a little complex at first, but follow these guidelines and you’ll get the hang of it.

2. Pay Uncle Sam first
One of the most crucial financial tips for the self-employed is setting aside enough money for taxes. Forget about “paying yourself first”-taxes take precedent for the self-employed. While paycheck earners get their taxes withheld automatically, you must set aside your taxes all on your own.

You’ll need to make quarterly estimated tax payments. If you make late payments, you’ll end up paying penalties and interest.

Make sure you have enough cash set aside each quarter by stashing away approximately 30 percent of all of your earnings. Your deductions might cause your bill to be lower, but at least you’ll have peace of mind.

3. Track your mileage
Going for a drive? You may be able to get a mileage deduction if it has something to do with your business. Your trip may be business-related if it involves:

Picking up supplies
Meeting clients
Going between offices
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If you’re going to log your mileage to take advantage of deductions, you’ll need to be scrupulous. Assuming you remember to log the details of every drive, you’ll need to record the destination, date, and miles traveled. This can take up a lot of your time and you may even forget about it.

4. Build an emergency fund
Everyone should have an emergency fund. However, it is even more important for self-employed people. You may find yourself dipping into your emergency fund more often because of your income fluctuations.

A slow month may require you to use your emergency savings to pay for a home repair, mortgage, or even your groceries. You should work on creating an emergency fund to cover six months. At the very least, you should set aside ten percent each month for emergencies.

5. Use windfalls for stability
There will be some months where you’ll do a lot better than your average. If you have some amazing months, don’t spend all your extra cash on lavish items. While it doesn’t hurt to treat yourself a little bit, it’s important to have some financial stability.

During these better months, take out what you need for taxes, emergencies, and your salary, then put the rest in an overhead account. This will provide you with enhanced financial security.

6. Focus on percentages instead of dollars
A crucial way to properly manage money while self-employed is thinking in percentages when setting money aside. If you rely on depositing a specific dollar amount into your savings, you could end up saving too little when you have high-income months. Allot percentages of your income to put toward your taxes, emergency savings, and other funds.

7. Don’t forget about retirement
You may put your retirement savings on hold as you get your business started. While this may be necessary at first, don’t ignore your retirement goals for long. Although your priorities may shift sometimes, you should never make the mistake of completely abandoning your retirement funding.

While you want to make your business sustainable, you certainly want to eventually retire. Balance your priorities so you can reach your goals and make informed decisions.

Being self-employed is an exhilarating, scary, and fulfilling experience all in one. It gives you the opportunity to follow your dreams and make your own path. Follow these self-employed financial tips and you’ll set yourself up for success.


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