What I’m Doing to Prepare for Self-Employment

What I'm Doing to Prepare for Self-EmploymentA couple of months ago, I published a post on Making Sense of Cents about How To Prepare for Self-Employment. I am planning on making the switch relatively soon, and I wanted to publish an update to that post.

There are many things that I have done and that I need to do in order to make the switch to self-employment as smooth as possible:

Increase our savings

We are really working on increasing our emergency fund. We depleted a lot of it in order to pay off my student loans. We want to have around one full year of expenses before I make the freelancing switch.

Luckily our budget is kind of low. Everything altogether (but before saving for retirement) is around $3,000 each month.

Think of a backup plan

Self-employment and freelancing is a dream of mine, and I would really prefer it to never end. However, we have to be realistic. What if something medical came up? What if freelancing really went down hill and we use up all of our emergency fund?

I really want to keep my resume up-to-date as much as I can. I want to keep my skills up-to-date as well. I really do have high hopes for my freelancing, and I am hoping that I will be successful with it for years to come.

Build my freelance services

Yes, I said empire, mainly just to be funny!  I am working on increasing the number of services that I offer, and I am also working on increasing the amount of clients that I have. Yes, I will be tired up until the day that I make the switch, but it will all be worth it.

I have been much better with streamlining my tasks and making everything work. Working my day job and freelancing have been much better lately.

Health insurance

Health insurance is tricky. Until W and I get married, I’m just going to have to suck it up and pay the high cost for health insurance. I am still undecided if I should pay for a cheaper plan that is mainly for “catastrophic” medical cases, or if I should get a more expensive plan.

I am healthy and hardly ever go to the doctor, but you never know what may happen.

Various expenses

There are a lot of relatively little things that I need to plan as well. I would like to set up a home office so that I am not just working anywhere and everywhere in the house. I would like to be more organized and have a place that I can really concentrate.

Right now, my various offices are on the couch in front of a TV…

Taxes

Taxes have of course been thought about and have been paid so far. I’m still looking into various ways to be smart with taxes and I will be consulting with more accountants soon. Paying 30% to 40% in taxes makes me cringe, but it has to be done.

It will be harder to get approved for financing

This is something that everyone keeps telling us. Yes, I know! We are putting our home-buying on hold since we haven’t found anything that we like yet.

What else should someone do who is preparing for self-employment?

 


Comments

What I’m Doing to Prepare for Self-Employment — 27 Comments

  1. Keep track of all your expenses. You’d be surprised what you can write off legally. I do this as a real estate agent and last year about 18% of my income went to taxes because of everything I could write off. May not be as much to write off as an internet entrepreneur, but just keep track of everything.

  2. Somehow I only just now subscribed to your new blog! Argh. At least I’ve got some backreading to do when I’m bored because I’ve read everything on my Bloglovin’ blog roll. Can’t wait to read more about your switch to self-employment!

    • Yeah I can’t decide. If we have enough in our EF to cover the deductible, then I don’t know if we need a more expensive health insurance plan.

  3. In terms of health insurance, does W’s policy allow for domestic partnership coverage? It seems pretty common for big companies to have this, so might be worth checking. Also, would you consider getting legally hitched before having the ceremony for insurance purposes? We know several couples who have done this for one reason or another (we did the inverse – our legal union happened a couple months later than our actual marriage), everything from health insurance to immigration status or mortgages. Family never has to know unless you tell them if that’s a big deal.

    • No it doesn’t. His company is locally big, but they don’t do anything outside of the metro area (so they are relatively small).

      And yeah, we have thought about it. We already act as though we are married, so getting married doesn’t actually mean anything to us, but we have had a lot of friends and family say that they would want to be there if we just went to the court house. I guess it’s more of we are being lazy about just going to the court house haha.

  4. Hmm. Backup technology or a technology replacement fund? I know some freelance writers who have a small emergency fund set aside to just replace a computer if necessary, because they would be lost without it.

    It seems like you’ve covered all the bases very effectively though! Well done!

  5. That tax system is a killer! And I thought that the 16% that we have to pay in Romania (plus 5.5% for health insurance) is a lot! Either way, I am sure that things will go great for you and I really don’t think that the back-up plan will ever have to be used but it is indeed a good idea to have one.

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  7. Sounds like you are doing a great job planning ahead! Don’t be too afraid of health insurance. Have you called around to get quotes yet? Mine is not too bad, & I’m just on an individual policy with Humana. I keep a very high deductible ($5,000) but that helps to keep the monthly costs down. I too rarely go to the doctor, but still wanted a good plan in place. Mine is an 80/20 plan until my deductible is reached, I have to stick with in network doctors & go for generic prescriptions but my monthly premiums are just about $105. Not bad at all!

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