According to the U.S. Bureau of Labor Statistics, 6% of people are self-employed, but almost 71% of Americans want to work for themselves. While this could result from the "grass is always greener" mentality, it could actually be the fear of failure that's holding you back.
There are plenty of benefits that come with being self-employed, but finding stable work and a decent work-life balance can be a challenge at first. Here's how to succeed when you're self-employed.
Pay Close Attention to Your Taxes
Unlike employees, freelancers have to pay a 15.3% self-employment tax and quarterly taxes once their tax burden exceeds $1,000. If you're unable to pay your taxes on time, you'll be charged a fee. If you calculate your taxes incorrectly, you'll be audited and must pay a fee.
To get a handle on your taxes, you need to save 25% to 30% of your income and be aware of your quarterly tax dates. We recommend using technology like QuickBooks or Zoho Books to make this process less arduous. Take advantage of tax deductions for self-employed workers.
Finding Work When You're Self Employed
Besides saving for taxes, finding work tops the list of the most stressful things to do as an independent. At first, you may miss the stability of a company's payroll, but freelancers have the chance to make more money if they succeed. Unfortunately, you'll have to manage your risks.
The first step to finding work is making yourself more appealing to new clients. That means writing an incredible resume, building a portfolio, and starting a website. But if you're really nervous, start networking and build up a bit of savings before you become a freelancer.
Protect Yourself With Benefits Coverage
Employees often receive health insurance from their employers, so if you're self-employed, you won't be covered automatically. There are several health insurance options available for people who are self-employed, and many of them are affordable, so don't go without coverage.
You should also open up a retirement savings account to prepare for your future and cash in on the tax benefits. In most circumstances, you can write off your health insurance premiums and your retirement savings contributions, so there's no reason not to prepare for your retirement.
Achieve Your Optimal Work-Life Balance
Most self-employed individuals have achieved a better work-life balance than their employed counterparts, but that may not be the case at first. You may take on too many responsibilities without realizing it, or you may be working more hours than you did when you were employed.
If you're working too much, try to pull back. If you're having a hard time relaxing at home because you work from your living room, go to a coffee shop. Change things up! If you're taking on projects you don't enjoy, or you're dealing with abusive or cheap clients, fire them and find something better.
Always Keep Your Career Goals in Minds
You may underestimate how difficult self-employment can be. Or you may find yourself quitting too early because you're not seeing enough traction. If you really want to be self-employed and you think you have the strength to push on, don't give up. The benefits outweigh the negatives!
When you feel like giving up, ask yourself why you became self-employed in the first place. Was it to spend more time with your kids or spouse? Or was it to become independent? Whatever your reason is, keep that in the front of your mind to stay motivated through difficult times.
