Opting to be your own boss instead of answering to someone else is appealing. However, it’s important to know that there are a lot of responsibilities that come along with it. You won’t have anyone else to turn to when there’s an issue. You’re the one who’s expected to take care of everything from human resources to accounting.
It can be an especially rude awakening when you add up your taxes.
So, before you decide to take the plunge and become your own boss, take a look at what you’ll need to make it work.
Put Aside Savings
When you first start out, money may not come in as quickly as you might hope. There will be times when you wonder how you’ll pay your mortgage or rent. Without a big corporation behind your paycheck, sometimes you may not get one at all!
Therefore, it’s wise to put aside a nice amount of savings first. Calculate what your business expenses will be as well as what it takes to live. By having a nice cushion to rely on in the beginning, the ebb and flow of a new business will be much less harsh.
A lot of new business owners fail to draw out a strict budget for themselves. Foresee any equipment you’ll need to buy, upcoming taxes, and what you’ll need to pay out to employees.
It’s prudent to rely on the help of technology. By using software instead of your own resources, you can significantly reduce the risk for error. Additionally, you’ll lose much less time crunching numbers.
Do Your Taxes Early!
If you’ve never filed as self-employed before, then you may not be prepared for how complicated it is. You’ll need to make sure that you’ve got all of your numbers organized as well as supporting paperwork.
Unless you have an accounting department, it’s up to you to figure out how much you’ll owe. It’s essential that you incorporate your taxes into your budget each month, so tax time doesn’t come as a shock.
Don’t wait until a week before tax deadlines to get started, either! You’ll be grateful that you gave yourself plenty of time to prepare.
While an accountant can be a great tool, it may not be in everyone’s budget. Therefore, consider a do it yourself tax software like Turbotax. For a small investment, the software will calculate and submit everything for you.
Educate Yourself On Deductions
You should do your research on what you can deduct on your return. By knowing the tricks of old-time pro’s, you can save thousands a year.
For example, if you own property which you use for both personal reasons and business, claim it as a deduction!
What are you doing to prepare yourself for self-employment?