Self Employment

From LoveToKnow Business

Self-employment encompasses a wide variety of industries including professional careers, such as real estate agents, freelancers, small office / home office (SOHO) workers, and small business owners. Despite the variety, successful entrepreneurs share many of the same needs, concerns and preparations before beginning a business venture.

Quit dreaming about self-employment, start now!

Before Considering Self-Employment

Self-employment is a calculated risk many individuals are willing to take to fire their boss, work their own hours, find financial freedom, and perform work that they enjoy. Thriving entrepreneurs share similar qualities:

Dedication and determination
Organizational and planning skills
Self-management and time management
Honest self-assessment

Additionally, the following skills are needed in most fields:

Marketing skills or awareness
Customer relation skills

Do you have what it takes? If you find yourself weak in some areas, develop the skills of a successful entrepreneur. Many qualities are learned as much as they are inborn. Other skills, such as customer service, marketing and accounting, can be outsourced to professionals.

Boss-Free Preparation

You may feel overwhelmed in the beginning, as there is much involved with starting a business. Some fields, such as construction, require more equipment and business planning, while others, such as a home-based service business, are easier to begin, if not maintain.

Following a thorough self-assessment of your skills, talents and interests, you should have a business idea in mind. Now it is time to investigate, plan and implement your self-employment goals:

Competition: Evaluate the market for your business; ensure that a viable need exists.
Local laws: Investigate and comply with state, local laws and licensing requirements.
Work Area: Define your workspace and verify that needed features are available, such as phone jacks, electrical outlets, adequate room, privacy etc.
Equipment: List all the tools, products and services needed to start and run your business.
Budget: Develop an estimated budget for starting and maintaining your business.
Recordkeeping: Implement recordkeeping from the start, and decide on what system and procedures you will use.
Tax-status: Determine which tax status is most advantageous. File for a federal tax identification number if needed.
Outsourcing: Identify any areas requiring professional consultation or service, including legal, marketing and financial.
Marketing: Create or solicit a professional to produce marketing materials, such as a logo, business cards and an advertising campaign. Consider both online and conventional marketing methods.
Trademarks: Prepare to file applications for trademarks or patents, if necessary.
Business Plan: Develop a business plan, using what you have assessed and developed thus far.

Small Business Resources

Adequate resources exist on the Internet to plan and implement your business from start to finish, including:

Business Plans: See the Small Business Administration for a plethora of tools and information or investigate business plan software.
Business Writing: See LoveToKnow's interview with a business writing expert for assistance on business correspondence you may encounter. Several business writing templates exist to further save time.
Equipment and Business Supplies: Find savings by utilizing comparison shopping engines that include both local and online retailers.
USPS: The United States Postal Service makes it easier to conduct business from your home or small business.
Free Accounting Software: Quality free programs exist for managing your business finances. Explore both free programs and free trials to save money and make an educated decision.

Self-Employment and Taxes

When filing taxes as a self-employed individual, plan ahead for IRS rules on estimated tax payments. Later, it may be beneficial to incorporate your business. Be diligent about saving receipts, including for items that you are unsure whether they are tax deductible, and keep them organized. For best results, consult a professional tax preparer for your first-year filings and to obtain the most deductions available.

Retirement and Savings

As your business grows and you generate a profit, consider the benefits of individual retirement and other savings accounts. Investment plans will not only allow you to save for your future but offer present-day tax savings. Read the latest from Smart Money on the best retirement plans for the self-employed.

Health Insurance

One of the biggest drawbacks to self-employment is the loss of employer-funded health benefits. "Approximately 60 percent of Americans that do not have health insurance work for small businesses," according to Representative Melissa Hart, R-Penn. Two organizations designed to reduce health care costs include HealthInsurance.org and the National Association for the Self Employed.