Self-employed? Things you should know

According to the U.S. Bureau of Labor Statistics, there are almost 10 million self-employed people in the U.S. in 2021. They can include jobs such as freelance writing, independent business consultant, local handyperson, food truck owner, and more.

Do you have what it takes?

If you’re ready to become you own boss, think about these traits that may help you transition from working for an employer to starting your own.

• Flexibility: You choose your working hours, take time off when you want, and work any place in the world. This is great for managing your career around family life and personal goals. However, your schedule may be irregular, and you’ll have to be the one that deals with whatever problems arise throughout each day.
• Self-motivation: You’re responsible for your own job and time. Create a plan of action and set your goals.
• Salesperson: You’ll have to create your own opportunities and close the sales on your own. Make sure to research those opportunities and position yourself to close the deals.
• Forward thinking: Make sure to create a list of short-term and long-term goals and develop your expertise.
• Consistent: Focus on consistency to keep your business going. Your customers must know that you’re devoted, talented, and have the attention to serving their needs.

Self-employment costs to consider

If you’re already self-employed or planning to work for yourself, here’s what you need to consider:

• Figuring out your health insurance: If you’re switching from a job that provided health insurance to self-employment, you may be able to stay covered by your former employer’s plan for up to 18 months. After that, you’ll have to cover the cost of Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance, which can be expensive. You may also compare COBRA costs and health care plans under the Affordable Care Act. Make sure to check to see which plans, if any, your doctors participate in if you want to stick with your primary care physicians. If you’re married and your spouse has insurance through his or her employer, switching over to their insurance plan may save you money.
• Creating a tax fund: Because you’re an independent contractor, you don’t get paid the same way as working for an employer. You’ll notice that taxes aren’t withheld. According to the IRS, you are generally required to file an annual return and pay estimated tax quarterly. This also includes paying self-employment tax and may require payment of state and local income tax. The self-employment tax is a Social Security and Medicare tax for those who work for themselves. To help save for your tax payments, it is recommended to set up a separate bank account.
• Creating an emergency fund: If you’re self-employed, create an emergency savings funds to cover at least six to 12 months of living expenses just in case you have no income.
• Protecting yourself: If you’re unable to work due to illness or injury, consider disability insurance. It may offer income protection. Research different disability insurance plans for the one that best fits you and your lifestyle.
• Saving for retirement: Make sure to open a retirement account and contribute to it. There are a variety of retirement options for the self-employed, so research the plan that works best for you.

The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.