What to Consider before becoming Self-employed
Being self-employed means being in control of your work and earning an income through independent contracts with businesses, instead of getting paid a regular monthly salary by an employer.
Self-employed people typically fall under three categories:
- Independent contractors who are business owners or freelance workers.
- Unincorporated sole proprietorships where there is only one owner.
- Business partnerships involving two or more individuals.
Upsides of Self-Employment
- Being your own boss allows you the opportunity to work towards things that are truly important to you. You can manage your work schedule and decide how much time and energy you can put into each project based on what will make you happy (or at least less stressed).
- Self-employed individuals are able to take advantage of opportunities others might not get a chance for, like starting a company or working in another country – which is something many people want but never act upon because they’re tied down by bills, debt and lack of free time.
That said, there are also challenges associated with being self-employed.
Downsides of Self-Employment
- You have to do your own taxes. The process can be challenging, but it will make you a smarter person. You may also take the help of an independent accountant to file taxes on behalf of you.
- No paid time off, sick days or vacation.
- Your income will not always be the same amount because there is no set limit to how much work you’ll need to do at any given moment.
- You won’t be getting a group insurance policy. But you can always purchase an affordable health and life insurance plan of your own.
- You’ll be solely responsible for retirement plans so make sure you have a solid plan in place. Talk to our professional financial advisors to know more about suitable retirement plans based on your financial goals and current liabilities. Zero fees and zero obligations!
Proper steps to take before pursuing self-employment
Create an emergency fund: Because it will take some time to fully get going when you’re self-employed, save up enough money for a couple of months’ worth of expenses just in case someone doesn’t pay you.
Use your spare time to start: If you have a steady full-time job, do not just leave it at the start and focus on your self-employment goals. Try starting on the side while maintaining the job. That way you will slowly be able to build up your network of clients.
Create a space for your work: It is crucial to have a workspace where you can work as well as balance your work life with personal time when you’re not at work.
What are the final things to do?
Now that you are set to pursue self-employment, here are the final few things to do:
- Create a realistic savings plan for an emergency fund. Also, have a plan in place to record your income for proper income tax filing.
- Get a life and health insurance plan immediately for financial security.
- Create a long-term retirement savings plan through RRSP or TFSA.
Talk to our advisors to know more about insurance and retirement savings plans at no additional cost and zero obligations. We have over 30 years of experience dealing in insurance and investment products for businesses and individuals in Mississauga, Brampton, Toronto, and Hamilton.