If you want to know how to become self employed, this comprehensive article will prove very helpful.
It reveals very important tips and answers some FAQs you might have about becoming self-employed.
If you are working for another individual or company, a standard process was probably followed before your hire.
That process most likely included your search for an employment position, submitting your resume in response to the open position, and if interest was shown you were invited to be involved in a job interview.
Wanting to make a good showing, you may have done your homework and researched job interview questions.
Some of those standard interview questions night have included tell us about yourself, where do you see yourself five years from now, what is your greatest weakness, etc.?
Another interview question that might be posed to gauge the candidate’s thinking ability may have been why are manhole covers round?
Or, to determine how the candidate can think quickly and on their feet, the individual might be asked by the interviewers to sell them the pen that they were writing with.
Another tough set of questions that may have been posed would have been about working relationships.
Specifically, if you could’ve changed one thing about your job what would it have been?
Importance of Becoming Self Employed
Would it come as any surprise to you that the second-highest response about change in the current or previous job would have been the ability to change their boss?
Just perhaps, if you are working at a company or for another individual and this would have been your response, maybe it is time to change employers.
Maybe it is time to look into the world of being self-employed.
Therefore, let us look into this possibility of self-employment and realize the importance of this consideration.
Today, it can be argued that individuals who are self-employed and have become small business owners are a significant driving force in strengthening America’s businesses and subsequently, the economy.
Added to the mix is that statistics also reveal that the average employee complement for a small business is 10 employees.
Calculating this statistic to the end result reveals that small businesses and therefore self-employment individuals make up 47.1% of America’s workforce.
Consequently, if considering starting your own business and being self-employed you will be working towards and attaining your own personal and business goals.
In addition, you will be contributing to the influence and impact of small businesses on America and Americans.
Also See: Best Reasons Why Success Is the Best Revenge.
6 Steps to Climb towards Self Employment
1. Business Plan
When beginning the climb towards self-employment the budding entrepreneur can choose one of two paths.
The one path is to choose a service that is well-traveled. This bandwagon approach follows the latest trends and may truly be a success if there is a demonstrated need in the community.
The other path is a unique path that takes into account the individual’s vision, personal character, and experience in providing a specific service.
Neither path is correct or incorrect. However, it is important to choose a business service that resonates with you as the owner and manager and excites you each day when your feet hit the floor in the morning.
Also, an important exercise to follow through on is to conduct market research. Information and the need for your services can be formed by this process.
To help in supporting your new business venture, one can reach out to the small business administration or the Chamber of Commerce in your community.
Once you have established what business service you will be pursuing, it is time to build a plan. The business plan will be your successful written guide on how your business will proceed.
Hallmarks of this business plan include a description of your business, where your business is located, potential hiring of employees, who you will be marketing your services to, a marketing plan, financials, etc.
Also See: Best Self Employed Ideas to Make Money from.
A critical step in protecting your vision and your business is to obtain business insurance. This action maybe a little bit more involved than just simply taking out a policy on your business.
It is important to realize that some businesses may be classified differently as it relates to insurance needs and maybe defined as an industry that is more high-risk than others.
Therefore, it is always a good idea to consult with a qualified and professional insurance agent to find out what would be the appropriate levels of insurance to purchase.
It’s also important to find out the levels of insurance to purchase that are in keeping with the laws of the state in which the self-employed individual will operate.
2. Business Structure
Once you have a clear direction, as afforded to you with your business plan, it is now the opportune time to legalize your business.
As an aside, it is important to have focused on a name for your business and checked with the local business directory and tax rolls to make sure that your business name is unique.
Registering your name with the local government is an important step to take before formalizing your legal business structure.
The major decision to determine is how your company will be legally structured. There are four options of a business structure that the self-employed individual can choose from.
Those four basic structures are:
- Sole proprietorship
- Limited liability company (LLC)
Although most new companies choose the LLC option as their business structure, it is important for you as the individual to familiarize yourself with all four possibilities and choose the appropriate structure in keeping with your vision and business plan.
Also, it may be important to obtain legal oversight to ensure that all of the T’s are crossed and the I’s are dotted.
4. Business License
Once these steps have been taken, it is now important for you to make an application with your state of operation and where your LLC has been registered.
This application requires you to obtain, pay and file for any necessary licenses and permits to legally operate in the state of your choosing.
Referring back to your business plan, you may have identified the need for obtaining financial support.
With your successful attainment of all of these steps up to this point, you are now ready to approach financial institutions to present your diligent and thoughtful process in starting your business.
Your vision, confidence, and well-thought-out business plan will go a long way in convincing these potential investors of your planned success for your business.
All which may result in a start-up loan.
Also See: How To Manifest the Money You Need.
6. Work the Plan
You have laid out your roadmap, you have achieved certain milestones up to this point and now it is time to continue on your journey.
With your business plan in hand, move forward on your business venture by adhering to this clearly defined document of entrepreneurial success.
Remember it is dynamic and can be altered and changed. But for the most part, it will be your successful framework for your successful business venture.
How to Become Self Employed FAQs
1. What Business Structure for Self-Employed Individuals?
In answering this question of what business structure to file your newly formed company under it is best answered by looking at the four possibilities.
By doing your research and consulting with other business owners or legal professionals, you can determine what are the pros and cons of each of the structures and what structure best suits your needs.
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2. What about Self Employment Taxes?
The tax structure for a self-employed individual is different than other legally structured companies.
For self-employed individuals, the estimate their taxes and pay the government quarterly.
These taxes and the appropriate self-employment quarterly tax forms are filed on the 15th of each month following each of the four quarters (April 15, July 15, October 15, January 15).
When it comes to tax season, the self-employed individual files their own personal income tax and lists themselves as self-employed.
Any taxes due over what was estimated and submitted will be payable at this time.
It may be helpful to hire your own business accountant to help with some of the potential financial and tax hurdles.
3. What is a SEP IRA for Self-Employed?
A SEP IRA is a retirement plan for self-employment individuals.
Like its counterpart, the traditional IRA, the contributions made by the business owner are tax-deductible.
The monies taken from the business as part of this plan can be invested in various retirement vehicles that can be researched and set up.
The beauty of a SEP IRA is that IRS laws allow for a higher contribution limit by self-employed individuals versus the contribution limits of a traditional IRA.
4. Is there a Salary?
The self-employment individual does not receive a standard salary or wage from their business.
However, the money earned by the company can be utilized by the owner to pay both business and personal expenses.
The amounts that they take from the business are technically called a “draw on the profits” and are of course contingent upon the business’s success and the sound financial judgment calls by the owner.
The cleanest way to draw money out of your business account would be to write a check to yourself from the company’s checking account.
This process can be done on a weekly, monthly, or as-needed basis.
Leaving the Manholes Behind
The least meaningful benefit of being self-employed is that you won’t have to take any more job interview questions.
And in particular strain over the question about the geometrical design of manhole covers (they’re round by the way because it is the best shape to resist the compression of the Earth around it).
At best, you are shooting for the moon and beyond. You are pursuing a dream and a vision.
You are leaving the employee manhole covers of this earth and setting your sights on loftier goals where the sky is the limit.
Your pursuit and achievement of self-employment have multiple benefits for the American economy, employees, service to your community, and for you and your family.
Self Employment Personal Story
Sometimes when opportunity knocks it is on the front door but the back door.
Allow me to explain.
My family and I had recently moved to Northern California and took a managerial position within the new company.
After my first two months on the job, I realized that a tremendous miscalculation had been made on my part.
The source of the friction? Surprise, surprise, it was overbearing and, in my estimation, peculiarities of the CEO.
Of course, panic started setting in, and eventually, the conflict accompanied with mental exhaustion spilled over into my personal life. I realized that a decision to sever the working relationship needed to happen.
Well, an opportunity came knocking as I was looking for another job.
The knock on the door was not the front door but the back door as I was offered an independent consultant’s position. The job requirements required that I do what I was already doing in my position of employment.
Long story short, the independent contracting or self-employment position was sufficient enough to meet our financial needs and started me on the path of entrepreneurship.
As a blessing in disguise, other silver linings included the perks and benefits of being self-employed and specifically starting a SEP IRA were realized and enjoyed.
Those that are self-employed or seeking to be self-employed are pioneers.
The journey is like scaling a mountain. There is the equipment needed, a calculated plan to follow, and guides along the way.
It is a journey for the physically strong but more importantly a successful journey realized through the power of discipline and a strong will.
Why consider the climb of the self-employment mountain?
Not because it is there but because when you reach the pinnacle or the summit, the view is unique and one of a kind.
Self-employment is that powerful accomplishment in the business world of employees and employers.
Besides, upon the realization of your dream, you will be working for one of the better bosses.