Exiting the workforce and working for yourself is a huge accomplishment. It doesn’t matter if you decide to start your own business or you go freelance, it will have a huge impact on your life. That includes your finances.
Having enough money is always important, but it’s especially important when your income is completely dependent on you. Working for yourself doesn’t have to be scary when you look for ways to save money in every area of your life.
Work With a Tax Professional to Maximize Your Deductions
Taxes are a huge consideration when you work for yourself. There are a lot of ways you can save on taxes that you can’t take advantage of when you have a traditional job. Unfortunately, finding ways to save on your own can be nearly impossible.
Skip doing your taxes yourself and hire a professional when you’re self-employed. They can help you find deductions that you wouldn’t find on your own.
For example, if you use your car for work, you can deduct things like:
- Fuel
- Repair Costs
- Registration fees
- Mileage
- Insurance premiums
Additional deductions might include your cell phone, workspace, homeowner’s insurance, and much more!
Have a Plan for Tackling Quarterly Taxes
When you work at a traditional job, taxes are automatically deducted from your paychecks. When you work for yourself, you have to pay taxes yourself. That means paying both federal and state taxes four times a year.
Knowing when those quarterly taxes are due is important, but so is having a plan for tackling them. Although paying too much will provide you with a refund, that’s money you could have used throughout the year. You definitely don’t want to pay less, as you could find yourself incurring interest as you try and pay what you owe.
Take taxes out every single time you get paid. If you need help determining exactly how much money you should put into a tax savings account, work with a professional to determine a good percentage of your income to set aside.
Take Advantage of Free Trials and Services
There are a lot of things you have to pay for when you work for yourself. There are a lot of programs you have to pay for even if you have a traditional job! Finding ways to take advantage of free trials and services can save you a lot in the long run.
For example, did you know you can find free antivirus protection? You can find free trials and programs for budgeting, delivery services, and music services.
In some cases, you may be able to use the free trial and drop it. That might be the case if you have an important package that you need to have delivered. Instead of paying to ship it, sign up for Amazon Prime and get it in two days. If you don’t foresee yourself needing the service again in the future, scrap it before they charge your credit card.
Barter With Other Businesses
You aren’t the only one who’s looking for ways to save. Other businesses and self-employed people are looking for ways to save money too! Use that to your advantage and see if you can barter with others instead of buying their products and services.
Don’t be afraid to approach others about providing you with a product or service in exchange for something else. For example, if you’re a web developer, but you’re not good at writing, see if you can find a copywriter to write the content for your website. In exchange, you could build a free website for them.
Look for Coupons and Discounts
Searching for coupons and discounts is always worth your time, whether you work a traditional job or you’re the head of a large business. A few dollars here and there can really add up!
That includes keeping your eye on the coupons that come in the mail, as well as conducting a search online every time you’re ready to make a purchase. And of course, take advantage of free shipping!
Just because you can’t find a coupon or there isn’t a sale doesn’t mean you can’t save. Don’t be afraid to ask if there are any special coupons or discounts for those who are self-employed. If you’re a senior, were in the military, or hold an AAA card, you may also be able to get a discount.
Keep Track of Your Budget
You should always budget your money, no matter what kind of job you have. Unfortunately, most people don’t because actually understanding your financial situation can be very depressing.
You won’t be working for yourself for very long if you don’t keep track of the money coming in and the money going out. That includes planning your budget for the year, but it also means keeping track of weekly and monthly expenses. That way, you can make a change quickly if there’s a shortage instead of discovering you’re thousands of dollars in the hole because you didn’t notice that your income wasn’t keeping up with your expenses.
Keep Extra Money in a Savings Account, Just in Case
Everyone should have a savings account that can cover expenses in an emergency. You should have an account that covers expenses for your business as well.
When you’re self-employed, you will probably notice that you make a lot one month and not so much the next. It’s important to have a backup account that can cover the difference when you have a slow month. That way, you don’t have to rely on credit cards to get by.
How much should you have in a savings account? The answer will depend on your particular budget. Having enough to cover your expenses for a month is a good start, but the goal of covering expenses for at least six months is even better.
There is a lot to be excited about if you’re self-employed. There’s a lot to be scared about too! Worry less about your finances and spend more time serving your customers by following the tips on this list.
