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40 Tips for Self Employment Success–A Guide To Working For Yourself

Being self employed sounds awesome on the surface. You have control over your schedule. You get to choose your own work life balance. You get to decide how to build, grow and transform your business.

On the other hand, you do have to find ways to make ends meet. So even if you are your own boss, there’s a good chance you’ll have potential customers to answer to, business related expenses to pay for, and services to render. Not only that, but now that you’re on your own, you also have to figure out how to navigate taxes on your own, how to procure insurance coverage for you and your dependents, and how to run the day to day financial operations of a business.

In other words, now that you own your own business, or are a sole proprietor offering specialized goods or services, you actually have a whole lot more responsibility than you ever did as a full time employee in somebody else’s company.

To the point, succeeding in running your own business can be quite demanding, and many self employed individuals actually work extremely long hours just to keep their small businesses running, their products shipping, or their services available. This is the type of dedication that can separate successful self employed people from those who struggle to make ends meet.

So how can you ensure that you are among the former and not the latter? Well, the success of your small business or sole proprietorship will depend on numerous factors including your ability to stay organized, manage business expenses, navigate income tax rules, maintain the quality of your product or service, and more. Below, we’ll break out our recommendations into a few key areas and offer some quick hitting tips on how to succeed at self employment.

If you’re not quite ready to leave your full time job for self employment, you may want to consider getting yourself a side hustle first. Check out our look at ten reasons you might want to dip a toe into the gig economy pool.

Otherwise, read on for…

40 Tips for the Successful Self Employed Person

There’s a lot you’ll need to know when it comes to self employment. From the challenges that come with filing and paying your own taxes to the financial realities of planning for retirement without the help of an employer; from the logistical challenges that come with running your own company to the personal difficulties you might face when pursuing work-life balance, self employment can actually be a fairly challenging proposition. That’s why we’ve divided our guide into a few distinct sections:

  • Tax Tips
  • Retirement Planning Tips
  • Financial Organization Tips
  • Getting Started Tips
  • Work-Life Balance Tips

Self Employed Tax Tips

Taxes are complicated, especially when you’re self employed. There are all kinds of tax rules and it may not always be immediately obvious how to navigate these rules to remain both in compliance with the law and in the position to receive all the benefits to which you are entitled. Read on for a few tips that can help you keep more of your net earnings in your own pocket while avoiding unwanted trouble with the IRS.

1. Make estimated tax payments. One of the biggest challenges you’ll face is managing your own income tax payments. When you’re employed by somebody else, your taxes are automatically deducted from every paycheck. But when you are self employed, it’s up to you to file and pay taxes on your own. The best thing you can do to soften the blow is to pay estimated tax payments over the course of the year. This way, you won’t owe a big chunk of money when it comes time to file your annual income taxes. Usually, with estimated taxes, you’ll pay quarterly taxes instead of a single lump sum on tax day.

2. Put aside money every month for taxes. Save money toward your anticipated tax burden each month. Place money from your monthly earnings into a high interest bearing savings account. When your quarterly taxes are due, you should already have that money set aside. But how much is the right amount? According to an article from Business News Daily, “It’s a good idea to save 25 to 30% of your taxable income to pay your quarterly taxes. That may feel like a lot of money, but it’ll help you avoid having a huge tax bill at the end of the year.”

3. Get credit card rewards while you’re at it. Use a good rewards credit card to pay off your quarterly bill so that you can collect points, frequent flier miles, and other rewards. A few nice credit card perks may even make you feel a little better as you fork that hard-earned cash over to the government to meet your tax requirements. Then, be sure to use the money set aside in your high interest savings account to pay your credit card balance in full before the next billing cycle in order to avoid interest charges on repayment.

4. Calculate your probable tax burden. While putting aside 25-50% of your income is a pretty good rule of thumb for meeting your tax burden, you may want to hone in a more exact number in order to better project your earnings and expenses ahead of each year. Use a self employment tax calculator to anticipate how much you’ll owe to the federal and state government based on the current self employment tax rate, which is composed of Social Security taxes and Medicare taxes. Forbes offers a handy calculator that can help you anticipate your self employment tax burden this year. 

5. Get all of the deductions and credits to which you are entitled. Make sure you’re capitalizing on all the tax advantages that you are qualified for, including all eligible deductions and credits for things like use of your home or car for business, office supplies, and other business related expenses. For instance, says the article from TaxACT, “Whether you take the standard mileage deduction or your expenses for gas, oil, and other actual expenses, you must have good records to deduct vehicle expenses. Your records must include mileage driven, the purpose, and the date. Count every trip to the post office and client meeting – those miles add up!” The same is true of meals that you pay for during work hours, coffee you consume to get your day started, and the utilities you use to power your home office. Self employment taxes can be costly, so be sure you aren’t leaving any business deductions on the table.

6. Make sure you’re getting your full medical deductions. As a self-employed person, you are likely paying for your own medical insurance. Be sure that you are receiving your full tax benefits in light of this expense. According to the article from TaxACT, you have a right to deduct the cost of your health insurance premiums, as well as those paid for your spouse and dependents. This dedication will adjust your overall income downward, which will ultimately lower your income tax burden.

7. Front load your business billing. Approaching the end of the year and looking for ways to lower your tax burden ahead of tax time? You can always stagger your billing toward the final days of the year. You may have completed the work ahead of the holidays, but as long as you receive payment in January or later, you now have a whole extra year to pay taxes on that income.

8. Back load your business expenses. Take on new business expenses at the end of the year. While you might want to collect on your invoices after the New Year, the exact opposite rule applies to adding new business expenses. Indeed, if you have plans to purchase any new assets for your business–especially those that may depreciate in value like vehicles or computers–it’s a great idea to make these moves by or before December 31st. As an article from TaxACT explains, “If you buy business assets by December 31, you can start depreciating them this tax year. You may even be able to take a Section 179 deduction and expense the entire cost of the asset in one year.” In other words, making these necessary business purchases before the end of this year effectively allows you to lower this year’s tax burden.

9. Get professional accounting help. Hire a tax professional to ensure that you are at once taking advantage of all available deductions and credits while also ensuring that you aren’t making any costly errors that could result in an audit or eventual penalties for underpayment of federal or state taxes. Even if you feel like you know what you’re doing when filing your taxes, it may be a good idea to work with a Certified Public Accountant (CPA) to preemptively avoid any trouble with the IRS.

10. Shelter your income from taxes using retirement savings. Make sure that you are using all appropriate retirement savings account options to simultaneously reduce your current taxable income while building a retirement fund for the future.

Smart Self Employment Retirement Planning Tips

Speaking of retirement, when you are self employed, retirement planning falls entirely on you. You won’t have the help of an employer, or employer matching funds, to help as you save toward retirement. There are a number of steps you’ll probably want to take as a self employed person in compensation. Consider these retirement fund options:

11. Start a Traditional or Roth IRA. As a self employed individual, you don’t have the benefit of an employer who matches your contributions to a 401(k) retirement account. But you can start your own traditional or Roth IRA and make regular pre-tax contributions toward your retirement savings. And if you’re just making the transition from full time employment to self employment, you can roll any existing 401(k) funds into your new IRA. You should be aware that there are limitations on what you can contribute to a traditional or Roth IRA in a given year.

12. Open a Simplified Employee Pension Plan (SEP). The SEP allows employers to make contributions to traditional IRAs on behalf of their employees. So why would that help you if you’re self employed? Well, as a self employed person, you can actually use this fund to set aside as much as 25% of your pay and you can do it with far fewer filing requirements or setup costs than a traditional IRA. This far exceeds the size of the contribution you can make to a traditional or Roth IRA in a single year.

13. Fund your own 401(k). While you might not have the benefits of employer matching, you can open a solo or self-employed 401(k). This retirement fund is designed for self employed individuals with zero employees and allows the account holder to contribute as much as $61,000 per year (as of 2022).

14. Hire freelancers if you need help. As noted above, the solo 401(k) is only available to those who are self employed and do not have full time employees. To this end, an article from Business News Weekly advises that there are clear limitations to how you may conduct your business when enrolled in a self employed 401(k). For one thing, this fund requires you to remain a sole proprietor. According to the article, “With self-employed 401(k) plans, you can’t have any full-time employees, but you can contract with freelancers or employ part-time employees who don’t work more than 1,000 hours a year in your business.” So if you do need labor support, contract work is your best bet. This can ensure that you remain both eligible for your existing solo 401(k) and that you have access to talent and labor as needed.

15. Employ the help of a financial advisor. As a self employed person, you may benefit a great deal from speaking with somebody who can recommend the best financial products for your situation, who can help you reduce the burden from federal taxes, and somebody who can help you secure the future you envision for you and your family.

16. Invest more aggressively when you can. While your retirement savings should absolutely rest on a foundation of prudent planning and stable long term investments, this shouldn’t necessarily be the only place you invest your self employment earnings. U.S. equities markets offer tons of opportunities for more aggressive investment with far greater potential yields. The article from U.S. Bank advises, “Don’t squirrel everything away in retirement accounts. While retirement accounts carry important tax advantages, allocate assets outside of them for growth as well. Investments in brokerage or automated investment accounts can also be easier to access if you experience cash-flow issues and need funds. How much equity you keep in your portfolio should be informed by your age and your risk tolerance.”

Financial Organization Tips for Self Employed Individuals

When you work for yourself, you are responsible for your own finances. If you’ve never run a business before, you will face a new set of challenges and learning experiences. Read on for a few tips on how to manage your own business even if you’re relatively new to the financial side of things:

17. Keep your company structure simple. If you are self employed, there’s no reason to complicate the structure of your business. Creating unneeded layers of organization can increase your administrative costs and unnecessarily raise your tax burden. The article from TaxACT advises that “Unless you need to form a partnership or a corporation for some reason, stick with a Schedule C, Sole Proprietorship. It’s the simplest way to file, and there’s nothing you have to disband if you move on to something else.”

18. Separate your business and personal expenses. Even if your business is just you, it’s a good idea to set up a separate checking and savings account for collecting income and paying business expenses. This can make it a lot easier to keep track of your spending and earning for business. More importantly, it can prevent a blurring of lines between business and personal expenses, which will be an important distinction to make when it comes time to file your taxes.

19. Pay yourself first. Cash flow can be a challenge in self employment. Depending on the nature of your business and the consistency with which you acquire and retain clients, your earnings and opportunities may vary widely. Try to establish a consistent salary for yourself, one that allows you to meet the basic costs of living and address all of your personal expenses without difficulty. While it’s obviously important to reinvest your company’s earnings into mid- and long-term growth, it is perhaps more important to get your own feet on the ground first. Make sure that you’re able to pay yourself a livable salary even as you weigh the longevity of your company. An article from U.S. Bank suggests self employed individuals “Set up an automatic transfer from a business bank account to your personal account, like a regular paycheck. This can also help you plan budgets and calculate taxes.”

20. Get comprehensive coverage. As noted in our section on tax tips, one of the biggest challenges of self employment is the fact that you’re pretty much entirely on your own when it comes to insurance coverage. And we’re not just talking about health insurance. When you work for a company, you may enjoy all kinds of other insurance coverage including life, liability and disability coverage. If you’re self employed, it’s all on you. According to the article from U.S. Bank, “self-employed individuals are on their own when it comes to selecting and purchasing coverage. State-based exchanges are a good place to start for browsing health insurance options. Life and disability insurance may be critical if you have family depending on your income. Make sure to look for an ‘own-occupation’ policy tied to your specific career.” This option may offer unique benefits based on the nature of your work.

21. Create a business budget. It’s important to have a complete picture of your expenses before they sneak up on you. An article from Indeed suggests that “When becoming self-employed, it’s important to prioritize your financial planning. Budgeting expenses, allocating money to your business activities and staying on track for reporting taxes are all necessary to ensure you can finance your business ventures.” This financial organization will also be pretty important when it comes to itemizing all of those business expenses and deductions on your tax filing.

22. Get some good accounting software. We’re guessing you’re not an accountant…unless, of course, accounting is your self employment trade. Barring that happenstance, it’s very possible that this is your first time attempting to build and balance a business budget. Fortunately, there are all kinds of great applications out there that can do most of the complicated stuff for you. That’s why it’s usually a good idea to employ a reliable accounting software program like QuickBooks to keep track of everything coming in and going out. The right budgeting application can even help you set up automatic transfer functions for paying bills, meeting monthly expenses, and paying your own salary.

23. Create a pricing structure that makes sense. On the subject of everything coming in and going out, it’s actually your job to set prices for your goods and services. Naturally, there are some expenses that you simply can’t control. For instance, if you are an independently contracted carpenter, the cost of lumber will factor into your customer pricing. On the other hand, it’s up to you to decide what your time and labor will cost. Make sure you find balance between profitability and practicality when you set your pricing structure. And, as the article from Indeed suggests, keep that pricing structure as simple and transparent as possible. The article from Indeed notes that “It’s important to clarify your pricing structure so that it’s both fair to the customer and viable for you doing business. You can compare your prices to that of the competition and figure out how much you can afford to live off of. From there, you can increase or decrease your prices to either give yourself a competitive edge or keep the business viable.”

24. Invest in the right business resources. You’re diving headlong into your own business operation. Now is not the time to get cheap. As the old saying goes, you’ve got to spend money to make money. Of course, you want to spend it wisely and with purpose. With that in mind, make sure you invest in the best tools of the trade. While the exact tools will differ from one industry to the next, be sure that you choose the systems and services that you’ll need to anchor your business. An article from PaySimple suggests that “For example, you could use a CRM system to keep track of your customers, an email service for your email marketing campaigns, and an online payments solution PaySimple to stay on top of client payments and billing.” The right service obviously depends on your needs. Do your due diligence to determine the best tools and resources for your line of work, then invest accordingly. The right investment will pay dividends through improved efficiency, accuracy, and organization.

Tips for Getting Started With Self Employment

For many aspiring freelancers and sole proprietors, getting started is the hardest part. Making the leap from a steady income and a stable full time job to the less certain world of self employment will likely bring a number of practical and financial hurdles. Read on for a few tips to help you clear those hurdles and hit the ground running:

25. Save up for the transition. If you’re new to freelancing or self employment, it may take some time to get things rolling smoothly. There could be some lag time between the start of your own business and the point at which you have a steady stream of paying clients. What’s more–there will definitely be some lag time as you provide these clients with goods and services, invoice them for your work, and await payment. In other words, until you’ve already made some money and you have a steady stream of money flowing in, you may need to fall back on your savings during the transition. Make sure you’ve put aside enough to make the leap into self employment.

26. Beef up your emergency fund. In addition to saving for the transition period between full time employment and self employment, you should also be placing a bit more money than usual into that all-important emergency fund. Everybody should have an emergency fund–preferably an interest bearing savings account where you can put aside a few dollars from every paycheck to prepare for unexpected or urgent expenses. Now that you’re going into business for yourself, this backstop is even more important. There may be times that your ability to garner business or land new clients is inconsistent. This may directly impact your cash flow, making it hard to make ends meet, and even threatening your long term ability to remain self employed. Build up your emergency fund before you make the leap and continue to fund it in times when business is plentiful so that you have a financial safety net in times when business is less plentiful.

27. Activate your personal and professional networks. After all, that steady stream of paying clients won’t just materialize out of thin air. You have to put yourself out there. According to an article from Business Weekly, “The best way to ensure you have a steady stream of work is by building your network. Let your family, friends and former colleagues know what you’re doing. You never know who is willing to send new business your way. You should also come up with a sustainable marketing plan. A marketing plan will help you connect with potential customers and clients, and get the word out about your business.”

28. Build your brand. This is a key part of marketing yourself. From getting professional headshots to refining the language on your LinkedIn account; from creating consistency of messaging across social media platforms to establishing the tone and language surrounding your product or service offerings, you should be creating a positive and memorable impression at every opportunity.

29. Create a website for your business. As long as you’re working on building your brand, it’s pretty important to establish an online home base. This is a place where prospective customers can find you and existing customers can verify the legitimacy of your company and the quality of your work. As an article from Forbes points out, “Whether you are a builder or a banker, there are few sole traders who do not have an internet presence. You probably already have a computer and internet connection so that’s already paid for. You can teach yourself how to set up a website but it’s not too expensive to get one designed.” Your website doesn’t have to be complicated. It simply needs to support your brand identity and convey your value proposition to prospective customers. Speaking of which…

30. Create a meaningful value proposition for your customers. Whatever you do, do it well. In the simplest of terms, you need to provide value to your customers if you want them to come back to you. As the article from Indeed recommends, “One of the best ways to inspire self-motivation and turn customers into repeat clients is to bring real value to the customer. This can mean producing a high-quality product or service that solves a specific customer issue and providing excellent customer service.” In other words, create a meaningful value proposition, whether it extends from the singular excellence of your work, your highly competitive pricing structure, or your ability to provide personalized care and attention in ways that larger competitors simply can’t. Whatever your value proposition, you’ll need to cultivate this into a meaningful competitive edge.

31. Identify your target market. Of course, you can’t simply create a value proposition for your customers without first knowing who your customers are. This will obviously depend a great deal on the nature of the goods or services you are selling. But before you make the full leap into self employment, make sure you can identify a market for these goods and services. Naturally, you’ll want to know that this market actually exists before you decide to base your future prosperity on it. But beyond that, you need to recognize and understand your target audience before you can effectively market yourself.

32. Sell your strengths. For better or worse, you are a company of 1. While you can’t provide the resources and reach of a big company, you can provide the personal attention, collaborative investment, and flexibility that a big company can’t provide. Focus on providing the benefits that come with a sole proprietorship, rather than selling yourself on the benefits that come with a big company. An article from Zen Business observes that “When you’re a small business, it can sometimes be tempting to act a bit bigger than you really are, or to attempt to come across as corporate when you’re really just a one-person show. While this may be a tactic that works for some, just being yourself is much easier, and probably isn’t going to cost you any business. The whole point of being self-employed is that you’re selling yourself and your skills, so it’s safe to say that your personality is part of the package.” Focus on selling your personality, and the small size of your operation, as strengths. If you position yourself as a unique entity in the marketplace, your clients will view these features as strengths as well.

Tips for Finding Work-Life Balance in Self Employment

Do not overlook the challenge of adapting to self employment on a personal and practical level. This may require some major adjustments to your lifestyle. There are a few things you can do to ease that transition:

33. Carve out a space where you can work without restrictions or interruptions. Creating a designated workspace that is separate from your living space is absolutely essential. If this is something you can do from your own home–great! Set up a home office where you feel stimulated, energized, and insulated from distractions. If this isn’t possible in your home based on the limited availability of space…or the limited availability of quiet…you may need to rent cooperative office space. This may be worth it. The ability to focus on doing your best work is absolutely critical to your success.

34. Create a routine and stick with it. One of the biggest pitfalls for newcomers to the world of self employment is the sudden absence of structure. It can be easy to become derailed, lose focus, or struggle to find motivation when you’ve been removed from the rigid schedule and procedures that often come with full time employment. It’s up to you to stay on track, remain focused, and self motivate. An article from Indeed suggests recreating that structure, even if that means mimicking the type of routines that you have experienced in traditional workplaces. According to Indeed, “Having a set schedule in place for when you work can help maintain a sense of responsibility and help balance flexibility and productivity. If you’ve transitioned from full-time work to self-employment, a good idea is to mimic the schedule you had at your full-time position. Waking up every day at the same time can acclimate both the mind and body to expect to work at that time. If you woke up at 7 am every morning at your full-time job, consider doing the same when you’re self-employed.”

35. Act like you’re actually going to work. This may seem obvious, because you are actually going to work. But the reality is that working from home can be conducive to doing all kinds of things you’d never do in a real workplace. You probably wouldn’t wear pajamas to the office, or take your lunch break at 10:30 while watching The View, or suddenly diverge from your current assignment to have a 40 minute chat with your neighbor about the best kind of mulch for growing healthy rhododendrons. And you know why you wouldn’t do those things? Because your boss would consider you unproductive and easily distracted. Well, now you are your own boss, so it’s up to you to recognize the signs of an unproductive and easily distracted employee–especially if that employee is you! As an article from The Guardian suggests, “Even if you work from home, it’s just occasionally a good idea to pretend you are in an office. Get properly dressed, turn up on time, maintain an organised workspace and try to keep life and work separate.” Simply stated–keep things professional, even when you’re the only one around to see it.

36. Prepare to wear a lot of different hats. It’s possible that you got into business for yourself because you’re an amazing web developer, or an extremely dependable graphic artist, or a talented home remodeling expert. And since you’ve decided to go into business for yourself, we’re guessing you’re pretty good at what you do. But now, on top of that, you also have to be your own appointment scheduler, business accountant, tax specialist, billing and accounts receivable department, customer service representative and, should you find yourself internally conflicted, your own human resources mediator. In other words, if this whole self employment thing is going to work out, you’ll have to do a ton of different jobs. You’re no longer just the creative or technical talent. You are also a business owner, and you now have all the responsibilities that this entails.

37. Beware of burnout. When you’re self employed, it can be easy to think of yourself as being on the clock at all times. And it’s true that sometimes, you will need to grind out some long days and late hours. But there are limits to how far you should push yourself. Exhaustion can be a pretty big setback if you don’t manage your mental and physical well being. As the article from Indeed notes, “Once you start to feel burnt out, it can be difficult to get back into your work. If you can only work eight hours each day, that’s ok. If you plan out your day with a schedule, you’ll be able to accomplish a lot in those eight hours. This also includes work-related communication. Setting a strict 8 pm deadline for all emails and correspondence can help you protect your personal time.” Think about it this way. If you were somebody else’s boss, you wouldn’t work them to the point of exhaustion. Well, now you are your own boss. Treat yourself as well as you’d treat an actual employee. Get rest when you need it.

38. Control your own schedule. As a freelancer, it can be hard to say no to work, or set boundaries with your time. For many self employed individuals, it can be difficult to grow beyond the feeling that you should always be in search of the next client or gig. After all, when you’re self employed, you only make money when you actually work. But as you see more success and a steady, reliable income, you should also feel more comfortable saying no to work, or at least doing it on your own terms. An article from The Guardian suggests that this can even be a bit of a power move, “Sometimes enthusiasm and efficiency are essential. But being occasionally unavailable often has the magical effect of making you instantly more desirable to potential employers and thus getting more work in the long run. Try it. Just say ‘no, I have deadlines to meet, so I can’t do it today. But I can do it tomorrow.'” The article from The Guardian suggests that playing hard to get with clients can actually foster the impression that your work is in high demand. And speaking with candor, if you have a packed schedule and thus the luxury of doing work only on your own terms–this isn’t just an impression. It’s a reality. Recognizing this can be extremely empowering.

39. Get support. As a self employer person, tt can be easy to feel like you’re out there on your own because, well, you kind of are. But that doesn’t mean you have to do it entirely alone. Consider joining the Freelancers Union and enjoy an array of benefits including access to specialized health insurance options, a ton of educational resources for managing your own business, and the ability to participate in advocacy efforts on behalf of self employed individuals like you.

40. Avoid isolation. This applies to both your personal and professional life. It’s easy to feel hemmed in by your responsibilities and isolated from others when you work in solitude. If your self employment takes place primarily online–an increasingly common reality–you may also feel a sense of distance from others. But both your mental health and the success of your business may depend on your ability to remain connected with others. An article from Entrepreneur suggests that “Networking and communicating regularly with people can keep your social skills fresh. Connections can also lead to new business opportunities. Local events are great for networking. Joining online Facebook groups or forming your own mastermind are other ways to stay connected. Studies show that entrepreneurship can be isolating. The best way to combat it is being proactive.”


Thinking of leaving your full time employer to start your own business? Being a small business owner isn’t easy, but we do outline ten steps that every aspiring entrepreneur should take on the way to running their own operation.