Financial Things to Consider When Becoming Self Employed

Starting out on your own can be a great feeling – it usually means that your venture has been successful enough to support you! That is awesome. However, being self employed presents a different set of challenges compared to working for a company, especially when it comes to financial matters. Most employers provide a lot of benefits for their employees beyond a paycheck, and if you’re moving to self-employment, you’re going to have to figure these things out on your own.


Most people get their health insurance and other insurance products through their employers. In fact, this is going to be just about mandatory once Obamacare takes effect. However, if you’re self employed or thinking about it, you’re going to need to look for private healthcare options for your insurance.

Most insurance companies offer individual and family policies that anyone can buy directly; however, they are expensive and can be confusing. Since you are buying directly, you have to make all the choices when it comes to deductible, co-payments, out of pocket maximums, and what exactly will be covered. And every choice can change the cost of the policy.

However, if you’re self employed, you may be able to get a group policy elsewhere – maybe your local chamber of commerce, or maybe there is a trade group in your sector that offers insurance. Regardless, you will still need to budget for these expenses out of pocket. And then, don’t forget to think about dental and vision coverage if you will need it. Those can be additional out of pocket expenses as well.

Finally, many people get their disability and life insurance through their employers as well. If your family or business counts on you personally for survival, you will need to make sure that they are protected should anything happen to you. Make sure that you carry enough insurance to cover thing. You don’t want to be the sole earner of your business, and then become disabled or die, and leave nobody to support your family.


Also, most people in the United States get their retirement taken care of by their employer. Yes, there are other options, such as IRAs, but most people still depend on pensions and 401ks. If you are going to be self-employed, you need to figure out what you are going to do to save for retirement. You need to budget for it, and you need to make sure that you are actually doing it. Also, don’t forget that your employer usually matches 401k contributions, so that if you contribute the same as you used to, you will be shorting yourself.

There are many different vehicles for self-employed individuals to save for retirement, so this may also be an area where you want to get professional advice to make sure that you are maximizing your retirement benefits while at the same time minimizing any potential tax liabilities. Online Calculators as well as a professional advisor can help you plan for this appropriately.

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