Taxes, insurance and accounting… oh my!
While not having a boss to answer to definitely has its advantages, if you're considering self-employment, one of the first things you might actually miss is having a boss to lean on. Once you become boss, you're responsible for finding and paying for your own health insurance (and liability insurance if you contract your services in many industries), staying up-to-date on and filing all of your business-related tax documents, as well as billing and accounting.
What you need to know
^While many self-employed people successfully tackle these new responsibilities on their own, you can always secure some extra help, even if you can't afford a full-time staff.
- Hire a part-time bookkeeper who's willing to work for an hourly rate, so you can budget for help as you need it.
- See if your business tax advisor offers side services, like helping you maintain your tax and corporate documents, year-round.
- If you can't get on your spouse's insurance, comparison-shop all of your options, including a Health Savings Account (HAS). HSAs allow you to deposit a portion of your pre-tax income into a savings account, earn interest tax-free and use those funds to pay for qualified medical expenses.
- Maintain detailed records of all health-related expenses. If you qualify as self-employed in your state, you may be able to deduct health insurance premiums — for you and your dependents — as well as doctor's visits and medications.
Home office 101
Working from home comes with many benefits for parents, like a flexible schedule that lets you chaperone field trips or attend mid-day school functions and still make time to work. However, unless you have some serious self-discipline, you might actually find yourself working more at home than you ever did in an office.
What you need to know
^Before you dive into working from home, have a plan in place so you can walk the very fine line between work and life balance. You need to be able to dedicate uninterrupted time to your new endeavor, without working around the clock.
- Set boundaries with work hours. Just because you work from home, does not mean you're always on call.
- If you're easily distracted when your kids are at home, hire a sitter for a few hours a day so you can truly focus on building your business.
- Be prepared to purchase and maintain all of your office equipment. When you work from home, there's no IT department.
- While being self-employed means more out-of-pocket expenses, there are also many tax benefits. Find out which expenses qualify as deductions, so you can keep detailed records and reap the benefits.
- If you can, set up an actual office with four walls and a door with a lock. You can only get so far trying to work from your sofa with a laptop resting on one leg and a toddler wrapped around the other!