Switching to self-employment is a dream for some. However, it is also a reality for many others as well. There are many things to think about when switching to self-employment. Being as prepared as you can for self-employment is very important.
How will you get health insurance? If you are self-employed, then you will have to buy your insurance yourself. This should be a line item in your budget, as it will most likely be one of your highest expenses each month. Health insurance Australia is important.
Is your income big enough and stable enough for you to live off of? Should you keep your day job until your self-employment income is livable? Some like to wait until they know that their self-employment income is livable, which is the best idea for many.
However, some also can’t build their business successfully without taking a risk and making that full-time self-employment leap in the very beginning.
Do you have enough in savings?
Self-employment can be a scary thing for someone. You are making a huge leap in your life and you probably don’t know what will positively happen in the future. Having a well-funded emergency fund can really make self-employment seem much more possible. Some like to have 6 months in their emergency fund, whereas some prefer a year or just one month.
For myself, I would prefer at least 6 to 8 months. One full year would be perfect.
A well-funded emergency fund can be very helpful with a self-employed person because you never know when you may have a bad month. Your income is entirely dependent on what you do. One bad month can really get you down, but an emergency fund can make it much easier because you won’t be entirely dependent on making enough money each month to pay your bills. You can dip into your emergency fund, and then of course fund it again if you tap into it.
Taxes as a self-employed person.
If you are self-employed, please do not forget about self-employment taxes! Save enough money for your taxes. Or, right when you make money, set it aside right away so that you never really miss it.
What else should someone think about before switching to self-employment?
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