Currently, there are almost 9 million Americans who are self-employed without owning their own company. Add in those who are incorporated, and the numbers are even stronger.
However, the numbers have been dropping in recent years, as self-employment isn’t an easy task. But if you’re up for a challenge and want to flourish while earning a living doing what you love, then this is the path for you.
There are several steps you’ll need to follow to make it happen, so if you’re wondering how to go into business for yourself, then read on. Here’s how to become self-employed to start a new career path.
Consider Your Business Ideas
Before you jump into things, you’ll want to consider your business ideas, then narrow them down to a specific one.
Generally, you’ll want to play to your skills and interests. Not only will you have more initial knowledge, but you’ll also naturally want to learn more and keep growing in the industry. This will make it easier to succeed and expand in the future.
In addition, you’ll want to identify gaps in the market. For example, if you want to provide certain types of supplies, you can gear them toward more eco-friendly materials if the industry is lacking. This will surely attract customers, as 64% of Americans said they’d pay more for sustainable products.
Once you find a great idea, you’ll want to conduct more market research. Make sure you understand your potential customers, competitors, and industry trends. This will help you refine your idea and identify your unique value proposition.
Form Your Company
There are various types of self-employment, and at the core of it, you technically don’t have to form and register a business. However, there are numerous legal and tax benefits, such as tax deductions on home office expenses, travel expenses, business equipment, and professional education. You’ll miss out on these if you don’t form a company, so it’s in your best interest to take this extra step.
Most self-employed people like to form limited liability companies (LLCs), as this separates them from the business in terms of taxes and liabilities. While forming an LLC is pretty straightforward, you should still get help from a company like Business Anywhere. Our business registration services will save you both time and effort, so you can focus on making your dreams into a reality.
While LLCs are vastly preferred over other business structures, you do have other options. They include:
- Limited partnership
- Limited liability partnership
- S-corporation
- B-corporation
- Nonprofit corporation
There are other choices too, so speak to a tax professional about which are best for your situation.
Register Your New Business
Registering a small business will mean different things, depending on which industry you’re in. In many instances, this means trademarking things such as your business name and logo.
Other commonly required things to become self-employed are professional licenses. Not only can these be location-specific, but they may also have recurring fees too. It’s vital that you get this part right, as any mistakes can be costly.
If you’re not sure about what licenses and permits you need, take a look at others in your industry. Joining groups can be beneficial, as you’ll be able to discuss legal requirements and compliance that’ll keep you in business.
Get a Business Bank Account
This isn’t a required step either, but it’s highly recommended. There are a lot of ways to become self-employed, but separating your personal and business finances is always a smart decision.
You’ll be in charge of coordinating tax reportings with your accountant, so you’ll want to make things easier on yourself. When you have separate bank accounts, recordkeeping will be much clearer, and you can do your taxes faster.
On that note, you should sign up for a business credit card as well. That way, when you make company purchases, they’ll be distinct from your personal ones.
Do note that you’ll have to pay quarterly estimated taxes during the year. If you don’t, it’s likely that you’ll be penalized, so don’t fail to pay on time. Even if you’re an independent contractor, you’ll have to pay these quarterly taxes.
Get Insurance
You’re relying on yourself to keep things going; without a safety net, situations can quickly crumble if anything happens.
Protect your small business from lawsuits with liability insurance. Depending on what field you’re in, you’ll also need specific professional liability coverage.
You don’t want to be left without income if you’re injured or ill, so consider buying a policy through the individual Health Insurance Marketplace. If you have employees, then you’ll use the SHOP Marketplace for small businesses.
Speaking with an insurance agent can help clarify what coverage is mandatory. Then, if you have enough room in your budget, you can add policies that are nice to have, but not necessary.
Market Your Business
It’s challenging to get a self-employed business off the ground, even if you have fantastic products or services. Marketing is the key to success, and you should start early.
As soon as you know that you’re pursuing this career path, and once you have your company name and logo, hit the ground running with marketing. Creating a buzz around your new business will ensure that you have eager customers as soon as your doors open.
Make use of both online and offline channels, and don’t forget to network too. In addition to potential clients, you’ll find outstanding partnerships and opportunities as well.
This Is How to Become Self-Employed
If you were wondering how to become self-employed, then this guide has outlined some excellent tips. These basic steps will take you through the process so there’s less stress and uncertainty.
Just remember to do your research and have a solid idea of what you want to do beforehand. If you do your due diligence and don’t rush toward self-employment, then you’ll set yourself up for a much brighter future.
Don’t walk the journey of self-employment on your own. Sign up with Business Anywhere to get professional assistance with setting up your small business.
