Tired of working for somebody else? This guide outlines how to start a business and become self-employed.
Growing numbers of Americans are ditching the nine-to-five rise-and-grind in favor of self-employment. The benefits of being self-employed are numerous, including greater control over your time and talents and the power to decide where your business goes.
How to start a business: 7 steps
If you’ve decided to fire your boss and go the self-employed route, here are seven steps that will help you succeed in how to start a business.
Step 1: Invest in the necessary tools
Before you quit your day job, prepare for working for yourself full time by investing in the tools you’ll need to operate your business. Here are a few ideas of tools that will help you build a successful brand when you start a business .
You need an address to receive confidential business correspondence, but you don’t want to expose your home address to every client and vendor you interact with. You can solve the sensitive mail problem with a virtual mailbox from iPostal1. The virtual mailbox can double as your business’s new mailing address, so you’ll be able to maintain your confidentiality and your image.
QuickBooks for Self-Employed
Intuit’s QuickBooks comes with a version designed for the self-employed, and it’s also available in a mobile app. Snap photos of receipts and keep track of expenses quickly and easily, so you don’t have to cry all the way to the bank come tax season.
Don’t let your ideas escape without writing them down. EverNote provides a way to store pictures online, organize your documents, and share memos with others.
The ability to hold virtual meetings is just the beginning of Zoom’s capabilities. Engaging new audiences and networking with customers worldwide are worth far more than the price of a Zoom account.
Splurge on the best computer you can afford. Whether you want a desktop version or a laptop for travel and home use, having a laptop with plenty of memory will serve your business well.
A portable scanner will allow you to scan and upload documents for storage and sharing. With a scanner, you can turn a stack of papers into a PDF and go paperless. You’ll never lose a receipt again, and you’ll save some trees in the process.
Step 2: Plan your workspace
The second step in how to start a business is to understand that a good desk and office chair will make your workday more manageable and productive if you plan to work from home. Locating office space is also an option for those who are self-employed. Wherever you plant your entrepreneurial roots, make sure it’s a place where you can focus on work. Otherwise, you’ll see yourself losing valuable hours to distraction.
Step 3: Prepare yourself financially to start a business
Before leaving your full-time job to start a business, consider all the perks of working forty hours a week for someone else. Here are some financial preparations you will need to make as you transition from full-time employment to working for yourself.
A medical emergency can lead to financial ruin if you don’t have health insurance. Don’t wait until you leave your full-time job to secure your own health insurance plan.
Many employers offer life insurance of about a year’s salary to their employees. Don’t leave your family unprotected when you jump the corporate ship. Term policies are affordable and will give you the coverage you need to secure your family’s future.
Working for yourself now doesn’t have to mean working forever. Roll over any pension or 401(k) from your old job into a tax-qualified retirement account and plan to make contributions to prepare for your golden years.
In a full-time job, you will have sick leave. That’s not true when you’re self-employed. When you’re self-employed, if you aren’t working, you aren’t making money. You’ll want to set extra funds aside in case you need time off to recover from an injury or illness.
Step 4: Plan your departure
Deciding to leave your full-time job is the motivational step in how to start a business, but it shouldn’t be the first step without planning. The transition to self-employment should be carefully planned and timed well.
Look at your employment contract
Before you rush to type up a resignation letter, look at the paperwork you signed when your employer hired you. Non-compete clauses are standard in some employment contracts. This clause could prevent you from self-employing for a while after you terminate your position, so incorporate that fact into your decision-making.
Negotiate your departure
Discuss your self-employment plans at the right time with your employer. Showing concern for the company and understanding of your boss’s position can go a long way in easing your conversation. Your employer could even become your first customer if you’ve built a solid rapport during your tenure with them.
Step 5: Consider the customers you need to start a business
Who will be your customers once you become self-employed? Think about contacts you’ve made during your working life thus far. Assemble a list of possible clients and send them personalized messages about your plans to start a business.
Step 6: Website and online marketing
You’ll want to create a website and plan social media and e-newsletter marketing campaigns for your business. An online presence is table stakes for how to start a business in today’s cyber-centric world.
Step 7: Don’t forget taxes when you start a business
Self-employment can lead to nasty surprises at tax time if you aren’t careful in how to start a business. Set funds aside to pay self-employment taxes and make your contributions to social security.
Most self-employed individuals pay their taxes quarterly using their predicted income for the year. Not only does this system take the stress off paying one more enormous lump sum at the end, but if you do not pay quarterly, you will likely incur additional fees. Ensure you know when and how you will pay your taxes to avoid a wake-up call from the IRS.
The bottom line
The lure of self-employment is drawing an increasing number of workers from their full-time jobs to start a business. Before you deep-six your forty-hour workweek, take these steps to ease your transition.