5 Things to Know about a Home-based Business
Many people who are tired of the daily grind think about giving it up to start a home-based business and be their own boss. For some, it’s an ideal situation that allows more freedom, flexibility and greater earning potential. But as much as it might sound like a dream scenario, there are several things to think about. Here are several things to know when considering opening a home-based business.
You Have to be a Self-Starter
That’s a term that gets thrown around a lot in the workplace, but when you’re working for yourself, it’s true. Owning and running a business yourself means there’s no boss to answer to and no clock to punch. You must have the drive and discipline to make yourself get up and get to work. PLus, you can’t let distractions deter you from the tasks you have to complete.
Your Income Will Fluctuate
Ask any small business owner and they will tell you the same thing. When it comes to working for yourself, it’s feast or famine. Sometimes you’ll have more work than you know what to do with, and other days you’ll be looking for ways to fill your time. If you’re used to receiving a steady paycheck every two weeks, it can take some time to adjust to your fluctuating income, but it’s not impossible. Learn more about budgeting with inconsistent income here.
You’re Responsible for Taxes
When you work for yourself, there’s no payroll department to withhold your taxes throughout the year. You will need to learn how to file and pay estimated quarterly taxes or pay someone to do it for you. Either way, staying organized and keeping accurate records are key to this process. If those things don’t come naturally, you may find yourself struggling with this aspect of being a business owner.
You Have to Pay 100% for Insurance
Unless you have coverage on someone else’s plan, you will be responsible for paying for insurance. Depending on your age, current health status, and the coverage you require, this can be a major expense you’re not used to having. And if you’re tempted to forgo coverage altogether, remember, you will have to pay a penalty on your taxes if you’re not covered, so it’s going to cost you either way.
You’ll Need to Save for Retirement
This can be all too easy to overlook when you’re working hard to start a business, but saving for retirement is a must. You won’t have the opportunity of contributing to an employer-matched 401(k) plan. But there are several retirement savings options available to small business owners, such as the SEP IRAs and Simple IRAs. Don’t wait too long to take this important step to protect your financial future.