If you are anything like me you are ready to embark on your next adventure! You know, the one that involves working for yourself. Sounds great, right?
Well, in order to work for yourself you must learn that preparation is the key to success. The biggest thing to keep in mind is that you are not only trying to replace your paycheck, but also all the salary benefits that go with that paycheck.
There are many salary benefits that you get when working for a company. However these are also the things that you need to keep in mind while you are preparing to leave that company. You want to plan on how you will replace these salary benefits when you are finally working for yourself.
While some of these 11 salary benefits to replace are common sense (like your salary), hopefully there are a few on this list that make you stop and think!
11 Salary Benefits to Replace:
1. Salary. The fix amount of your paycheck.
2. Bonus and/or Commission. Any extra that you get on a yearly basis.
3. Stable Income. Most of the time a W2 is a considered a stable income.
4. 401K Retirement Program. At a minimum, most companies have a retirement program even if they don’t match. The loss of this means you no longer can invest $17,500 or $18,000 (depending on age) into a 401K or Roth account. There are other opportunities available (the Roth or a Sep IRA), but you will be responsible for establishing and deducting it each month.
5. Portion of Tax Paid. Another benefit of being an employee is that they pay part of your year’s taxes.
6. Taxes Withheld. Your company figures out the taxes owed quarterly and sends them off to the IRS. So all you are required to do is file your taxes at the end of the year. When you are self-employed, in addition to end the year, you also have quarterly tax payments, and a 1099 to any venders.
7. Health Insurance (dental, vision, etc). While Obamacare has made health insurance more affordable, it is still very important that you make sure you are covered.
8. Life Insurance. Most companies provide some sort of life insurance for free and other times more is offered for a small cost. It is important that you don’t forget to find your own policy and sign up before you leave.
9. Short or Long Term Disability. Many jobs offer these benefits and often times the state does too. Since you don’t have any paid time off and only get paid when you work, it is important that you have insurance through AFLAC or another provider as a back up.
10. Time Off. There is no such thing as paid time off when working for yourself. So it is important to budget for that during your financial planning.
11. Professional Experience. As a small business owner it is very true that you do it all. The unfortunate thing about working for yourself however is the ability to re-enter the work force at a later date. While not impossible, it is going to be much harder than if you had continued in your industry.
Did I miss any benefits? What has been your experience?0