It is getting easier to start your own business given rapid technological advances, increased ability to buy your health insurance, ability to outsource your needs, growth in the sharing economy, and innovative financing choices.
If you are a disciplined self-starter, have a vision and a plan you want to carry out, this may be an excellent path for you.
We will review the benefits and drawbacks of being self-employed but let’s define the term first.
If the sole proprietor is sued and loses, the winner of the case may take personal assets like the car and the house to settle the claim. Being a sole proprietor carries a higher risk than other forms like incorporation or an LLC.
You are probably going to handle a lot of the business aspects on your own. Consider outsourcing at least some of the functions. Many people have a strong vision, motivation, hard work ethic, decisive, and strong skills.
Make sure that you pay yourself a salary and save as much as possible for those times your monthly income is lower. You need to have an ample emergency fund for six months or more to pay for your living expenses.
Before you even form your business, it is vital to review your credit report for possible errors. Fix them ahead of approaching the lenders for a loan. There may be hits to your credit report that you can explain.
Being self-employed hits you with the realization that you no longer have paid benefits you may have enjoyed at your previous employer. You still need to have access to some of the critical benefits and purchase them on your own.