Most people perceive self-employment as a lucrative option. As a self-employed individual, one has the opportunity to determine their working schedule and the type of business they choose to venture into. You become your boss and, to some extent, even an employer. With the uncertainty and unsatisfying results of working a 9-5 job, most people are turning their passions or hobbies into a small business that they can profit from. Self-employment has become a widespread practice due to its success that may be extrinsic or intrinsic. Despite the benefits of self-employment, it has its cons, which most people fail to recognize as they are excited to capitalize on the benefits. Here are some of the common self-employment mistakes that you should avoid.
1. Poor time management
Although running your own business allows you to create a flexible schedule, it is important to manage your time correctly. Avoid wasting time and instead invest your resources in building your business to become what you desire it to be. Self-employment requires one to exercise a high level of discipline as there is no one supervising how your work or productivity is. It is therefore essential that as a self-employed person to always work at the highest level of efficiency. Integrating structure and discipline in your daily schedule is a practical approach that assists a self-employed person to become efficient.
2. Failing to separate personal and professional life
Most self-employed people struggle with the idea of separating their work from their personal lives. As a result, this negatively affects their business or personal lives. It is vital to maintain a healthy work-life balance to gain satisfaction from your work. If you work from home, you may find yourself returning work calls or replying to emails during odd hours of the night, which affects how you relate with your family. Failure to give yourself adequate rest from work may cause you to be unproductive and not be efficient. However, by designing an appropriate working schedule and sticking to it, you will be able to balance your work life and home life and not experience burn out. Additionally, while working from home, it is easy to get distracted by the people around you or chores. It is imperative to create a conducive environment within the home, such as an office that allows you to work with minimal distractions.
3. Failing to budget your income
Poor financial decisions have led most self-employed individuals into bankruptcy. People that are starting in self-employment tend to overlook the importance of keeping track of your revenue income and expenditure. Bookkeeping may be a boring task for most self-employed people who mainly begin their business as from a hobby. However, for any entrepreneur to succeed as a self-employed individual, they must keep an accurate record of their revenue income and expenditure. Self-employed people are encouraged to record all the financial information concerning their business in a spreadsheet. It is also advisable to invest in accounting software or accountant that assists you in tracking your business finances. You can also seek the help of a financial advisor if you have enough resources that enable you to pay for their services.
4. Failing to understand how taxes work
For most businesses, tax season is one of the most hectic periods during the financial year. Most self-employed people do not remember to account for the self-employment tax, which is payable alongside the regular income tax. Business owners should set aside at least 20% of the income generated to cover tax payments. Additionally, self-employed people are not informed about the regular tax deductions. For instance, money that has been used on marketing, advertising, phone bill, and permits. Thus, a business owner should be alert and take advantage of the tax season.
As a business owner, your taxes increase and may put a lot of pressure on the owner leading to tax complications. Business owners need to educate themselves about taxes to avoid being charged with illegal activities for the failure of adequately filing their taxes. Self-employed individuals can access all the information they may need from the IRS tax center that allows them to read about all they need to know about taxes. This site can prove to be a valuable tool as one grows their business and employs workers.
5. Undervaluing your time and resources
A self-employed person may find it challenging to decide the amount of money to charge for their services and products, especially at the beginning of a business. To attract customers, one may end up undercharging for their service and time. Thus, it is crucial to factor in all aspects of your business when writing an invoice or quotation. For instance, consider expenses such as tax, insurance, your own time and effort, and other relatable costs that may be incurred when offering a product or service. It is also vital for a new business owner to familiarize themselves with the basic concepts of contractual and negotiation terms and how they apply with clients and suppliers. One can hire a legal practitioner to teach them about the basics of contracts and negotiation policies or have an experienced business person guide them.
6. Fear of asking for help
Starting a business can be a lonely venture and requires an individual to seek guidance. However, some people shy away from asking for support for fear of being perceived as failures. It is important to reach out to your mentors or individuals within the same field that you respect and admire, and ask for help when you are struggling with certain aspects of your business. Seeking mentorship is a practical approach that will help you identify appropriate ways to address the business challenges that you encounter along the way. A self-employed person must know when it is time to engage with the right people who they presume would guide them in overcoming the struggles they encounter.
If you are considering going the self-employed route, avoid the above mistakes. Do better than the thousands of your fellow self-employed people out there by never making any of the above mistakes, especially if you love what you are doing and intend to turn it into a fortune 500 company in the future.