Being self-employed entails so many things and as such makes one independent.
However, you go about providing value to the community you find yourself.
If you wish to know how to be self employed, then you need to implement these things.
Once you think of being self-employed, automatically, the concept of being your own boss comes in.
Hence, you might have few ideas of running industry, organization, and self-promotion.
Then, you might need to make use of the next options available to you to make money.
Therefore, considering a self-employed business will be a better option for you.
Now, let’s see the possible ways on how to be self-employed.
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How to be Self Employed
Here are the four major factors to be considered if you are looking for how to be self employed.
Choosing a Business Model
Setting up your Business
Choosing a Business Structure
Paying for Taxes
CHOOSING A BUSINESS MODEL
- In choosing a business model, you first need to form a company that can be a partnership, a corporation, a sole proprietorship, etc.
Hence, before starting the company, you ought to have your business plan, products, services, and startup funds provided.
- The next thing is to open a franchise, thereby offering you business models, policies, training, and support.
However, if your business or startup is not bearing much profit at first, then you don’t need to invest in a franchise.
- You can become an independent contractor and still be self-employed. These include freelancers, consultants, etc.
Here you work independently without being an employee or worker, yet you pay for self-employment taxes, etc.
- Make use of what you have. You can be self employed by offering services with your skills and resources.
Get to learn a skill if you don’t have one, either being a freelance writer, a web developer, a babysitter, a junk-hauler, etc. and then work from home or anywhere.
SETTING UP YOUR BUSINESS
- In setting up your business, either in a partnership or to attract investors, then you need to draft out a formal business plan.
The business plan will include a description of your company, the structure, products or services, marketing strategy, and the summary of your business plan.
- The next thing is to choose a location by providing an office or a store outlet and if you plan to work from home, then register the house address as the office.
Hence, independent contractors don’t need to choose or register any business address.
- Now, you need to finance your business by determining how much fund you required for your business startup.
You can source for funds by applying for loans both on private and federal government funding/grants.
Or you can apply for a loan with the Small Business Administration or with your bank.
- The next thing is to register a name, think of a proper name that describes all about your company or services you offer.
You can search and register your name with CAC under the Department of State Business Registry via “Corporate Name Availability.”
Once your name is available and original, then register it immediately with the appropriate department, and you can include LLC to the name if you form an LLC.
- The last stage here is registering with the Department of Revenue; this is for a company that has employees or sells goods and as well collect sales tax.
Hence, if your company is only a one-person business and does not collect any sales tax, then you don’t need this.
You only pay for self-employment tax.
CHOOSING A BUSINESS STRUCTURE
- Sole Proprietorship: Here, you are the owner and manager of your company; you work, manage, and reap the entire profit from the business.
Sole proprietors are mainly independent contractors and not seen as only members who form an LLC or corporations.
- Building a Partnership: Here is another business structure you can choose if you want to work with someone else, thereby sharing the profits, losses, and labor.
Hence, you can still be your own boss but will be ready to give in equal responsibilities.
- Forming a Limited Liability Company (LLC): Owning or choosing an LLC makes you a member of the company, unlike sole proprietor/partnership.
In this case, you work together, and you will be protected from business debts. Also, in LLC, you pay personal taxes and not corporate taxes.
- Forming a Corporation: This can be an LLC (Limited Liability Corporation); it seems to be more comfortable and cheaper to startup such corporation.
However, corporation taxes come at a lower rate than personal taxes. Hence, many tend to incorporate due to some reasons.
PAYING FOR TAXES
- In paying for self-employment taxes, you need to get an EIN for your company if the business is not a sole proprietorship and has more than one owner.
You will be taxed as a corporation rather than a personal tax, and you can get the EIN from the IRS website here. It is free.
- Another tax payment is the quarterly estimated taxes that you need to pay throughout the year on these dates (January 15, April 15, June 15, and September 15).
You can fill out the form here to pay for quarterly estimated taxes.
- The last thing here is to track your expenses and take note of them. These can be done by opening a separate bank account for all your expenses funds.
These expenses can include gas money, website maintenance, mobile phone calls, and cards, etc.
This is part of the taxes you pay when running a company or a business enterprise.
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So, this is all you need to know on how to be self employed and the available self employed business.
Now with this guide, you can learn how to become self employed legally.