submitted by Joe Beckford
Imagine what life would be like as a freelancer. You’d pick your own hours and clients, avoid the pains of a commute and do so from the comfort of your couch. Or at least, that’s what everybody thinks. While those benefits can certainly be part of the experience, working for yourself comes with a unique set of challenges. So before you quit your full-time job and go it on your own, consider these three perspectives.
Making Your Part-Time Hobby a Full-Time Commitment
It’s one thing to make a little extra money on the side with a hobby or talent. But turning that that side hustle into your main source of income comes with some considerations that aren’t just financial.
For one, do you love it enough to do it full-time or would it quickly become just another job? Spend time with this question. Don’t just go with your gut reaction.
Prepare for the Worst. Hope for the Best.
If you’re going to make the switch, you should have an emergency fund that will last you at least 9 months – preferably longer. You can tap into that while you build up your client base, freeing you and your family from some of the stress that come with going it on your own.
More Freedom Equals More Taxes
In a country founded on entrepreneurial values, it may come as a surprise that the current tax laws are so harsh for freelancers. As a self-employed person, you’ll now also be responsible for employer taxes. That means you’ll probably owe more than you did before. You’ll also have to make quarterly tax payments, so you’ll want to set aside setting aside a portion of your income every pay period – at least 25 percent.
All that said, you’ll also be able to write off most of your living expenses as business expenses. It can be tricky to figure this out when you’re starting out, so you’d be wise to talk with a tax professional.
Going after your passions is always a worthy pursuit. But like every important decision, careful consideration is often the key to choosing the right path forward. So if you need help thinking through this decision, consider bringing a third-party expert into the conversation.