There is no question that there are many different benefits that come along with being self-employed, both financial and otherwise. However, there are also many financial complexities that can accompany the decision to work for yourself. For instance, rather than being able to count on an employer-sponsored pension plan when you retire, you will need to plan for your own retirement. This is just one of the many tasks that a financial planner will be able to assist you with. Below you will learn more about how financial planning services can benefit you if you are self-employed.
Establish An Emergency Fund
One of the drawbacks of self-employment is that your income can be unpredictable. This is especially true for sole proprietors whose ability to keep an income coming in is completely dependent upon their own ability to continue working on an ongoing basis. For these individuals, even a short-term illness that prevents them from working one week can have a significant impact on their income. Individuals who work in industries that experience slow and busy seasons may also find that their income is less than predictable. That is why it is so important for self-employed individuals to always have an emergency fund that can be used to cover immediate expenses in the event that they experience income fluctuations. A financial planner will be able to work with you to determine just how much you need to save for your emergency fund and establish a savings schedule that will allow you to realistically reach this goal as quickly as possible.
Plan For Tax Liabilities
Another important thing for self-employed individuals to keep in mind is that they are solely responsible for covering any state or federal income taxes on the money that they earn. A failure to plan ahead can leave these individuals facing a significant tax bill at the end of the year that they are not prepared to pay. Working with a financial planner can help you not only to better understand your tax liabilities but also to establish a plan to limit these liabilities and save accordingly so that you are not scrambling to come up with the cash to cover tax debts at the end of the year.
Plan For Retirement
Assuming you don't want to be working forever, you will need to take steps to plan for your retirement. A financial planner can help you to accomplish this goal by identifyng what type of long-term investments are best suited to your overall income and your personal comfort level when it comes to investment risk.
To learn more, contact a resource like Greer Financial Group.