Be your own boss

Ready to be your own boss? 5 things to consider before you make the jump

When I was self-employed as a writer, after penning a captivating article for the New Yorker, I’d guzzle a 1962 Merlot and then meander to the spa. This was a typical day.

Okay, I’m stretching the truth like Hubba Bubba.

Truthfully, when I was a full time freelancer I scored lucrative, fun assignments. To pay bills, I also wrote decidedly less glamorous pieces like advertorials about poultry-flavoured soy products that tasted nothing like “chick’n.” I also often drank plonk and never went to spas even though I needed massages to calm my nerves during financial dry spells. I always rebounded from these income hiccups because I was financially prepared.

Think you want to be your own boss? Take this readiness assessment:

  1. Do you have six months income saved?  You’ll need this buffer during inevitable revenue lapses. Raid the stash during salad days. Repay it during steak days.
  2.  Are you bionic? Nope. You may get really sick after you hang up your shingle. Buy private health, life, critical illness and disability insurance if you’re single or your partner doesn’t have coverage. And join a professional association as many offer other group insurance plans like home and auto. You’ll likely also meet valuable mentors.
  3.  Do you want to work forever? No? Factor in regular contributions to a RRSP or TFSA as part of your self-employed budget.
  4.  Do you know how to have your Merlot and drink it too? Hire an accountant to learn valuable tax planning advice and what expenses (like possibly wining and dining a customer) you can deduct. Especially the first year you become self-employed. It may seem like more of an expense than you are willing to cover (especially if you are used to doing your own personal taxes or having them prepared at a discount) but many accountants specialize in industry-specific taxes and would know of deductions that aren’t common knowledge. Ask your network of other self-employed professionals in the same industry for recommendations and you will likely be glad that you did.
  5. Can you establish a home field advantage? Nix commuting, energy and office-leasing costs by working from home (if you can). But if you really think your productivity will suffer or don’t have a proper home office, office sharing agencies offer low cost co-working spaces. Or, if a friend has a better place, why not offer to rent part of their house while they are working?

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