Ever since becoming self-employed, I have been very happy. That's pretty obvious if you have read my post Being Your Own Boss – 2 Years Since Becoming Self-Employed or any of my monthly income reports.
However, I don't want anyone to think it's all sunshine and butterflies.
Learning how to become self-employed is hard work and there are a lot of steps a person needs to take before they think about leaving their current job.
There's no one “correct” way to leave your job and become self-employed and everyone takes slightly different steps. However, by taking your time to become self-employed and preparing yourself, you may have a much smoother transition.
Below are the steps you should take before you make the leap for self-employment. The below will help you learn how to become self-employed so that you can have the best start possible.
1. Start your business on the side.
Starting your business on the side will allow you to see if it’s something you want to do, if it’s a realistic way to make an income, and whether it will work or not. This is a great way to learn how to become self-employed as you will learn all about it on the side.
By doing this all on the side of your full-time job, you will be able to have a little less stress because you will have somewhat of a built up business before you drop your stable full-time income.
For me, I had my business on the side for around two years before I decided to make the leap into self-employment. There is no right or wrong amount of time for each person – just what you think is good for you.
You will want to think about:
- What kind of business you will start.
- How you will earn a living and whether you can earn money well into the future.
- Try living just on your business income to see if it’s doable.
- Get used to or research the behind-the-scenes stuff such as paying taxes, dealing with health insurance, and so on.
- What equipment, space, and so on you will need in order to effectively run your business.
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2. Think about what you’ll do without the benefits of your current job.
If your job provides certain benefits such as health insurance, life insurance, retirement, daycare, and so on, then you will want to think about what you will do when those benefits no longer exist.
It’s much better to do your research and price everything out now so that you can get a better idea about what your self-employment budget will be.
Related: If you are wanting to leave your current job to pursue something else, I have the book for you. I highly recommend the book How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye. It includes 150 pages of information on how to negotiate a severance from a job you no longer like, profiles of people from different demographics and income levels who've successfully engineered their layoffs, and how they did it, and more.
3. Create an emergency fund.
If you truly want to know how to become self-employed, then you need to take my word on starting an emergency fund!
An emergency fund is extremely helpful when you work for yourself. It can come in good use if you ever have a bad month (or multiple bad months), if you decide to change direction with your business, and so on. When owning a business, you never know which direction your business will go.
By having an emergency fund, you will feel a little less stress so that your financial troubles are not impacting your business in a negative way.
4. Have a backup plan.
While some may say that having a backup plan is for those who have no faith in themselves, I do think it is a smart idea for many.
A backup plan can help you in case your business isn’t going as well as you thought it would, if you no longer like self-employment (I have seen this a few times), or something else.
Having a backup plan can help you feel less stuck in case that point in time ever does come.
5. Don’t forget about taxes and the legal side of running a business.
Many of the newly self-employed underestimate what their taxes are. Be sure to either do your research or to contact someone who is qualified so that you can be ready for taxes.
Another thing you will want to think about is possibly contacting a lawyer as well to see if there are any legal issues you should be aware of when it comes to your business.
6. Leave your day job.
This is the step you've been waiting for.
The final step when learning how to become self-employed is to one day finally leave your day job.
When you finally feel prepared and ready to leave your current form of income, you should figure out the correct way to leave your job, set a final work day, and turn in your notice.
Have fun and good luck with your business!
Are you interested in learning how to become self-employed? Why or why not?
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