If you’ve been working for a while, you might be thinking about becoming self-employed. Whether you’d like to strike out on your own in your current industry or make a radical departure and do something completely different, becoming self-employed can be a path to lifelong fulfillment and financial security.
Self-employment isn’t for everybody, of course. If you’re a salaried or wage-based employee now, this comes with a certain amount of security and predictability in your job, and there’s comfort in that position. That’s one of many reasons why you might be hesitant to leap into the realm of the self-employed. Many would-be entrepreneurs considering self-employment are nervous about their lack of experience running a business, and rightfully so. This is why it’s crucial to gather as much information as you can about self-employment, especially the tips and words of wisdom that can make your journey successful the first time out.
When Are You Ready for Self-Employment?
Timing is everything in business, especially when you’re planning to join the ranks of the self-employed. There’s no single correct answer to the question of when you’re ready to start your business, because everybody is different and only you know your own situation. In fact, the “right time” to go it alone varies, because so many professional, financial, social, educational, and personal factors come into play.
- Professional: Every industry is different, and the length of time it takes to prepare for self-employment varies as much as Canada’s industries do. Let’s say you’re thinking about freelancing as a writer, designer, artist, consultant, or in some other low-overhead business: You may be ready now. However, your chosen industry might take a bit more investment, such as in the building trades or allied health. In this case, you’d probably have to stay on with your current employer until you can acquire the equipment and supplies you’ll need.
- Financial: Even a personal-service business requires some investment money to get started. Depending upon the province in which you’re intending to do business, you may need seed money to register your company, or to pay the third party that does it for you. You need start-up capital to buy equipment and/or inventory, and you shouldn’t expect to make a profit you can live on right away. Ask yourself how long you can survive on your current savings: If it’s less than two years, you might not be quite ready yet.
- Social: Nobody in today’s world is truly alone, and knowing enough of the right people can make a huge difference in how well your company does right off the bat. Do you belong to any trade or professional – or even alumni organizations that can help you find those all-important first few clients? Do you have the connections to help you find discounts on your vehicle service, or on your roofing compound? Can you network with others in similar lines of work who are equipped to take on your overflow or collaborate with you on big projects? Before taking the plunge into self-employment, make it a point to meet people who can mentor and advise you along the way.
- Educational: Some self-employed people work in fields that take little to no formal training, while others learn on the job. Still others render professional services, such as practising law or medicine, which takes years of formal education and official licensure. As an employee, you’ve probably grown used to the requirements of your position, and that job is all you do. But are you also ready to handle your business tax filings and HR forms? If you’re planning to work as a freelance artist, are you any good at making sales and marketing your services? Big companies have specialists who do that, but when you’re self-employed, it’s all up to you. If the field of your dreams requires any of that, it might not be a bad idea to keep your day job for a while longer so that you can attend classes and sharpen the skills you’re going to need.
- Personal: It doesn’t always feel like it, but you do have a life outside of your job, don’t you? How does your spouse or partner feel about the risk you’re considering taking on by becoming self-employed? Are your kids old enough to understand what it can mean for the family? Personal factors are every bit as important as professional considerations in deciding when to start your own business.
Must-Read Books and Other Resources for the Newly Self-Employed
As part of your research into becoming self-employed, you might look into written works that can give you a leg up on the process. Some of the best books are written by self-employed entrepreneurs, while others are written by professionals including economists. Even ancient philosophers provide valuable insight and inspiration for pursuing your new business venture. The following books in particular might help you develop a self-employment mindset and put your affairs in order prior to taking the plunge and setting off on your own:
- The Lean Startup, by Eric Ries: Every new business needs to manage its capital, and this author explains how to manage yours to get the most bang for your limited supply of bucks.
- Think and Grow Rich, by Napoleon Hill: Arguably the first “self-help” book ever written, this rigorous study of how successful people got that way and stayed that way was first published in 1937. The truths it contains remain relevant for self-employed workers in Canada today.
- A Paperboy’s Fable, by Deep Patel: Deep Patel’s father started a business as a teenager delivering newspapers, and he eventually ended up as the wildly successful CEO of a big corporation he founded. The author has picked his father’s brain for anecdotes, wisdom, and words of advice to share that can help just about anyone on the road to fruitful self-employment.
- Meditations, by Marcus Aurelius: The philosophically inclined ancient Roman emperor had a lot of spare time to write during his 10-year campaign against the hostile tribes on the Danube, and he put his thoughts to parchment. Over 1,700 years later, his sage advice practically defines words of wisdom: “When thou hast trouble in getting up, say to thyself: I awake to do the work of a man; why then should I grieve for having to do the things for which I was sent into the world? Was I born to remain warmly in bed under my covers? But it is so pleasant. Wert thou born for pleasure, then? Was it not for action, for work?“
- Smarter Faster Better, by Charles Duhigg: The name says it all. This slim volume by an experienced media professional is all about doing more with less and arranging systems around you that save time, effort, and money.
Aside from printed books, online research turns up various blogs and websites with a wealth of information and insight for you as you begin operating your small business. Some print publications, including Profits Magazine, published by the Business Development Bank of Canada (BDC), have vast online catalogues you can browse or search for specific topics, such as registering for the VAT or doing business across provincial borders. Other internet resources, such as the QuickBooks Online Small Business Centre, have countless articles for you to browse through about self-employment and other business topics that are specific to Canada. You can find similar material at QuickBooks U.S. and World centres geared toward doing business across the border.
Self-Employed Advice on Taxes and Other Requirements
As a self-employed Canadian, you have special tax and other official considerations that don’t apply to wage-based employees. Some of these considerations are a normal part of starting any business, such as registering your company and signing up for the VAT. Other matters, including the correct valuation of assets you plan to use for business, such as your phone, computer, and private vehicle, need special attention. The Canadian Revenue Agency (CRA) provides good information on its website about your likely tax expenses when starting your own business. When you look at the CRA website, you notice a distinction between most small businesses, those that are registered as partnerships and sole proprietorships, and fully incorporated small businesses. If you’re self-employed and not incorporated, it’s likely the CRA counts you in the same category as a sole proprietor for tax purposes.
Are you buying into an existing business? If, for example, the current owner is ready to retire and you’re taking over, you might be on the hook to pay the Goods and Services Tax/Harmonized Sales Tax (GST/HST) to the CRA. This tax can be expensive when you’re just starting out, but there are ways to earn an exemption. One of the most common ways out of paying GST/HST in this situation is to buy at least 90% of the equipment you could reasonably need to do business, and then agree with the seller to opt out of the GST/HST by filling out CRA Form GST44. Since most self-employed people who buy their businesses from others buy them all at once, this is a routine part of such purchase and sale transactions in Canada. It’s easy to claim this GST/HST exemption, though it’s a good idea to discuss it with the person selling you the business beforehand, because both of you must file the form together.
Self-Employed Software Apps
The world is full of software applications designed to help you in your quest to become a successful entrepreneur. The trick for you is to spot the ones you really need, and make sure you’re using them effectively. As a rule, the areas where new freelancers and the self-employed need the most help are in time management, inventory tracking, networking, and accounting. The following 10 apps can be a massive help with those concerns:
- Focus Booster: Self-employed people living in the age of the internet know that every day brings a new struggle to maintain focus on one’s work. Focus Booster is a productivity app for the easily distracted, and for those newly self-employed professionals who are just accustomed to having someone else set their schedules for them. Using the Pomodoro method for efficient time management, this app tracks your productive work hours and signals you when it’s time to take a break and when you have to work. As a rule, your time can be broken up into blocks of 25 minutes of work, followed by 5 minutes of rest, and then back at it again. This app sets up a cheerful alert that reminds you when it’s time to stretch your legs and take a breather, and also when it’s time to swing back into action again.
- Freedom: Speaking of distractions, Freedom behaves like the friends who want what’s best for you, so they lock you in a room without distractions until you finish your work for the day. Freedom can disable your social media access selectively while you work; potentially increasing the time you spend actually working while reducing procrastination via cat videos, selfies and chats. You can set this app to lock down one device or several, and choose between having it engage at preordained times during the day or manually switching it on when it’s time to get to work.
- Toggl: Part of being productive is getting to know yourself and your habits. In the past, you probably had a boss who tracked your productive time for you and made suggestions regarding how to improve your efficiency. Now that you’re self-employed, there’s nobody to track your peak performance times but you. Toggl is an app that makes it easy to identify the blocks of time when you’re at your most productive, so you can correlate the factors that help you work and maximize those things going forward. Toggl is part of a comprehensive approach to achieving daily increases in productivity, and following the program can turn your best-producing hour into the norm.
- Oh, Don’t Forget…: This whimsically named app manages the burden of keeping up with your many, many emails for you. Download and install this app, flag the five or six (or 50 or 60) emails you get in a day that seem the most important, and Oh, Don’t Forget. . . reminds you to answer them before you wrap up for the day. This app makes a great way to finish a productive day’s work, since it’s like a personal assistant tapping you on the shoulder to remind you of things you’d otherwise forget.
- Hootsuite: If you market your services across Canada or around the world, you probably need some degree of social media presence. This is especially true if you manage an online brand that demands attention and a loyal following in order to thrive. Hootsuite helps you to accomplish all of that with one easy-to-navigate interface that works on all of your devices. When you have a message for your followers such as teasing the launch of a new product, load it into Hootsuite and choose a time for it to drop. Hootsuite can drop your tweets and updates across platforms on the times and dates you choose. In this way, your followers stay in the loop, and you can position yourself more easily as a thought leader in your field.
- Google Drive: Google Drive is the go-to resource for online work collaborations. As a self-employed professional in Canada, you might find it advantageous to connect with an American marketing pro, a Japanese designer, a Swiss finance expert, and your South African client. Google Drive allows you all to effectively “meet” in one place online. This is useful for the exchange of documents, files, notes, communications, blueprints and technical specs. If you work alone and have clients all over the world, or if you’re part of a distributed workforce that pulls together a diverse range of self-employed professionals, it’s almost inevitable that one of them suggests a joint project through Google Drive.
- Evernote: Evernote is a handy little app that takes the weight of the world off of your self-employed shoulders by letting you jot notes as quickly as you can think of them, and then to recall them when you can use those ideas. Evernote loads onto almost any device you’re likely to carry, and it lets you jot down quick notes on the fly. Maybe you have a great idea about your pitch meeting with a client tomorrow, but you’re in a meeting with a different client today and can’t sit down to draft a proper proposal. With Evernote, you can grab your phone, discreetly make a few notes, and then index your note to self for later review. Your files don’t take up much space in their text form, so you can keep writing into Evernote as long as you like without deleting anything you haven’t tackled yet.
- Juice Defender: Have you ever ever suffered the annoyance of having one of your clients call you for important business, but you have to call them back because your phone is down to 10% power? Juice Defender may not prevent that, but the app can save you the frustration of not having sufficient power to make it through a day of phone conferences and long chats with a distributed workforce. Running quietly in the background, Juice Defender cleverly manages your phone or tablet’s power options to keep consumption to a minimum and help you recharge quickly. Performance varies by device type, but this helpful app could stretch your phone charge by as much as 300%, if you don’t mind letting it cut your 4G connection when the phone is not in use.
- Square Register: Square Register is quickly becoming a must-have e-commerce app for self-employed retailers and service providers who work without a fixed location. This app lets you charge credit and debit cards from any location with a good internet connection, including the Wi-Fi at your local coffee shop and the temporary connection you can sign on to at the farmers’ market. The app comes with a compact card reader that plugs into the headphone jack on most phones. To charge your customers, simply have them swipe their cards through the square-shaped reader, tap a few strokes on the screen to input the price you’re charging, and then have them sign with their index finger or a stylus. Square Register even provides the option of porting sales information over to your QuickBooks account and issuing an emailed receipt to the buyer. This app is ideal if you’re an Ebay or Etsy seller meeting face-to-face with local buyers or a consultant who likes to get payment out of the way before you leave your clients’ offices. This app and device are also useful if you’re a service provider such as a mobile pet groomer, massage therapist or other freelancer who provides services in your clients’ or customers’ homes.
- QuickBooks Online: The gold standard of online accounting software, QuickBooks Online is a full-service suite of cloud-based accounting services. Track inventory and payroll, schedule invoices and payments, track your income over time, and prepare the necessary documents to file your self-employment taxes with this all-in-one service. QuickBooks stores your company’s vital information securely on the cloud, which gives you cutting-edge data security for far less than you would pay on your own, and you get virtually limitless storage space. You can buy a package with all of the features you need from this service, or pick just the apps you plan to use now, and add more later as your business grows. Hundreds of other apps are compatible with QuickBooks, so it’s easy to customize your digital approach to accounting, finance, and tax software.
Self-employment is an exciting trip to take if you’ve been working for others all your adult life. Finding the resources to make the trip worthwhile can be a challenge, but the help you need to succeed is out there. The QuickBooks Self-Employed app helps freelancers, contractors, and sole proprietors track sales and manage their businesses from anywhere. Sign up today and achieve your dream of self-employment.