You’re a dedicated hard worker who crushes it on a daily basis at your job, but the only problem is that you’re not doing what you want to do, which is work for yourself. But you can’t just quit and strike out on your own. You want to grab hold of the next vine before letting go of your current one.
The good news is you’re not alone. According to the Bureau of Labor Statistics, about 5% of the American population has a second job. So now the question becomes: How will you develop and manage your own business while having a full-time job? Let’s find out.
Love What You Do
Ultimately, if you’re going to sacrifice your free time and finances to become self-employed, it cannot be stressed enough how vital it is to do something that you’re passionate about. Quite simply, caring about what you’re doing makes your work more meaningful. Additional benefits include:
- You can relate more to the work and come up with better ideas.
- You are more inclined to work longer hours.
- You are willing to go above and beyond the call of duty.
- No obstacle will stop you from achieving success.
- You will get more fulfillment when you finally make it.
When you can take your passion and turn it into a career, you will never “work” a day in your life. But we all need a starting point, which means we must begin by choosing a field that piques our interest.
Choose a Field
If you know you want to be your own boss and know the direction you want to pursue, you’re already ahead of the game. But if you aren’t sure what kind of business you’d like to start, here are a few fields that have relatively small barriers to entry and provide entrepreneurs with quick and cost-effective startup options:
- Deliveries/Transportation. Just about every business needs goods delivered or transported, especially in bigger cities. If you charge less than your competition, chances are you’ll be able to generate some immediate work—even if you don’t have access to a car. Just remember to look out for any licensing and insurance requirements.
- E-Commerce. Sites like eBay and Shopify can be lucrative venues for anyone who buys low and sells high. Some people are able to make thousands of dollars per month by seeking out used goods from garage sales or swap meets and selling them online for a profit.
- Residential and Commercial Maintenance. Window washing, spa and pool cleaning, snow removal and landscaping are all basic handyman services that generally require nothing more than elbow grease, competitive rates and maybe a license, depending on where you work.
- Transcription. Transcription services are always in high demand, especially within the medical and legal fields, and typically require little more than knowledge of basic grammar.
- Join the Share Economy. Hot startups in the share-economy space are always looking for people who want to be self-employed. Whether it’s pet sitting with DogVacay, running errands with TaskRabbit or driving with Lyft, the opportunities continue to grow.
Of course, if you have more specialized skills, such as experience in web design, writing or management consulting, you will probably want to focus on the things that can get you the most clients and money.
Set Clear Goals
It’s crucial that you set goals and have deadlines, even if they end up being flexible. Whether it’s determining what kind of business you want to start or when you plan on leaving your current job, you are less likely to achieve them in a timely manner if you don’t mark these milestones on your calendar.
When setting goals of any kind, make sure they are SMART:
Prepare Your Business Plan
Whether you need a written business plan depends on many things, including if you want to raise money from investors or get a loan. But even if you choose not to write a formal plan, remember Winston Churchill’s advice: “Plans are of little importance, but planning is essential.”
The value of a plan is the work involved in creating one, not necessarily the end product. Make sure to include the following sections when creating a business plan:
- Executive summary
- Company description
- Organization and management
- Market description
- Sales and marketing strategy
- Operations strategy
- Funding request (if applicable)
- Financial projections (if applicable)
Find Mentors or Hire a Coach
It’s okay to ask for help if you’re feeling overwhelmed or have basic questions. The best way to get advice is to find business mentors that have paved the way to where you’re going. If you’re not sure where to start, look to the people in your life who are most successful. They will point you in the right direction and introduce you to other people in their network.
If you’d rather find a good business coach, you should find one who will work alongside you in an intimate capacity, asking tough questions to help you find clarity and focus. His or her job will be to guide you toward eventually discovering solutions on your own.
As with most things in life, starting a business is generally easier when you don’t go it alone. Aside from being able to contribute to networking and funding, the right kind of business partnership can provide moral support for when times get rough, which will likely happen when starting your own business. Partners can also challenge and stimulate you on intellectual levels that can foster better ideas and solutions.
Invent and Invest Time
Whether it’s for writing your business plan or acquiring your first clients, chances are there aren’t enough hours in the day to pursue your own business while working a full-time job. Unfortunately, there’s no easy way around this, so you’ll have to invent time.
Wake up an hour earlier and/or go to bed an hour later than usual to create content, send out newsletters, network online or search for a business coach or job openings.
It’s also vital that you set aside specific times for your work. After all, just because you’re operating out of your home doesn’t mean you don’t have other responsibilities, whether they are your family or personal errands. By setting a specific—and strict—schedule for your self-employment, you will be able to manage your time more efficiently. Oh, and carefree weekends? You might need to say goodbye to those for a while.
This is an important one. Being self-employed has many advantages. Having to pay quarterly taxes, however, isn’t one of them.
From the official IRS website, “As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly.” The IRS defines individuals as “self-employed” if they conduct business as a sole proprietor or independent contractor, if they are members of a business partnership or if they earn direct income as a freelancer.
As a self-employed entrepreneur, you need to pay your income taxes as well as self-employment (SE) tax, which represent your contributions to Medicare and Social Security.
Bottom line: If you’re self-employed, you probably need to pay estimated tax four times a year. Some individuals may be exempt from reporting quarterly if the following is true:
- Your business generated a net loss of income.
- You haven’t been in business for a full year.
- You have earned less than $600 from your business.
But if you’ve been up and running for 12 months, and if you’re earning an income from your business, then it’s time to get to work on your quarterly estimated taxes.
Estimated taxes are exactly what they sound like: Using last year’s return and the worksheet found in Form 1040-ES, you pay approximately one-quarter of what you expect to owe the IRS at the end of the current year. If you overpay, then you’ll get a refund when you file your yearly return in April.
But if you underpay, then be prepared to pay more come spring. And most importantly, make sure that you pay your quarterly taxes promptly. If you report late, the IRS will penalize you at the end of the next quarter, and the penalties can add up quickly.
If you still need help, check out some essential tax tips for the self-employed.