- Unlike in a standard job, where your employer pulls taxes out of your pay before giving you your check, when working as a private contractor, you must take responsibility for your tax payments. The IRS requires any individual who makes more than $400 in the course of the year to pay tax estimates quarterly. By doing so, you can ensure that you don't have a surprise come tax time.
- When you are self-employed, you alone are responsible for ensuring that you have enough work to meet your needs. If you work as a self-employed individual, and your work dries up, you can't simply apply for unemployment, and you certainly won't receive any severance pay. Before you give up a job that is secure, carefully consider whether you have reliable sources of income to meet your needs.
- You can likely increase your self-employment success, and the security of your self-employment income, by diversifying. Don't complete all of your work for just one client, because if this client decides to terminate your relationship, you may run out of income. Also, consider ways that you can expand your business. For example, if you rent out party equipment as your primary business, you may find that you can use the truck you use to deliver your equipment as a plow truck during the winter.
- Success in the realm of self-employment requires the ability to stay focused and self-manage. If you find that your time away from the office is spent lounging around not getting much done at all, self-employment may prove challenging for you. If you are committed to self-employment but struggle with self-management, consider setting aside a room in your house strictly for business use, and commit to working in this room during set times each day.
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