Before You Take Your Biz Full Time Do These 5 Things

Taking your business from part time to your full time gig is a huge step, one for which you should be very excited! But it can be a bit frightening as well. There are so many things you need to plan for and consider before you take the plunge. Per usual I will hit this from the financial side, here are 5 things to consider before making the switch to running your business full time.

Tax Savings

Many, many, a business has been ruined by not having the cash to pay taxes. When you’re working a regular job the lovely folks in the Payroll department are required to withhold taxes from you before you receive your paycheck. So for the most part paying your taxes is fairly streamlined and you usually don’t have a massive bill due in April (if that’s not the case please check with a tax pro to get this ironed out).

However when you’re working for yourself and responsible for paying yourself there isn’t a payroll department to make those tax payments for you. You’ve got to save for taxes all on your own.

The best way to handle this is to put aside 25% every time you pay yourself. This might mean you have to do some calculations to make sure you end up with the take home pay you were counting on post taxes. For example, if you plan to take home $750 a week, then $250 goes straight to your tax savings account right then (working with easy math of $1k here). I would highly recommend that this tax savings account is a completely separate account so you don’t accidentally end up spending it.

Emergency fund

Whether you go full time in your business or not I am always going to recommend having an emergency fund. Both a personal one (3-6 months of expenses) and a business one (also 3-6 months of expenses). If going full time in your business is a bit of a stretch for you (meaning you don’t have a partner’s income to help support you, or your business isn’t making as much money as you need right now) then get that fund much closer to the 6 month mark.

And I highly recommend beefing up both your personal and business emergency funds. Doing so will mean that you can operate your business from a place of confidence, not fear and scarcity. Do your best to go into this awesome and exciting time of taking your business full time in the strongest financial position possible.

Health insurance

A major benefit to having a regular job is that you usually have the option of group health insurance. When you have your own business it's not as straightforward. So before you leave your job to take your business full time make sure you look into your health insurance options. Perhaps it’s time to jump onto your partner’s insurance, or search for something out in the open market. Don’t forget about health care sharing options as well. Whatever you do make sure you’re covered at all times.

Live on what you make

Obviously this is good advice at all times, but especially if your total income is a bit of a question mark. Make sure you’re monitoring both your business and personal expenses and cutting back where you can. Don’t let something silly like not paying attention to your budget turn your dream of working for yourself into a nightmare.

Plan ahead, build up some savings, and trim your lifestyle to meet yourself where you are right now. This is not forever (well living inside your means should be) it’s just a temporary trim so you can grow this business with confidence.

Have you recently taken your business full time? I’d love to hear what advice you have for others (financial or otherwise). Tell me here.