Shaun recently sat down with Paul Benson to talk about making the move to self employment.
Have a business idea, think you can do things better than your boss, or ready to take your side-hustle to the next level?
Have a listen to this (by using the link below) before you make the plunge.
Some key points to take away:
Have clarity on your ‘why’
Why are you making this journey to self employment in the first place, is a very important question to ask yourself, and to keep coming back to for that matter.
Is it to be in more control of your own time, for financial freedom, to work with better technology, get better clients or to be your own boss?
Keep good records
Pay everything with cards so every little thing is always tracked, and have a separate bank account for your business.
If there are any important receipts such as big purchases or things with warranty, you can take a photo of them and upload them to save them. There are plenty of apps to help you be more organised, so use them!
Shaun recommends software such as Xero to keep track of all your payments coming in and out, but at the very beginning this could be as simple as an excel spreadsheet.
Have a survival strategy
Think about how you are going to get by until you get income coming in. The initial revenue you receive may go straight out with expenses for your business.
Perhaps if you are a couple, you may live off the other persons income during this period of adjustment, this could be savings, a long service leave payout or something else.
Knowing how you are going to live will help you to take away the stress. This will ensure you can pay your mortgage and other necessaries in the meantime.
Remember you need to pay tax
When you were an employee, your tax (and super) came out of your wages and so you didn’t need to really think about tax. Now you are going to have to put money aside, and pay quarterly.
Don’t leave it until your first individual tax return, talk to your accountant and do some planning.
Note, Shaun talks about what’s called the ‘honeymoon period’ in this podcast. It’s well worth a listen if you are new to paying your own tax.
Everyone that has their own ABN not only pays their own tax, but is essentially also a tax collector for the government.
Make a business plan
This doesn’t need to be a long 30 page document, but a short few pages that you can edit and review as time goes on.
Know what your breakeven point is, and price accordingly.
Pay yourself a wage
It’s important to pay yourself when you can, but don’t go splurging and taking all the business profits for yourself.
Once you have profit, think about what you can do with it such as on your home loan offset account, reinvesting back into the business or even a super contribution.
Some links and quotes from this podcast
If you fail to plan, you plan to fail – Benjamin Franklin
Revenue is vanity, profit is sanity – Unknown
The Financial Autonomy podcast’s are created by Paul Benson, and there is a wealth of information on his website which can be found here. The full list of podcasts include such things as investing, side-hustle ideas, retirement and other gaining choice ideas.
The link to the podcast can be found again here:
Ready to make the move to self employment?
Get in touch with us by calling 03 8609 9226 and we can help with next steps, explain what needs to be applied for, talk about your ideas and go from there.