Are you one of the many people who jumped to freelancing or self-employment recently? How has it been treating you so far? The journey has its ups and downs; it’s risky and rewarding. It’s only logical to have concrete plans to secure your future.
Being your own boss is great. However, regardless of how old you are, you need to start planning for your retirement. Too young for you, you say? Think again.
Who doesn’t want to have a secured future? Make yours one by building a retirement plan and keeping your finances in check. Your future self will thank you for ensuring that you stay relaxed and happy, leaving you with less stress to worry about, more money to spend wisely, and lots of time to tackle your remaining goals.
Contribute to your retirement account
When speaking of investments, tax-deferred retirement accounts are likely at the bottom of your list. It’s time to raise it to your priority.
Giving contributions to your retirement account is a great way to bring down the amount of your taxable income and raise your tax refund. If you have a Solo 401(k) contribution and if you’re able, do max that out before year end. This will allow you to enjoy more out of your retirement due to a much less tax liability.
Settle your pensions and savings
As someone who works as their own boss, you are free to set up your own pension albeit obviously, there will be no employer contribution. Let it not get in the way, though. Given this, a pension is even more essential for self-employed entrepreneurs. There are several pension options you may check out to find which one suits you best. Choose wisely.
Being self-employed puts a heavy weight on your shoulder. If you don’t have a side job elsewhere and your business is the sole source of your income and you’re suddenly faced with its failure, perhaps a sudden death or illness, your entire family will suffer from the financial loss.
Income protection and life insurance are essential not only to your company but for your family as well. Ask any tax specialist and they’ll likely advise you to get one for the protection and security of your family and business.
Sure you’re still decades prior to your ideal retirement age, however, life is unpredictable and anything can happen without notice. It’s only wise to budget your finances as early as you can.
If you need an accountant to help you sort out your finances and taxes–hire an expert. They’ll help you track how much money comes in, how much you spend out (i.e. on business and personal purchases); and most importantly, how to manage it.
Creating a budget and sticking to it will certainly boost your savings and secure your finances. This shall help you out come rainy days.
Keep personal and business accounts separate
As you may very well know, handling finances can get tricky, especially for those just starting out as well as those who are not able to pull out a salary from your business’ income every month.
One way to simplify your expenses is to open separate accounts and credit card for your business and personal use. Not only will this make your finances more manageable but also make calculation easier come tax time.
What are your plans for retirement? Share it with us!
About the author: Chie is a daytime writer for Depreciator – Tax Depreciation Schedule, a company dedicated completely to Tax Depreciation Schedules that aid the Australian property market.