Author Topic: Self Employment  (Read 3730 times)

ElectroStache

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Self Employment
« on: February 04, 2014, 12:59:18 PM »
A trend I have seen on the forums and seems to match MMM's scenario is working a full time job, saving a crapton percentage-wise and then heading towards financial freedom and retirement.

I just quit my job. I'm moving into working for myself, have a solid chunk of savings in operating expenses (9 mo - 1.5 years depending on scenario), have a couple different revenue streams that gets me close to my old salary + benefits (in absolute dollars) and seems like I'll have more time to be more flexible (can wait longer for services, negotiate based on how soon something needs to get done, can work on the house in the middle of the day during lunch breaks, etc). I also had a mentor whose words always stuck with me, "You'll never make as much working for someone else as you will working for yourself". The results of that are yet to be seen. To be honest, simply moving away from needing to be somewhere 8 hours a day (even if it means I chose to work somewhere else 12 hours) already feels pretty good.

I'm curious how many others are on their way towards FIRE, but using self employment vs a traditional employer? Is there anything I should be doing differently in terms of savings/retirement/tax optimization?

ethereality

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Re: Self Employment
« Reply #1 on: February 04, 2014, 01:24:44 PM »
I don't have any answers, but I'm also self-employed, right out of college. Also figuring out issues with taxes and investing.

schimt

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Re: Self Employment
« Reply #2 on: February 04, 2014, 01:32:25 PM »
You may want to read some of Kraig's material, he has created a blog and podcasts with a simular mind set to what you are describing. I was reading his stuff, then stopped because he talks more about creating the self employment then savings, which is not my plan.  He has a couple good podcast's called The Chasing Financial Freedom podcast, with some people that were in your shoes starting out too that you may get some inspiration to information from.

http://www.createmyindependence.com/

soccerluvof4

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Re: Self Employment
« Reply #3 on: February 04, 2014, 05:37:21 PM »
After floundering around out of the Military for a few years, I became self employed and have been for 22 years. In that time i have also started a half dozen other business's and the biggest things i can pass on to anyone is first of whats written at the bottom which i changes and actually should read " In business you dont get what you deserve you get what you negotiate" thats number 1 !. The second biggest thing is yes its true you can make alot more money working for yourself BUT you also have the financial and legal risks that go with that. To help sleep at night find the best accountant in town and get yourself a good attorney. I cant tell you how many frivolous lawsuits I have had over the years.  And don't cheat the government. So you want a good old fashion to the book accountant. I also would say now that stick with what you know best. I started several business and made money and lost a ton of money but my main business which I knew best if i just would of stuck always with that i Could of retired 10 years ago.  You need to work hard and smart, need a good business plan and definitely need to create your own opportunity's but you still need some luck. Dont take risk with poor credit.  I now say if the last company i worked for wouldnt of tried to cut me off at the knees (which put them into bankruptcy) i would of been better of and so would they obviously so treat your employees well.  Not knowing what your doing i dont know how much of this pertains to you but when its good its great but when its not...its not!  I wish you the best!

DB

ElectroStache

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Re: Self Employment
« Reply #4 on: February 04, 2014, 05:58:18 PM »
Thanks DB, that's great to hear that it has been working out for you so long. I'm excited and a bit nervous.

iris lily

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Re: Self Employment
« Reply #5 on: February 04, 2014, 06:46:42 PM »
... "You'll never make as much working for someone else as you will working for yourself". The results of that are yet to be seen. To be honest, simply moving away from needing to be somewhere 8 hours a day (even if it means I chose to work somewhere else 12 hours) already feels pretty good...

My DH definitely made more money working for someone else than he does working for himself. He started his own business a dozen years ago. But there no substitute for having control throughout the day of his own time. Today we needed to take one of the dogs to the vet for a critical issue and he could do that.
Since we are nearing retirement at age 59 he can also scale back as time goes on, scheduling fewer customers and turning down the harder jobs. It is all ok.

I will say that he consciously has not grown his business to anything bigger than a 1 man shop. He doesn't want the cost and headache of employees.


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« Last Edit: February 06, 2014, 06:55:27 AM by iris lily »

soccerluvof4

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Re: Self Employment
« Reply #6 on: February 05, 2014, 05:02:26 AM »
I started a business with a few other people when I was a freshman in college and I'm still running it today, almost 14 years later.  (Man alive, has it been that long?!)  It has certainly had its ups and downs over the years.  If everything stays on track, I should be able to hit FI by the time I'm about 35.

As for savings/retirement/tax optimization, there's all sorts of fun stuff you get to do as a business owner.  Lots of stuff can be purchased with pre-tax dollars through your business (phone, internet, business lunches, business trips, etc.).  Make sure you don't do anything illegal, but certainly don't leave free money on the table either.  For retirement, you can set up an Individual 401(k) and invest in it as the employer and employee.  Take a look at:

https://investor.vanguard.com/what-we-offer/small-business/individual-401k?Link=facet



Thats great advice as well! The other thing which I learned through experience, and hear over and over again on the board I sit that everyone says is never go into business with a partner!!!! It does work for some like in Knaaks case so I mean no disrespect but in most cases it doesn't, but there are times you have no other choice.
A good rule of thumb is don't spend more than 4% of your gross margins and you most likely will never get audited. There are people that run business's that just write everything off and get away with it BUT there are alot that dont....hence why get a good accountant.
Best of luck to you with your new company!
« Last Edit: February 05, 2014, 05:05:11 AM by soccerluvof4 »

soccerluvof4

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Re: Self Employment
« Reply #7 on: February 06, 2014, 04:56:20 AM »
Yea i learned the hard way. I was in a franchise situation and had 4 stores in the upper midwest. My stores were in malls and i had 4 in the top ten in the country. The franchisor was always looking for ways to make more money and what better than keep coming to me with proposals since i proved there concept a winner. Long and short of it they bring me to some big money bags who wants to go into 5 stores at once and promises not to be involved blah blah blah. Not only did he get involved he got greedy instead of following what made me keep building. So i got out of it, went back to my 4 successful stores and new they would pay me top dollar for my stores as they were selling out to a fortune 500 company. Another lesson learned was in retail/franchises the only people that make money are the Malls and the Franchisors. I did well selling my stores, most money I made in a year BUT overall as well as they performed it was not worth it. If i didnt get in early i would of probably like most of the other franchisees around the country not done so well.