How many of us are self-employed?

[puglogic]

Are many mustachians self-employed?   I see lots of conversations here about people employed by others, and the (relative) stability of income afforded by that. 

I sometimes bump into situations unique to self-employed folks like myself, not the least of which is the lack of predictability of billings from time to time for some of us, and wondered if many of the folks here are working for themselves too?

[protostache]

I'm not (yet) but I would like to be soon. I already have a small software development consultancy going on the side and my plan is to expand that into a part time thing (~ 20 hours a week) and then build more passive income generating products. I sell an ebook right now that makes an ok amount every month but I'd like to have a few more revenue streams.

How do you deal with the ups and downs? It's one of the things I'm most scared about with making the jump.

[Christof]

I am, and I have a few employees. I definitely have a much larger cash buffer to accomodate fluctuating income and irregular payments. Large means I have approximately 1-1.5 years of my family's annual expenses available at any time.

[Silvie]

I am. I'm a freelance translator. I have a few regular clients. The biggest one provides me with enough income to cover my monthly expenses and has been giving me steady work for 2 years now. The other ones are a nice addition. I could do more acquisition and marketing to get more clients but I'm lazy :-)

[gildedbutterfly]

I have a few regular clients. The biggest one provides me with enough income to cover my monthly expenses and has been giving me steady work for 2 years now. The other ones are a nice addition. I could do more acquisition and marketing to get more clients but I'm lazy :-)

Ditto this (though as a writer, not a translator). I also budget based on a year back, so that I don't spend any of what I make in 2014 until 2015. And what I make in 2015 will pay for my life in 2016, etc.

Thanks for starting this thread; like you, I find a lot of discussions here are fun to read, but not necessarily applicable to my life as a SEP.

What is everyone's FIRE plan? I love, love, love what I do: I actually have three different self-employed areas (writing ~80% of my income, personal trainer ~10%, and adjunct professor ~10%), and I'm working hard to be FIRE ASAP so that I can work less and be pickier about my projects, but I don't really see myself totally retiring for a very long time (if ever). Having worked in an office job, and as a full-time teacher/professor, I used to dream of "retirement," but always pictured it as my life is now: self-employed, doing what I love. So I'm curious whether we SEPs have less desire to actually retire. Or is anyone, like me, more thinking of FIRE as a way to insure that I can keep doing what I love, albeit in a more picky manner?

[gildedbutterfly]

Also, I'm going to be the retirement police for a moment here: I don't remember where it was (and I'm too lazy to look), but I remember MMM posting about a reader one time that he could "retire" from his job and support himself by being self-employed. The reader did not have enough of a 'stache to support himself, and was basically looking to go from working for someone else to working for himself.

While I'm a big fan of being self-employed, I do take exception to calling someone retired who has to continue to work. People like MMM, who don't have to work but choose too, absolutely are retired. But, as someone who "has" to work to support herself (and someone who works 50-70 hours a week to make enough to FIRE), I don't consider myself retired, and won't consider myself retired until I am free of the necessity to work.

Any other SEPs have opinions about this? Am I just being ridiculous here (like other retirement police officers)?

[Kriegsspiel]

I'm a new 1099er myself, after being a W2er since I got out of college in 2008.

Hello.

[puglogic]

{sigh of relief}   Glad it's not just me.

I too have a buffer to help with the ebbs and flows, but not enough of one.  I'm a freelance web designer and social media person, and have been for about 17 years.  I would love to develop some passive income streams but am a little stumped about the right ones for my clients (I work with very small companies and nonprofits).  But it's all on my radar.  I'm still a work in progress.

Butterfly, I love what I do to, or more specifically, who I do it for.  I wouldn't consider ceasing to work altogether, but like the "your money or your life" folks, I'd like to pick and choose what I do, and who I do it for.

[TheFrugalFox]

My wife and I have been self-employed for the last 10 years or so. She's a graphic designer and I had a couple of small shops. One thing I found is that you generally are just replacing a boss with a bunch of bosses i.e customers - although you can occasionally tell them to take a hike - do it too often an you won't have a business.

Last month of work for me though - no more bosses, that is a nice thought.

[Christof]

How do you deal with the ups and downs? It's one of the things I'm most scared about with making the jump.

I would be scared to have only one employer that I depend on for my life and have no control over their stupid actions. I guess, it is just a matter of perspective and adaption.

In my 18 years there have customers paying a year late or going bankrupt, months where I could't find a new contract and times where I had to call all my contacts for work. But I never ran completely out of work, ever.

The most important part is to connect; to local businesses, to others in your profession, to online groups. I am running a meeting for developers in my city, have written for magazines and speak at conferences. If you can't or don't want, partner with someone who does.

[resy]

What industries are you guys in? My husband and I are in the service industry (each self employed) and feel we need to get "real"jobs with benefits, 401ks, etc to get ahead someday.

[ShortInSeattle]

I have a few regular clients. The biggest one provides me with enough income to cover my monthly expenses and has been giving me steady work for 2 years now. The other ones are a nice addition. I could do more acquisition and marketing to get more clients but I'm lazy :-)

Ditto this (though as a writer, not a translator). I also budget based on a year back, so that I don't spend any of what I make in 2014 until 2015. And what I make in 2015 will pay for my life in 2016, etc.

Thanks for starting this thread; like you, I find a lot of discussions here are fun to read, but not necessarily applicable to my life as a SEP.

What is everyone's FIRE plan? I love, love, love what I do: I actually have three different self-employed areas (writing ~80% of my income, personal trainer ~10%, and adjunct professor ~10%), and I'm working hard to be FIRE ASAP so that I can work less and be pickier about my projects, but I don't really see myself totally retiring for a very long time (if ever). Having worked in an office job, and as a full-time teacher/professor, I used to dream of "retirement," but always pictured it as my life is now: self-employed, doing what I love. So I'm curious whether we SEPs have less desire to actually retire. Or is anyone, like me, more thinking of FIRE as a way to insure that I can keep doing what I love, albeit in a more picky manner?

Self employed 8 years now, and I also base my budget off the prior year's income. (Spend 2014's earnings in 2015) I pay myself once a year.

My plan is to reach FI and then drop to "projects for fun" and work less than half time. I do enjoy my work, but not the intensity. I'll see how that goes, knowing I can ER when ready.

[shelivesthedream]

I'm just starting out as self employed and am still figuring out how best to do day-to-day banking, especially as my field involves paying a large amount up front for materials and being reimbursed later -my cash flow is totally chaotic. I'm currently viewing everything I earn as 'months in the bank'. For example, if I earn two months expenses on a job that lasts a month, that's one month in the bank for the future. My FIRE plans involve being able to be super-picky about what work I take (because there are a lot of bad jobs around) and being able to only work part time (because it can be exhausting and I do have other interests). It's mostly about being able to attain a level of security such that if I never got any work again I would be fine, rather than actually stopping work altogether (although it is also about choices because I can potentially see myself wanting to change direction in the future). I am really enjoying it so far, though - I find it so much more relaxing than 9-5 hours!

[b1gm1ke11]

I've been self-employed for 7 years, and currently have 40 employees.  It has been a very rewarding experience, but my exit strategy is to sell within the next ten years to reach FIRE.  I felt I had no choice but to become self-employed because of my distaste for cubicle life! 

[lizfish]

Shelives - is there any scope to take a deposit against materials? It might not be the done thing in the industry but even a small percentage would help the cash flow a bit. You're in the UK, so my example is the builders will usually take a 30 or 50% deposit before work starts mainly to cover the cost of materials and paid staff.

For you and anyone else with cash flow headaches I would also recommend YNAB (man I should be an affiliate for the amount of times I say that) they have specific methods or variable incomes and you can even set up a separate file for your business if you wish. I have found it very useful in defining and keeping to my expense budget and also building up stache when I'm not ready to invest yet for example.

[lizfish]

I am self employed as bookkeeper and have been for 3 years. I left a good but stressful wage behind. The learning curve for SA has been steep and I am only now finding my confidence in getting new clients and offering a good value added service.

As far as variable income goes I use YNAB (see above) I budget a month ahead because the nature of my work means that I have regular monthly amounts that although aren't the same, are similar. So I have a core budge of x.  I take my income and deduct a calc'd  amount for predicted tax (I love spreadsheets) and then anything left over goes to investments or pension. If my income were very variable like some of you then I would be maintaining a much larger buffer. Say 6 or 9 months expenses. My DH is employed currently, we are saving a decent amount between us and have money out aside for other things so the need for a massive safety fund is smaller. When/if he goes SA we might consider keeping more liquid cash.

I think we've decided that we're not shooting for full FIRE but a hybrid where we've paid off the mortgage, spend less and both work less than we do now. We can be choosy about what work we do and fit that around the kid(s) we're planning in the next few years. We'll still be stashing (at a slower rate) and that will cover us for not being able to work and older age we when can't/won't work.

[TomTX]

What industries are you guys in? My husband and I are in the service industry (each self employed) and feel we need to get "real"jobs with benefits, 401ks, etc to get ahead someday.

It's super easy to set up a SIMPLE IRA with Vanguard.  Easier alternative to setting up a Solo 401(k). If you're bringing in the cash, you can stash it.

[BlueHouse]

I'm a consultant doing exactly what I'd be doing if I worked for someone else.  I had an opportunity to do the same work under my own umbrella and I snatched that brass ring!  At the time I thought it was very possibly a one time thing so I thought:  worst case, I'd support that contract for a few months, earning twice as much for the same work, then when it was over, I'd just go get another job. 
Well, it's been 5 years and I keep getting pretty stable contracts with lucrative rates. I really have wanted employees because it's a lot of risk to only have one income stream, but it hasn't happened for a number of reasons.
I keep a large cash buffer even though it's probably not as unstable as I tend to think it it.

As for the "real job" part, I structured the company as a corp, and I pay myself monthly. My employer(me) is very generous with a full match max 401k (51k/yr) but very stingy with vacation time. I take a little more than half of my income as w-2 wages and the rest as shareholder distributions. In the months where cash flow is slow, I don't take any distributions (there's no extra money sitting the account). This usually happens in the first three months of the year, due to a big check to 401k max profit sharing (about 30k of the 51k ) and then 1st quarter taxes.

A few employees would help me get to FI so much faster, but I'm chicken and lazy and there are some roadblocks that could probably be overcome with persistence.

My strategy for tough times is to just go back to working for someone else for a lot less money.   I'm really hoping I can reach FI before I have to do that. If I paid off my mortgage, I'd be willing to take more risk. If I sold the house, I could take on an enormous risk with nothing left to worry about. Makes me rethink priorities.

[frompa]

Count me in as one of the self-employed, have been for over two decades.  I agree with those who say that this way of earning a living has more uncertainty, but in all my years, I've never run out of clients or work that pays adequately, and I have ultimate freedom to set up the business finances to benefit me.  Risk and uncertainty? Sure.  But on a particularly fine day, if the work isn't too pressing, I can blow it off and go for a fifty mile bike ride instead of sitting my ass at a desk all day.  Can't beat that. 

[Zelda01]

What is everyone's FIRE plan? I love, love, love what I do: I actually have three different self-employed areas (writing ~80% of my income, personal trainer ~10%, and adjunct professor ~10%), and I'm working hard to be FIRE ASAP so that I can work less and be pickier about my projects, but I don't really see myself totally retiring for a very long time (if ever). Having worked in an office job, and as a full-time teacher/professor, I used to dream of "retirement," but always pictured it as my life is now: self-employed, doing what I love. So I'm curious whether we SEPs have less desire to actually retire. Or is anyone, like me, more thinking of FIRE as a way to insure that I can keep doing what I love, albeit in a more picky manner?

I have been self-employed for 5 years.  Like you, I always pictured my ideal work life as being self-employed, it just took a while to get here.  I like your idea of FIRE as the place where you can be pickier about clients, and also not worry about the ebbs and flows.

In another early retirement forum, there was a thread along the lines of "What won't you miss when you retire from your job?"  They would say things like, "no long commutes," "no boring meetings," "no office politics."  The list went on and on, and I realized it was describing my life already. 

Self-employment is minus so much of the crud that makes regular-jobbed people miserable. 

So yeah, I wish we would have more self-employment discussions on here.

[P938LVR]

I am both self employed and employed by another person. I own my own business and pretty much run the business that I work for as well. Its complicated. I am just really tired and really stressed all of the time. Not only that but since my husband travels for most of the week I am essentially a single parent most of the time as well. I am stretched very thin....

I am working towards growing my own business and branching out completely on my own but I want to pay off all if not most of our debt first.

[gildedbutterfly]

In another early retirement forum, there was a thread along the lines of "What won't you miss when you retire from your job?"  They would say things like, "no long commutes," "no boring meetings," "no office politics."  The list went on and on, and I realized it was describing my life already. 

Self-employment is minus so much of the crud that makes regular-jobbed people miserable. 

That's my favorite thing! The other day, I was talking to one of my friends about a client of mine who is uber-picky and borderline unprofessional, but who keeps giving me contracts and referring other clients to me, as well. I was mid-bitch about him and I suddenly thought, "Hang on a minute. I'm the boss. I don't have to keep working with him!" AWESOME moment.

So, the following day, when he emailed me with another project, I just said, "I would love to work with you more, but my schedule is so tight that I'm having to raise my prices." And then I proceeded to quote him a price that was 50% higher than what he was paying before. He (grudgingly) accepted the price raise. My point of view is, I'll take him on for more money (which will make it worthwhile for me) or he'll decide that he doesn't want to pay the extra money, at which point I'll be free of him and his shenanigans. Either way, I'm satisfied.

I am both self employed and employed by another person. I own my own business and pretty much run the business that I work for as well. Its complicated. I am just really tired and really stressed all of the time. Not only that but since my husband travels for most of the week I am essentially a single parent most of the time as well. I am stretched very thin....

I am working towards growing my own business and branching out completely on my own but I want to pay off all if not most of our debt first.

That's SUCH a tough position to be in. I'm sorry that you're going through that. I remember my last six months of employment/self-employment combined and how exhausted I felt, and I don't have any kids, so I can only imagine what you're going through!

Take heart, though, that it DOES get better. And when you do pay off your debt and branch out into being fully self-employed, you'll appreciate it so much, since you've gone through this time. In the meantime, just keep reminding yourself that it will happen eventually.  And if you need any proof or encouragement that you'll get there, stop by in here and we'll all tell you about our days when we were where you are now, and how much better it gets.

[puglogic]

So, the following day, when he emailed me with another project, I just said, "I would love to work with you more, but my schedule is so tight that I'm having to raise my prices." And then I proceeded to quote him a price that was 50% higher than what he was paying before. He (grudgingly) accepted the price raise. My point of view is, I'll take him on for more money (which will make it worthwhile for me) or he'll decide that he doesn't want to pay the extra money, at which point I'll be free of him and his shenanigans. Either way, I'm satisfied.

Wow, I think we are metaphysically connected  :D    I just did the same thing today, and for the same reason.  So freeing.

[Peacefulwarrior]

I wouldn't call it self employed but I own 17% of the company I'm working for so freedom-wise it's close.

[Thespoof]

I am a property inspector and I also do contract engineering work (roof truss and engineered floors) for residential houses. Been self employed since 2001. Some days I pine for a a regular job with holidays. I a can't remember the last time I had a week off where I didn't have to do at least some work :-( I go to Mexico every January for a week and take my laptop.

[BlueHouse]

I am a property inspector and I also do contract engineering work (roof truss and engineered floors) for residential houses. Been self employed since 2001. Some days I pine for a a regular job with holidays. I a can't remember the last time I had a week off where I didn't have to do at least some work :-( I go to Mexico every January for a week and take my laptop.

Travel is something I hope to do more of when i retire. My last vacation trip was 8 years ago for 1week.   Next month I'm taking my first week off since then. I've had many "days off" in between (one or two days at a time) but I usually part part of that time doing house chores or doctors appointments or tax issues that I can't deal with at a client site where people can overhear me.
This is my own doing. I never had good work/life balance when I was employed by someone else either. I'm working on it.

[webguy]

I've been self-employed for a year now - I quit my job last summer. I was a full-time web developer who did freelance web design/development on the side but didn't want to do it full-time due to the stress of having to manage clients and find ongoing projects. So I built a web-based software product which I now sell, maintain and support. The income stream is pretty stable although by no means a guaranteed long term source as it relies heavily on Facebook. I'm hoping to keep stashing away as much money as possible from it over the next few years so that I'm FI and will be able to work on some other projects for the fun of it rather than for the money.

[gildedbutterfly]

Travel is something I hope to do more of when i retire. My last vacation trip was 8 years ago for 1week.   Next month I'm taking my first week off since then. I've had many "days off" in between (one or two days at a time) but I usually part part of that time doing house chores or doctors appointments or tax issues that I can't deal with at a client site where people can overhear me.
This is my own doing. I never had good work/life balance when I was employed by someone else either. I'm working on it.

I'm the same way, and also trying to work on it. My niche in writing tends to be relatively seasonal, and of course there's always the chance that there will be a down month or two even in non-seasonal work. But I've had steady work, month in and month out, for years. I keep pushing myself, expecting down time, and then never get it.

I finally went to a reduced schedule this summer, mostly because I was so burnt out and exhausted that I was having trouble getting work done. But I still haven't taken time off, just have been working ~40 hours/week instead of 60-70.

[Cassie]

My hubby & I semi-retired 2 years ago with small pensions. We can live on them if we want to.  We both like to work in our professions so now do so p.t. for ourselves.  We love the balance & love the extra $.

[rusty]

Self employed for over 13 years.  Have really been what I would call my own boss for the last 3.  Worked as a subcontractor (insurance agent) with a company who seemed to treat their subcontractors like employees w/o benefits.  I decided to start my own agency 3 years ago and it's been great so far.  This year has been great and next year looks good also.  Knocked out my home equity line this year and considering paying off mortgage next year or buying another rent property (leaning towards rental).

I would love some more discussions about issues that self employed face. 

[nora]

I am, but only doing it for about two years, with six months off in there on maternity leave. I had an agency finding me work which required travel for the first year, but then moved to another arrangement with a local group which is much better as no travel needed. I look forward to paying off my mortgage in a few years, and then I plan to have another child, and start saying no more often to the jobs I don't like. At the moment I feel under pressure to say yes a lot to improve my chances of continuing to being offered work. A bit of a drag.

[BlueHouse]

I would love some more discussions about issues that self employed face. 

Biggest issues:
1.  too busy (or too chicken) to grow.  I only have one employee now (myself).   Could retire faster if I hired people.
2.  Taxes - No real strategy except to pay what I owe.  I pay a payroll/tax preparer company monthly AND a CPA each year.  I'm sure there is some overlap. 
3.  I pay a lot of different people for things that I could do myself, but I'm afraid of missing some regulation somewhere.  I wish I had more time to figure out all the small stuff.
4.  Registered agent - I pay a company $85/year to have an address in the state of my incorporation and to have a corporate document mailed there once per year.  They put it in an envelope and mail it to me.  I literally pay them $85 per year to forward a single piece of mail to me.  makes me crazy.
5.  Multiple taxes and licenses in multiple jurisdictions because I live in a tri-state area.   Very complex to make sure you deduct in one state or Federal because you've paid somewhere else.  CPA is necessary for me. 
6.  Control - I have a hard time trusting that others are doing things "right", so I either don't hire employees, or I spend too much time overseeing everything my paid professional services people do. 
7.  Terror at losing it all.  I'm hired on contracts which can end at any time.  with only one source of income, it's scary.   But I save for emergency, then I am terrified of losing that.  I'm looking forward to paying off all debt so I can go back to no-fear. 

I'm sure there are more.  These just popped into my head. 

[puglogic]

Bluehouse, it looks like you are incorporated.

How have others organized their businesses?   Sole proprieter, LLC, S-Corp, Corp?

I've never thought of myself as big enough to warrant incorporating, and all the cost (setup and ongoing) that goes with it.  Am I foolish?

[Tetsuya Hondo]

Bluehouse, it looks like you are incorporated.

How have others organized their businesses?   Sole proprieter, LLC, S-Corp, Corp?

I've never thought of myself as big enough to warrant incorporating, and all the cost (setup and ongoing) that goes with it.  Am I foolish?

LLC with S-Corp here. It's well worth it. I use an accountant, who has easily paid for himself and also seems to offer a bit of audit protection (supposedly, as CPAs are expected to be somewhat self-policing from the IRS's perspective, versus someone doing their taxes on their own). I make more than I did as a W2 employee and I pay less in taxes, and I play it pretty conservatively too with regard to taking salary versus dividends. The cost of setting up an S-Corp really isn't that high, but paying the accountant for recurring payroll and taxes gets a little pricey (~$500/year in total). Even though, he's still saved me enough and kept me out of trouble enough to warrant the cost.

[YeahNo]

LLC with an S-Corp as well here. I have 14 employees and we do product design and manufacturing. We are 8 years old.

I'd love to find a financial blog/forum that caters more to the self employed.

Do any of you know of one?

[darnlaura]

I've been self-employed as a copy editor and project manager for 6 years and feel so blessed. It's been my employment dream since I graduated college, and it became a reality when I quit my full-time job (in the same field) and let them know I'd be happy to continue on a contract basis. No more meetings! Since then, I've found work editing books also. My husband works as a professor, so I'm not responsible for supporting our family financially, and I also stay home with our two young children. I started reading MMM posts a few months ago and have been bewitched by them, mainly because of the way his viewpoint has transformed my view of the life I already have. I went from feeling overwhelmed at having two small children at home (2 and 5) with a part-time job on top of it, to realizing how lucky I am to have the time to devote to my family, my home, and the best job I can imagine. I work during the school year and take time off during the summer and winter when my husband is not teaching. To echo what some of the others have said, I'm not sure how soon I'll quit this job, just because it was my goal in the first place and I enjoy having a role other than being a mother. When I talked to my husband about early retirement after reading MMM, he pointed out that he's already "partially" retired and doesn't envision wanting to quit his job any time soon either. We are working on paying off our house in the next 2 years and will likely have some interesting discussions after that about what we want our future to be.

[Self-employed-swami]

I am also self employed, and loving it!

[lauren_knows]

I'd kill a man to make the jump to self-employed, but I'm a big chicken because my self-employment dreams are based on my hobby and not my actual career.  I'll just live vicariously through you all.

[soccerluvof4]

Been self-Employed 23 years. I am basically retired and my wife runs whats left by her choice about 25hrs a week. We use to have close to 70 employees but now just 8 and will stay with it as long as it pays too or 2-3 years more max.

[puglogic]

Bo_knows, what's your hobby?  I've seen some awesome ways to turn even obscure hobbies into income. And you can start tiiiiiny, and work your way up.

[lauren_knows]

Bo_knows, what's your hobby?  I've seen some awesome ways to turn even obscure hobbies into income. And you can start tiiiiiny, and work your way up.

Programming is my hobby. I built the site in my signature, and I'm currently building a Risk-like game in Javascript / canvas.

I just feel like I'm so far into my career, with a good salary, that it'd be silly to change. So, I'll just build things for fun :-)