IN GOOD COMPANY

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There are over 30 million small businesses in the US. In fact, that’s 99.9% of all US businesses.

Thinking about going out on your own? Let’s talk about how you can set yourself up for success as an entrepreneur.  

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Health insurance

• COBRA — Allows you to keep your employer-provided health insurance plan for 18 months after you say goodbye to your employer. You pay the entire premium.
• State health insurance — Your state has online tools to advise you which plan to participate in. They can also let you know if you qualify for any assistance programs.
• Your partner — If your partner has health insurance and you can join it, it will likely be cheaper and easier than buying your own.

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Runway ✈️

Your first year in business may not be rainbows and unicorns 🦄✨ so plan accordingly with an emergency fund. Estimate how much income you’ll need to replace to pay for living expenses. Then make a plan to start saving it. The more saved, the longer your runway.

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Bank accounts

The right bank account structure leads to better organization. Consider setting up several business accounts, each for a specific purpose:

• Revenue — Deposit all monthly revenue into this account, then distribute to the other accounts listed below.
• Expenses — Transfer 30% of monthly revenue to this account.
• Taxes — No one likes an unexpected tax bill. As a business owner, you should proactively save for the taxes you’ll owe. Transfer 15% of monthly revenue to this account.
• Owner’s pay – Transfer 50% of monthly revenue to this account.
• Profit – This money helps build up your business savings, reinvest into the business, or save for retirement. Transfer 5% of monthly revenue to this account.
• Savings – Aim for 3x your monthly business expenses. 🎯

Retirement savings

Entrepreneurs are notorious for neglecting their own retirement! Here are some options to build up your savings:

• Traditional IRA or Roth IRA – Contribute up to $6,000 in 2022.
• SEP IRA – For anyone who is self-employed.
• Solo 401(k) – C corporations, S corporations, and LLCs with no employees (except a spouse) can participate in this plan.

Schedule an appointment with a Fruitful Financial Guide to talk about how you pursue your self-employment dreams.

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