Being your own boss results in many benefits. For instance, self-employed people get to choose their working hours and establish their business goals as they seem fit. Moreover, they can determine their work environment and grow their skill set in unique ways.
However, being self-employed also comes with its share of responsibilities. One of those responsibilities that often proves to be the most challenging is protecting the income. And not knowing how to do it can push any business over the edge into bankruptcy proceedings.
This article will focus on ways every self-employed person can use to protect his or her income. They range from taking out insurance and using an accountant to reviewing investments regularly and preparing for potential issues in advance.
Choose the Best Insurance Companies
One of the easiest and most obvious ways to protect an income is to go through an insurance company. Here’s a quick look at the income protection guide:
Health insurance: Every self-employed person needs a different type of health insurance than the one someone would have if they were employed by someone else. The reason is that an employer’s health insurance plan covers both short-term and long-term illnesses. However, when a person is self-employed, they may not be able to get insurance for long-term illnesses. So, it is crucial to understand what their insurance covers and whether it meets their needs.
Life insurance: Life insurance is also something that will benefit a self-employed person a lot. If some does not have anyone who will benefit from their income if something happens, then life insurance may seem useless. However, if a person does have a family or people, life insurance can help them out after one’s death with financial security.
Disability insurance: Disability insurance is something that both employed and self-employed people may need to purchase. In fact, it may be even more critical for those who work for themselves because they do not have an employer who pays their income while they are sick or unable to work due to some other accident or illness.
Business property insurance: If someone’s business requires any equipment or other property that costs more than $5,000, then it is recommended that a person buys business property insurance that will cover these items in case they get lost, stolen, or destroyed.
Umbrella policy: If a person’s total assets amount up to over $100,000 or more, then an umbrella policy may be something that can protect these assets from lawsuits brought against their business by customers.
Consider Using an Accountant
An accountant can be an invaluable asset when it comes to protecting the income of a self-employed individual. A good accountant knows all the tax laws and accounting procedures in a particular country and can use this knowledge on someone’s behalf. For instance, they can help a person choose the best tax deductions for their business and work with tax authorities to resolve any issues that might come up during the tax season.
Regularly Review Your Investments
Investing in the right things may seem easy when times are good, but it gets much more complicated when the economy goes south. Therefore, self-employed individuals must regularly review their investments to make sure they are doing the right thing at the right time. For instance, if they own stock in a certain company that starts losing value, then they should be able to sell off those stocks right away in order to minimize any losses.
Prepare for Emergencies
It is very important to prepare for emergencies to protect the income of any self-employed person. And while many types of emergencies can happen, there are three specific ones this article will concentrate on, and these are the ones a person should put an emphasis on when creating an emergency plan:
Injury or illness: Any time an employee gets hurt or falls ill, their employer needs to take care of them and ensure they receive all the care they need. However, if someone is self-employed, then they must have a plan in place to handle these situations. A person may need to ask someone else to temporarily take over their work or purchase insurance that will cover them in case something happens.
Business emergencies: In case of a business that relies on certain services or tools, it is crucial to prepare for any potential emergencies that can happen with those services or tools. For instance, if a business depends on electricity or the internet, an owner should have backup generators and alternative sources of the internet to protect themselves from any potential disruptions.
Natural disasters: Natural disasters can happen at any time and there is nothing we can do to prevent them from happening. However, there are ways to minimize the damage they cause to our income. For instance, if someone lives in an area that is prone to being hit by hurricanes, tsunamis, or tornadoes, then they should have an emergency plan prepared in case anything happens. Also, they should make sure to have backup sources of energy and water in case the main ones stop working for some reason.
There are many different ways to protect the income of a self-employed person. However, it is important to do so in order to ensure that the income keeps coming in and the business continues to grow. Therefore, a person needs to make sure to take the time to consider all of the options mentioned above and use them in order to protect their income.
Doing that will allow a person’s business to thrive, as that will allow the person to focus on the essential aspects of running his or her venture. In other words, only by protecting an income will a self-employed individual be able to become successful.
Phil Cord is a freelance content writer. He loves exploring new solutions and their impact on business. Currently, he works with a group of specialists fascinated by the broadly understood subject of work. Their areas of interest include topics related to the future of work, offices, technology in the workplace, HR specialists’ competencies, health, communication and a wise combination of professional and private life.