Working in a self-employed capacity carries a wide range of benefits. You’re able to work on whatever projects you choose, and at the end of the day, you’re your own boss. However, it’s not all plain sailing – self-employed individuals are in many ways far more vulnerable than employees, especially in the construction industry.
While those working for bigger firms as employees will receive a paycheck every month, even if they fall ill or can’t work due to injury, if you’re self-employed, you’ve got to take care of yourself. If this is something you’ve been thinking about lately, then read on for some of our top tips on how to protect your self-employed income.
Managing your business
First of all, as a self-employed individual, you are your own business, and you need to recognise that you’ve got a whole range of responsibilities that need taking care of in addition to what you think of as ‘work’.
You need to find regular, reliable clients, manage your accounts and ensure that you’re on top of things when the tax year comes to a close, and ensure that you’re getting a steady source of money coming in throughout the year to cover your expenses and save for the future.
Part of protecting your income means setting aside time on a regular basis to make sure that you’re taking care of each of these aspects of your personal business – don’t wait until it’s too late and you have to stress to get on top of things again.
Try to diversify your income
We all know the saying don’t put your eggs in one basket, and this is highly relevant when it comes to ensuring a reliable income as a self-employed individual. Make sure that you’re not relying on one, single client for all of your work, no matter how good your relationship is. If they decide they can go elsewhere and get a better service for less, they very well might do that – you need to make sure that you’re not left in the dust if that happens.
If you are going to work on a big project for a single client over a prolonged period of time, as is often the case in the construction industry, then make sure that you’re legally covered. Have a contract that ensures that you’ll get paid, and make sure that you’re getting paid throughout the project, not as a single lump sum at the end. Long before the project ends, make sure that you’re putting yourself out there for more work, so that you’ve got something good lined up when you’re available for work again.
Develop an emergency savings fund
Things will go wrong, and it’s important to have a rainy day fund. Whether your tools get stolen or break, or your car decides to stop working one day, there are a whole host of scenarios where it can be life-changing to have a little fund put away to deal with emergencies immediately, ensuring that you’re able to get back to work as soon as possible.
It’s important to have insurance policies in place as well, but these can often take a while to pay out. In the meantime, you want to be able to get back on your feet as soon as possible, without having to stress about if and when you’ll be able to rely on the insurance provider sending you your cheque.
Make sure you’ve got good insurance
Your self-employed income is almost always dependent on you showing up for work each day. If you’re ill or get injured and can’t go to work, then without any other protection mechanisms in place, you simply won’t get paid.
Worksites can be dangerous places, and workplace injuries aren’t as uncommon as we’d like them to be. As a result, you need to make sure that you have a good accident and sickness insurance policy, and any other policies that you might need such as liability insurance and health insurance.
Retirement plan
We don’t just need money when we’re working – we also need a steady stream coming in to enjoy our retirement. If you work for an employer, they have a legal responsibility for setting up a retirement plan. If you’re self-employed, however, you’re going to need to take care of that yourself, or you’ll have to rely on a pretty small state pension.
There are a number of ways of doing this, and it’s important to do your research into which option is most suitable for your personal circumstances. Depending on your pension plan, you can either be paid a regular sum each month or you can choose to pull out the whole amount in one single lump sum.
Keep your skills up to date
As you’ll know, the current job market is incredibly competitive, and to protect your income in the long term, you need to make sure that you’re constantly updating your skills. Potential clients will want to receive the best service possible, and you need to be able to provide them with that.
Go to trade shows, take courses on how to adopt emerging technologies, and keep in contact with other peers in your industry to see what techniques and tools they’re adopting. See any expenses related to learning as an investment – they may be expensive, but they’re sure they pay for themself in the long run.
Don’t forget to about marketing your services
Finally, if you’re self-employed, you won’t get work unless you find it. Even if you rely on word-of-mouth marketing, it’s important to be aware that this can dry up, and to have some sources in mind where you’ll look for new work. Whether that means making some flyers or a strong social media account, marketing will play a central role in securing your self-employed income.
While all of the tips listed above might seem a bit overwhelming, these aren’t something you need to take care of in a single week, they’re an ongoing process that you’ll have to stay on top of as time goes on. By putting aside just a few minutes a week to make sure that you have the above systems in place, you can ensure that you’re taking the necessary steps to protect your income in the long term.