Factors To Consider Before Launching A Business
Amid the “Great Resignation,” many people continue to relish the idea of being their own boss. While autonomy and flexibility can be alluring, there are also important financial considerations.
Here are five things to contemplate before hanging out your shingle.
The economics and business expenses
While setting out on your own can be rewarding money-wise, it can also be a financially risky move. Consider whether you can afford to give up a regular paycheck and if you can stomach the uncertainty.
Pick a team of advisors
You’ll want to assemble a team of professionals including a certified public accountant, an investment advisor, insurance specialists, and an attorney who can review contracts and offer advice on other business-related matters.
Determine your structure
How you set up shop depends largely on factors such as your anticipated income, your expenses, and the desired liability protection. Your team of advisors will be helpful here.
Investigate insurance options
There are many different types of insurance you may need as a business owner, some of which will be business-dependent. Coverages could include health, life, disability, business liability, and malpractice insurance. To get a sense of what you’ll need, determine what coverages you are losing by leaving your salaried job, many employers provide some level of disability insurance, for example.
For health insurance, consider your options under a spouse’s policy, if available, or COBRA, which helps start-ups with health insurance. Then compare the options on www.healthcare.gov, the government’s marketplace for individual health care plans, or contact an Insurance agent for help. At RCB & Associates, we will do a cost comparison of plans and get other important details such as deductible information and which plans cover your current medical professionals for our clients, free of charge. This expertise is invaluable as you weigh your options.
Craft a retirement savings roadmap
Many self-employed workers are not saving consistently for retirement, and this can have negative consequences for their ability to retire comfortably, if at all. To save for retirement, business owners can choose from several tax-advantaged options. These include a Roth or traditional individual retirement account, a SEP IRA, or a solo 401(k).
Your team of advisors will guide you to which one is right for you will depend on factors such as your age, your income, and how much you can afford to save. Make sure you understand the contribution limits as well as the pros and cons of each type of plan.
