Paying Yourself: 5 Tips for Managing Self-Employment Income

According to the latest data, there are about 9.6 million self-employed workers in the United States.

Thanks to the gig economy, anyone can be their own boss! But with freedom comes challenges.

Especially when it comes to finances.

If you’re self-employed you have to read this article. We’re walking you through five easy tips to help you keep track of your self-employment income.

1. Take Advantage of Budgeting Tools

Setting a budget will help you keep track of your money. You’ll get to see how much you’re spending, how much you’re saving, and what you need to put back into your business.

You don’t have to be a spreadsheet wizard to keep track of your expenses and income. All you need is an Internet connection.

Budgeting tools like Mint are free and easy to use. Just set your financial goals, link your bank account, and you’re good to go.

2. Keep Track of Payments

Watching your bank account grow is rewarding. With that said, you may want to invest in a pay stub generator so you can keep a more accurate ledger.

Sites like The PayStubs are affordable and easy to use. Plus, having this info on hand will make tax time so much easier.

3. Learn About Self-Employment Taxes

Here’s something they don’t tell you about self-employment: Tax time is even worse than before. It might not seem as though that’s possible, but navigating self-employment tax codes and requirements is more confusing than filing a 1040 and sending it to the IRS.

Since a portion of your income doesn’t go toward taxes in a solo venture, you’ll want to get savvy about your new tax expectations.

For starters, keep track of everything. Having a pay stub as we mentioned earlier is a great start, but you’ll also want to hold onto receipts for anything and everything you buy for your business. Fortunately, you can write these off when it comes time to pay the piper.

We also suggest setting aside some of your paychecks for tax purposes. It’d be nice to have that extra money, sure, but having that money set aside can help you pay off your debt quickly.

4. Set Aside Savings

As freeing as self-employment is, it can also be quite scary. If you’re not generating leads and getting steady work, you’re not making money.

No matter what line of business you’re in, expect ebbs and flows.

Store a small part of each payment you receive in your savings account. Having a safety net to fall back on when things get tough can make the downtime much more manageable.

5. Invest in Your Business

When it comes to self-employment, you get what you give. If you’re not investing some of your income back into your business, it’s going to be next to impossible to grow.

Set a personal goal to set aside even 5% of your income back into your business.