As a sole proprietor of your business, you get to enjoy flexible hours, creative control, and high job satisfaction. You should also enjoy workplace benefits. Here are a few benefits that you should be providing yourself with as sole proprietor.
Shop Around for Health Coverage
Everyone needs health insurance. If you are self-employed and not established as an LLC, and if you are the only employee in your business, you will have to find an affordable personal or family healthcare plan. Compare rates with insurance brokers and state-run plans and choose the one that best meets your needs. The best news is that your health insurance costs can be deducted from your annual tax return. If you have regular employees as part of your sole proprietorship, you might be able to find reduced rates on a group plan. However, you will only be eligible for a group plan if your employees fall under the IRS common law rules that define a worker as an employee versus a contractor.
Open a Self-Employed Retirement Account
There are basically two types of tax-advantaged retirement plans for sole proprietors. You can choose from an individual 401(k) and a SEP-IRA. SEP-IRA’s offer simple administration and high annual contribution limits. A SEP-IRA lets self-employed people contribute up to 20% of net profits. Personal contributions are made before taxes, and matching contributions from the business are tax deductible. An individual 401(k) is your best option if you need greater flexibility and you think you might need to borrow from the plan at a future date.
Give Yourself Time Off
When the entire business falls on your shoulders, it is easy to over-work yourself. But even sole proprietors need some time off now and then, whether you are sick or need a little R&R. When you set your budget, don’t hold yourself to a 52-week work year. Plan vacation and sick time into your budget by scheduling for a 48-week work year. Since you won’t technically get any paid time off, plan for your time off. Save some money each month to accommodate for lost revenue, spend time getting ahead before a planned vacation, and automate business as much as possible so that your company will still perform critical functions while you are away.
Just because you are the sole proprietor of your business doesn’t mean you shouldn’t enjoy some of the benefits of a more traditional job. In addition to these ideas, make certain that you understand what expenditures count as business expenses and can be deducted from your tax return. You don’t want to miss out on the benefits that you already qualify for.
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