If you are a contractor or have a side hustle outside of a traditional job, there are some financial considerations you need to consider.
The first major point is taxes. If you work for yourself, then you have to pay your own taxes. Taxes will not be taken out for you. A good rule is to save 35% of what you make towards taxes. Also, set up quarterly payments for taxes. This will ensure you are paying the IRS what you owe and won’t have a huge bill to pay around tax season.
The second point is retirement. When you work for an employer, your retirement account is pretty much handled for yourself. This is not the case. You have to decide which account you want, figure out how much you want to save, and manage that. There are a lot of great online resources for this.
Finally, health insurance is the last consideration. Like retirement, most employers handle health insurance, and the cost of it is paid by them and you. Again, you will need to do research on what plan is best and the total cost of this.
Being a contractor or having a side hustle can be great, but make sure you understand these implications to set yourself up for success!
