Money
The self-employed Gen X money checklist
Self-employment turns four things into your job that an employer used to do: paying tax quarterly, saving for retirement, keeping business money separate and keeping records. Do those four and most of the stress disappears. The retirement piece is the big one: a Solo 401(k) or SEP IRA lets you put away far more than an employee can.
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The quarterly rhythm
Set aside a fixed percentage of every payment (25 to 30% is a common starting point) into a separate savings account the day it arrives. Pay the estimate from that account each quarter. The money was never yours to spend; treating it that way removes the April problem.
If you are behind
The self-employed make up a large share of people with unfiled years, usually because one hard year became three. The way back is the same for everyone: transcripts, file the missing years, then deal with the balance. What actually happens, year by year.
Questions people ask
- Should I form an LLC or S corp?
- An LLC is about liability, not tax. An S corp election can reduce self-employment tax once profit is high enough to justify payroll and the extra filing. Ask a tax professional with your numbers; the answer depends on the profit.