5 tips to survive self-employment

Taskrabbit tasker consults resident on the placement of frames while hanging picture frames in the baby's room.
Thai-can “Paul” Nguyen, right, Taskrabbit tasker, consults with San Francisco resident Lauren Fraser on the placement of pictures on the walls of her baby’s room in 2016.
(Lea Suzuki / San Francisco Chronicle)

Striking out on your own? You’re not alone. Hundreds of thousands of workers are leaving their jobs and opting to work for themselves. But if this is your first experiment with working for yourself, you may need a few tips to survive self-employment.

Why? The human resources department that used to handle complex things like withholding, FICA taxes and health insurance is now gone — replaced by you. Moreover, safety nets that employees take for granted — unemployment and disability insurance, for example — are largely unavailable when you’re self-employed. And forget about regular paychecks. Even if you find regular work, clients don’t always pay promptly. Sometimes they don’t pay at all.

Of course the benefits of self-employment — flexibility, independence and greater income potential — are well worth the challenges. But a brief guide can help you sidestep some of the most vexing problems. These five tips can help you survive — and thrive — in self-employment.


1. Know your options

Most people don’t quit a full-time job until they have a client or two ready to hire them. However, nothing about self-employment is certain. So, it’s helpful to know that copious online job sites can help you find new clients, if and when you need them.

And it’s not a bad idea to sign up with these sites — and ideally, accept a few gigs — long before you run out of work. That’s because many sites promote your profile after you have successfully completed work there. And the more work you’ve done, the more likely the site is to give you a marketing push.

To be sure, adding gigs to an already-full schedule could make your first months of self-employment overwhelmingly busy. But there are worse ways to launch your own business. And working extra at the start will also help with another of the key tips to survive self-employment — boosting your emergency fund. (More on that later.)

Good job sites

What job sites should you use? That depends on what you do. For professionals, the best job platforms specialize in just a few work categories. For instance, staffing giant Robert Half specializes in finance, accounting, law and healthcare. SMA Inc. offers copious opportunities for engineers and project managers. For those looking for jobs in tech, Braintrust and Catalant are good choices. And WorkingNotWorking and Creatively are great options for those looking for marketing, design and film gigs.

However, broader job platforms, such as Fiverr and TaskRabbit, are often better choices for people looking for project work in fields including writing and human resources. Fiverr largely specializes in remote work, so it’s a great place to offer resume writing, translation services or nutrition consulting, for instance.

TaskRabbit, on the other hand, largely focuses on in-person work in a number of vocations such as personal shopping, building furniture and hanging pictures. Both sites allow freelancers to set their own rates and determine the nature of the services they offer.


2. Get covered

If you can’t piggyback on a traditionally employed spouse’s health plan, you’ll need to buy health coverage. Yes, it’s expensive. But it’s less expensive than trying to pay an unexpected hospital bill by yourself.

Losing health insurance as a result of a job loss is generally a “qualifying event” that allows you to buy coverage through state and federal health exchanges at any time of the year. (Normally, you must wait for open enrollment periods.) And, if your family income is below certain levels, your health insurance premiums are discounted.

If you prefer to earn money through creative pursuits, there are plenty of websites that can connect you with acting, photography, fashion and other gigs.

Dec. 5, 2021

Notably, a company called Stride Health can help streamline the search process. Stride uses artificial intelligence to match workers with affordable insurance coverage in their states. It also provides information about the discounts you can receive through the Affordable Care Act.

3. Build emergency savings

None of the tips to survive self-employment are quite as important as building emergency savings. Why? None of the safety nets that you had when you were employed extend to self-employed individuals. Vacation time? Nope. Sick leave? Forget it. Unemployment insurance? Only during the pandemic, by the grace of emergency legislation.

Moreover, many freelance and self-employed workers say that work comes in waves of “feast or famine.” When you have slow periods — or slow-paying clients — emergency savings keep food on the table.

Indeed, your emergency fund is your primary safety net when you’re self-employed. So, an amount of emergency savings that seemed reasonable when you were an employee is likely to be inadequate now. How much you need will depend on your family circumstances. However, it’s smart to have at least six months of living expenses in emergency savings. And saving more never hurts.


4. Execute contracts and invoices

Most clients are honorable and can be trusted to make good on verbal contracts. Some are not. You are well-advised to set up structures that accommodate both. A simple contract that spells out the nature and scope of the job, the deadlines and payment terms can help avoid misunderstandings and enforce your rights, when necessary.

It’s also not a bad idea to put in cancellation clauses that protect you if a client changes their mind about a job halfway through.

Keep your contract terms, including when payments are due, clear. And send invoices on a predictable schedule to help you and your clients budget.

5. Remember taxes

Newly self-employed individuals often forget that no one is withholding taxes out of their paychecks. That can result in you owing taxes and penalties when you file your return.

Also, when you’re self-employed, you pay both the employee and employer contributions to the Social Security and Medicare systems. This can increase your tax burden dramatically.

As a business owner, you also have access to far more deductions and credits than an ordinary wage earner. And the taxes you pay are only on your businesses’ net profit — earnings after all those expenses are deducted.


Some things self-employed individuals can deduct that wage earners cannot: health insurance premiums for you and your family; office equipment, and, potentially, all of the expenses related to running your home office; work travel; subscriptions and dues; marketing costs; and more.

However, allowable deductions for business owners often hinge on facts and circumstances. This is one area where it’s always wise to hire a professional to ensure you get all the deductions and credits you’re due. The good news? Tax preparation fees are also deductible.

Kristof is the editor of, an independent website that reviews moneymaking opportunities in the gig economy.