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Are You Your Own Boss? Here Are 5 Money Tips to Remember

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Being your own boss means you tend to have more flexibility: You could set your own hours, decide when you’ll take time off and may even get to choose where you’ll work from.

But working for yourself can have its own set of challenges as well. When you work for a company, a lot of details are usually taken care of for you, like schedules, payroll, business expenses, insurance and retirement savings.

However, being your own boss usually means that you’ll have to pick up these responsibilities yourself. In other words, you may have a lot more “stuff” to keep track of besides just getting the client work done.

But striking out on your own to do what you love doesn’t necessarily have to create more headaches – especially on the money management front. As with other areas in life, staying organized and planning are keys to success.

Whether you’re new to the self-employment world or a veteran, we want to share a few tips that could help you manage your money effectively and keep you moving towards your financial goals, like a boss.

1. Track your cash flow

Salaried employees usually have pretty predictable paychecks – in that you generally know how much you’ll receive each pay period.

But self-employed work can be a little more variable. Business tends to ebb and flow based on your clients’ needs and the time of year.

Depending on the industry you work in, certain months may be busier than others, which means that your income could vary month to month. For many, this is a big change from having a fixed salary and could take some time to get used to.


One way to get a clear picture of your self-employment cash flow is to have a separate bank account(s) for your business.


To help get a handle on your self-employment income, it’s important to track your cash flow. Knowing how much is coming in (and going out) each month can not only help you maintain your business budget (more on this later), but it also allows you to see how your income fluctuates throughout the year.

For instance, are some months busier than others? This kind of perspective could also help you plan for the year ahead.

One way to get a clear picture of your self-employment cash flow is to have a separate bank account(s) for your business work. That way, your business income and expenses aren’t mixed in with your personal expenses.

Having a bank account dedicated to your freelance work may also be helpful when tax season rolls around and you need to report details like your income and business expenses.

2. Set up a self-employment budget 

Self-employment comes with certain expenses that you should be aware of. Knowing what kind of extra expenses you may have to account for while you’re self-employed allows you to create a budget that provides an accurate, comprehensive look at your total monthly income and expenses.

This financial picture helps you see how much income you’d need to bring in each month to cover your bills – plus how much you could set aside for any financial goals you may have.

Basically, a self-employment budget can help you better understand the cost of doing business and determine how much to charge your clients to cover that cost.

Reaching your goal starts with saving for it.

As we mentioned earlier, when you work for a company, the human resources department typically takes care of your benefits and payroll.

You generally don’t have to worry about setting up your own retirement and health care insurance plans, and the money to cover those expenses is usually automatically deducted from your paychecks.

Your employer also typically withholds income taxes from your pay and sends the tax payments to the IRS for you.

When you work for yourself, you have to manage these expenses in your self–employment budget. How much would it cost to purchase your own health care insurance? How much do you want to contribute to your retirement plan? These are the costs you’re likely going to have to consider and allocate for each month.

And when you receive payments for your client work, you’ll want to get into the habit of setting aside a portion of your pay for quarterly estimated tax payments because remember, you no longer have an employer withholding and paying taxes for you.

Paying estimated taxes takes a little more work, but don’t worry, we’ve unpacked some of the basics for you here.

Health care, retirement and income taxes are just some of the expenses you have to account for in your budget. Depending on the type of work you do, you may also need to factor in other work–related expenses such as supplies, equipment and travel.

3. Consider getting a professional to help with your taxes

Taxes can be a complicated matter when you’re your own boss. There are a lot of self-employment tax rules to be aware of regarding what you can and cannot do. (Not to mention all the forms!)


A tax professional could help you better understand your new tax obligations and answer any questions you might have about your particular situation.


Given that self-employment can come with some new tax considerations, it may be worthwhile to hire a tax professional to help you with your taxes, especially if you’ve just started working for yourself. There are a lot of details to navigate – like estimated tax payments and which self-employment deductions you’re eligible to claim.

4. Continue to save for retirement

If you participated in your company’s workplace retirement plan (e.g., 401(k)), it was probably a pretty straightforward process. Typically, during each pay period your employer would deduct a certain amount, specified by you, from your paycheck and put it into your 401(k) account.

Even though you may not be able to contribute to your workplace 401(k) once you leave the company, you can still save for retirement by opening up your own retirement account(s).

An IRA is a common example of a personal retirement account that you could sock away money in for your golden years.

Other retirement plan options for self-employed people that you may also want to consider include:

  • Simplified Employee Pension or SEP Plan 
  • Solo 401(k)

Different retirement plans have their own contribution and deduction limits, which are subject to change each year. For example, for 2023, the total contributions you could make to all of your traditional and Roth IRAs can't be more than $6,500 (or $7,500 if you're age 50 or older). For 2022, the limit is $6,000 (or $7,000 if you're age 50 or older).

The 2023 contribution limit for a SEP Plan is $66,000 ($61,000 for 2022) or 25% of compensation, whichever is lesser. The difference is no chump change!

Keep in mind, too, that contributions to a self-employed retirement plan may be deductible, so check in with the IRS webpage here for the most up–to–date information on contribution limits or consult a tax professional.

5. Plan for ups and downs by building an emergency cash reserve

People who have been in the self-employment business for a while know that the availability of work can fluctuate. On top of this, even if you do have enough business for a set period, you may still have to contend with late payments or non-payments from your client(s).

In short, your flow of income can be quite unpredictable. That’s why in addition to tracking your income, it’s important to plan for these ups and downs by building an emergency cash reserve.

Having emergency cash on hand can help you cover essential expenses if you find yourself in a slower work period.

Even though the general rule of thumb suggests saving enough to cover three to six months of your essential expenses, you may want to consider stashing away a little more given the inherently unpredictable nature of self-employment work. Having a bigger reserve may also help you feel more financially secure.

For those who have been self-employed for a while, consider reviewing your flow of income and expenses from previous years. This historical perspective could help you settle on a savings target for your emergency fund.

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Parting thoughts

Working for yourself can be rewarding. One, you usually have more of a say in how, where and when you work. Two, you get to work on projects you care about.

Now you might have to get used to your income fluctuating month to month, but there are proactive steps you could take to boost your sense of financial stability.

Tracking your income, setting up a business budget and continuing to save are just a few ways to help you manage your money and stay on course towards your financial goals. Hey, think of this as being a good boss to yourself!

This article is for informational purposes only and is not a substitute for individualized professional tax advice. Individuals should consult their own tax advisor for matters specific to their own taxes. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendations in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements of any information contained in this document and any liability therefore is expressly disclaimed.