5 financial moves to make to help you thrive as a solo-entrepreneur

by | Jul 5, 2023

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Being a solo-entrepreneur or self-employed individual can be challenging in a number of ways. And often, one of the biggest challenges is managing your finances and ensuring that you have enough money to sustain your business and yourself. These five financial moves can help you not only survive as a solo-entrepreneur or freelancer, but thrive.


1. Separate your personal and business finances

One of the first moves you should make as a solo-entrepreneur is to open a separate business bank account. By doing so, you can keep your business finances separate from your personal finances, making it easier to track expenses and budget. Plus, having a separate bank account can help you establish your business’s credit score, which can come in handy down the road.


2. Know your worth

It can be hard to know how much to charge when you start freelancing. Start by identifying your long-term goals, such as quitting your full-time job or being able to work fewer hours. This can give you something to work towards and help you make informed financial decisions.

When determining your rate, a good starting point is to divide your desired annual salary by 2,000 (or less if you want more time off—2,000 is the number of hours in a 40-hour-a-week job with two weeks off a year).

Make sure to take into account taxes, out-of-pocket benefits, time for admin, and networking (these are working hours that you won’t bill for). You’ll also want to consider intangibles such as how in demand your services are and how much value you are bringing to your client.

Learn more about setting your rates in We Are Rosie’s 7 step guide to launching your career as a marketing consultant.


3. Invest in yourself

One of the best financial moves you can make as a solo-entrepreneur is investing in yourself. This can come in many forms, such as taking courses to improve your skills, attending industry events to network, or hiring a business coach to help you navigate challenges. While these investments may cost money upfront, they can pay off in the long run by helping you grow your business and increase your earning potential.


4. Save for taxes

As a self-employed individual, you’re responsible for paying both income tax and self-employment tax on a quarterly basis. This means that you’ll need to set aside some money to pay these taxes later on. Depending on the state you work in, this can range from 25 to 45% of your income. Consider opening a separate bank account just for taxes and move money into it regularly to ensure that you have enough money saved up.



5. Build an emergency fund

Having an emergency fund is crucial for anyone, but it’s especially important for solo-entrepreneurs who don’t have the security of a steady paycheck. Aim to save up at least three to six months’ worth of living expenses in an emergency fund. This can help you weather unexpected expenses or a slow period in your business.

Being a solo-entrepreneur can be a rewarding and fulfilling experience, but it’s important to take your finances seriously in order to succeed. By following these financial moves, you can set yourself up for success and ensure that you have the financial stability to thrive as a self-employed individual.

Remember to separate your personal and business finances, save for taxes, set financial goals, invest in yourself, and build an emergency fund. Here’s to your financial success as a solo-entrepreneur!

Written by Angie Moody
Angie is the the founder and CEO of Ruby Money , a year round tax app that helps the self-employed stress less and profit more. She has her MBA from Stanford University and previously held executive roles at Visa, Instagram and Capital One. A southerner at heart, Angie was raised in New Orleans and currently lives in Charleston, SC with her husband and two daughters.

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