Statistics are still in favor of men. Women entrepreneurs only make 55% of what men do, and when it comes to startup sales numbers, their businesses only have 11% of that share.
There are few safety nets for entrepreneurs as compared with your conventional employee. Below are 5 things that women business owners need to make sure they are doing to take care of themselves financially:
1. Health Insurance. This really is a dealbreaker. If you can’t afford monthly health insurance, then you shouldn’t go into business. Otherwise, having any kind of serious illness or accident could result in hospital bills that will bankrupt your family. It just isn’t worth the risk. You can shop around on Google for high-deductible, low monthly payment policies that will cover major disasters like emergency surgery or car accidents. Your local Chamber of Commerce will also be able to point you towards affordable plans. The worst case scenario is that you hold out until 2013 – that’s when President Obama's Affordable Care Act will become active, making healthcare more affordable for entrepreneurs.
2. Plan For Retirement. Save, save, save should be your mantra. I know it’s tempting to dip into your 401(k) when you start your business, but it’s better to borrow money in this case. Because once your retirement funds are gone, you can’t replenish them through borrowing. You may want to think about opening a SEP-IRA which will let you save huge chunks of money and is tax-deferred. If you’re unsure about your options, consulting a CPA should give you a good idea as to what your best move will be.
3. Be Wise When You Borrow. I shouldn’t need to say that you should shop around for the lowest interest rates…that’s a given. But other options besides credit cards and taking out a second mortgage is getting a Small Business Administration (SBA) loan from the bank (they gave $30 billion in loans last year.). Also, the White House has formed the Startup America initiative, which has programs designed to help entrepreneurs obtain loans and find business mentors.
4. Pay Taxes Each Quarter. More than likely, companies that pay you won’t withhold for taxes, so to avoid a hefty payment at the end of the fiscal year, it’s best to pay them quarterly. Luckily, as a self-employed entrepreneur, you can also deduct a load of expenses. Here’s what you can deduct: “half the Social Security and Medicare taxes, all of your health insurance premiums, business travel expenses, office supplies and equipment, and (sometimes) home office expenses.” It’s a pretty hefty list. [source]
5. Hire a CPA. This will save you from drowning in mountains of paperwork that you will never understand. The only way to find one is to call around and see which CPA has the skill set that matches your needs. You can also check the National Society of Accountants and American Institute of CPAs, which are online directories that will help you find the right person. Another resource is the Accreditation Council for Accountancy and Taxation – they provide a list of questions that help you start this process.
What do you think of this list? Is there anything else I should include? Leave us a comment!