Create Your Own Benefits Package When Self-Employed

When you own a business, you don’t have the luxury of benefits from “the man.” You need to create your own benefits package when self-employed.

Earlier this week, my buddy Glen at Free From Broke?shared an interesting article in the Wall Street Journal about the rise of benefits packages for freelancers. As a contract worker myself, I found the article rather interesting.

When you own a business, you lose the benefits that are often associated with working full-time for someone else. It’s one of the challenges of being self-employed.

This doesn’t mean that you have to accept a life without health insurance (well, you couldn’t now anyway, due to the ACA) or a retirement account. You can create your own benefits package when self-employed.

benefits package when self-employed

Purchasing Insurance

When you don’t get insurance through work, you might need to purchase it on your own. For years, I’ve had an insurance plan purchased through a third-party aggregator. The good news is that when you purchase health insurance as a self-employed person, you can deduct the cost on your taxes.

But that’s not your only choice. My husband’s shiny new job is going to offer us access to health benefits, and we will probably abandon our current plan for something new. If you are self-employed, but your partner works and you and any children you have can receive coverage, it might be cost-efficient to switch it up.

You might also do well by splitting up your coverage. You might be able to buy a low-cost plan to cover you, while your partner purchases a plan through work for him/herself and the kids. It can be a little time-consuming and tedious to run the numbers, but it will help you see what’s available to you as you choose your health insurance.

Don’t forget about other types of insurance. My bank offers a certain amount of free disability coverage, and for a small fee, I was able to get additional coverage. I feel better knowing that I have a backup if something happens and I am unable to work. You, too, can look into your options for disability coverage, including from a partner’s work, or from an independent insurance agent. You might be able to get coverage in a bundle with other policies to save a little on the premiums.

As a business, you might also need other types of protection. Many home business owners like to get professional liability insurance packages that protect them in the event of being sued as a result of what they do. You might also need umbrella coverage if you are concerned about high dollar lawsuits.

Insurance through professional organizations: You don’t have to rely on your partner’s employer, or try to find insurance on your own. As the Wall Street Journal article points out, many companies offer access to freelancer-tailored packages. You can access insurance through an organization like Freelancers Union, or find out about coverage through other professional organizations related to your line of work.

There are professional organizations for a variety of business specialities, whether you are a lawyer, doctor, or selling items from an ecommerce store. Research the possibilities, and consider whether joining a professional organization might provide you with access to affordable insurance coverage.

self-employed retirement

Saving for Retirement

When creating your benefits package when self-employed, don’t forget about retirement. Too many entrepreneurs neglect this aspect of financial wellbeing.

The good news is that you don’t need “the man” to help you save for retirement. While it’s too bad that you won’t have the chance at a matching contribution from someone else, you can still put together a retirement nest egg.

Opening an IRA is the easiest thing you can do to start saving for retirement as a self-employed person. (I prefer Betterment for my IRA.) But there are other options as well. Look into SEP and SIMPLE IRAs, and solo 401(k)s. In some cases, depending on how your plan is structured, and the situation with any employees you might have (or plan to have), you might actually be able to create your own own matching contribution from your business.

Investigate the ins and outs of these plans, and figure out what might work best for you. You might be surprised at all of your options when it comes to putting together your retirement plan as an entrepreneur.

Other Features of Your Benefits Package When Self-Employed

Don’t forget to build in other features when building your benefits package! Health accounts, vacation, and other items should be considered as you plan your home business.

I’m a huge fan of the HSA, and my account perfectly complements my high-deductible health plan. It’s another tax deduction, and it provides another cool opportunity for my retirement savings (I plan to use the money for retirement health care costs).

Vacation is another biggie. Too often, solopreneurs and other home business owners work, work, work — and forget to play. You need to build vacation into your schedule so you don’t end up with burnout. Vacations can be good for you, and you should plan them into your business model.

self-employed benefits package

I plan to go camping two or three times during the summer, and that includes ditching computer access. I also attend a couple of blogging conferences to get away from the “regular” routine and so that I can connect with other like-minded individuals. And, of course, I go on spring break with my son.

While a vacation might not exactly be “paid,” I can work ahead so that I can relax more, and so that my income doesn’t suffer while I?enjoy my “time off.” It’s not always fun to include this in your benefits package, since it usually requires a little more shuffling about, but it is nevertheless an important part of your benefits package.

You can also find out about getting help with childcare. Depending on your income level, there is a dependent childcare tax credit that you can claim. It’s not exactly daycare at the office, but it can still help you find some sanity a few hours a week, and it’s a tax break that can help you better afford it.

Bottom Line

Creating a benefits package when self-employed takes a bit of work, and it’ll be piecemeal. But it is doable. Once you have your benefits package together, you’ll have a little more peace of mind.

What goes into your self-employed benefits package?

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