Sole proprietors in the U.S. caught a huge break in April. The
Paycheck Protection Program, borne out of the economic hardship caused by the
COVID-19 pandemic, became available to solo entrepreneurs and independent
contractors on April 10, 2020.1
According
to a 2017 survey, 36% of U.S. workers are part of the gig economy.2 With so many sole proprietors contributing to
today’s economy, it stands to reason that the federal government would
recognize these contributions through the Coronavirus Aid, Relief and Economic
Security (CARES) Act’s small-business loans and unemployment insurance
provisions.
Retirement
planning can be difficult when you work for yourself, especially when it comes
to navigating the various retirement plan options. If you’d like help creating
a strategy for income in retirement, please give us a call. We’ll work with you
to craft a plan that is designed to match both your needs and business model.
One
of the silver linings of the recent crisis may be a greater focus on the needs
of independent workers. Following the lead of recent federal government
legislation, individual states are getting in on the act. California, New York
and Washington already offer paid family and medical leave benefit programs in
which the self-employed can participate. Meanwhile, Massachusetts, Connecticut,
Oregon and the District of Columbia also are working to establish family and
medical leave programs.3
Given
the recent rise in unemployment numbers, it would be no surprise to see more
people consider self-employment once the economy recovers. Many people don’t
like having to rely on government benefits to see them through hard times, but
recent experiences have shown that traditional employment may not always be
reliable either. However, there are a mountain of considerations when it comes
to becoming a full-time sole proprietor.
For
example, it takes a broader set of business skills. Not only do you provide the
product or service that you’re good at, but you also have to learn to manage
the administrative functions of your business, including accounting, marketing
and sales. Some of the sad truths of self-reliance are that there are often no
financial safety nets, you might work long hours — even if you are sick or
caring for a sick family member — and may not be able to enjoy vacations since
you are “on call” nearly 24/7, 365 days a year.4
There
are perks to being self-employed, however, such as the opportunity to earn
unlimited income. There are also tax deductions that self-employed individuals
may qualify for and potential household budget savings on things like
professional business clothes and commuting expenses.5
1 Elaine Pofeldt. CNBC. April 10, 2020.
“Paycheck Protection Program aid opens for sole proprietorships and independent
contractors.” https://www.cnbc.com/2020/04/10/paycheck-protection-program-opens-for-sole-proprietorships.html.
Accessed April 30, 2020.
2 Lisa Hogan. Bloomberg Law. Sept. 17, 2019.
“The Gig Economy Could Change How Employers Gear for Next Recession.” https://news.bloomberglaw.com/us-law-week/insight-the-gig-economy-could-change-how-employers-gear-for-next-recession.
Accessed April 30, 2020.
3 Michelle Andrews. Kaiser Health News. March
19, 2020. “Gig Economy Workers Hurt By Coronavirus Eye New Federal Funds For
Relief.” https://khn.org/news/gig-economy-workers-hurt-by-coronavirus-eye-new-federal-funds-for-relief/.
Accessed April 30, 2020.
4 Holly Johnson. The Simple Dollar. April 8,
2020. “Seven Truths About Self-Employment.” https://www.thesimpledollar.com/make-money/seven-truths-about-self-employment/.
Accessed April 30, 2020.
5 Greg Johnson. Dough Roller. Dec. 2, 2019. “11
Financial Benefits of Being Self-Employed.” https://www.doughroller.net/small-business/11-financial-benefits-self-employed/.
Accessed April 30, 2020.
Neither
our firm nor its agents or representatives may give tax advice. Be sure to
speak with a qualified professional about your unique situation.
We
are an independent firm helping individuals create retirement strategies using
a variety of insurance and investment products to custom suit their needs and
objectives. This material is intended to provide general information to help
you understand basic financial planning strategies and should not be construed
as financial or investment advice. All investments are subject to risk including
the potential loss of principal. No investment strategy can guarantee a profit
or protect against loss in periods of declining values.
The
information contained in this material is believed to be reliable, but accuracy
and completeness cannot be guaranteed; it is not intended to be used as the
sole basis for financial decisions. If you are unable to access any of the news
articles and sources through the links provided in this text, please contact us
to request a copy of the desired reference
Investment Advisory Services are offered by Imber Financial Group,
LLC., a Registered Investment Adviser firm. Insurance services are offered
through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber
Wealth Advisors, Inc. are affiliated companies
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