Are You “Trying” Out Self Employment?
If you’ve recently been laid off and are considering “trying out” self-employment for a few months, you might be in the early stages of testing the entrepreneurial waters. And if that’s the case, keeping your business infrastructure light is usually perfectly fine.
But even in the early phases, it’s important to set a solid foundation. Here’s what you should consider doing:
1. Separate Your Personal and Business Expenses
Be super clear and intentional about keeping your personal and business finances separate. This will help you stay organized and avoid any confusion when it comes time to file taxes.
2. Set Up a Dedicated Business Email Address
Create an email address that’s exclusively for business communications. It doesn’t have to be anything fancy—something like yourbusinessname@gmail.com works just fine for now.
3. Open a Separate Business Bank Account
Open a separate bank account for your business. It can be under your name, or you can file a DBA (Doing Business As) and use that name for the account. This is crucial for maintaining clean records. Deposit all earnings and pay all business-related bills from this account. If you’re loaning money from your personal account to the business, make sure you clearly transfer the funds into the business account.
4. Designate a Personal Credit Card for Business Expenses
If possible, designate one personal credit card exclusively for business expenses, or consider setting up a new credit card just for your business.
5. Get an EIN (Employer Identification Number)
Even if you don’t have employees, an EIN is a smart idea—it helps you avoid using your Social Security Number (SSN) for business transactions. Best of all, you can get an EIN for free from the IRS.
6. Register Your Business Locally (If Required)
Check if your city or local government requires you to register your business. It’s always good to ensure that you’re in compliance with local regulations.
7. Talk to Your Tax Accountant
Let your tax accountant know that you’re now self-employed. They can provide tips that are specific to your situation and make sure you’re on the right track.
8. If You Have Assets to Protect, Consider Legal Protections
If your client or customer doesn’t provide an independent contractor agreement, it’s essential to get a robust agreement in place for yourself. You may also want to consider liability insurance—either general or professional—to specifically cover your business activities.
9. When to Formalize Your Business
Once you’re confident that self-employment is for you, you can start thinking about formalizing your business—naming it, incorporating it, and setting up more structured systems. Until then, this foundation will be everything you need to easily transition to an LLC or S-Corp later on.
However, if your “self-employed” experiment only leads to one project or a few side hustle sales before you go back to a traditional W-2 job, you won’t be stuck unwinding a formal business for 18-24 months.
About the Author
Meredith Fennessy Witts,
Founder & Strategic Growth Advisor at Le Chéile
and Co-Host of Agency Darlings
With a background in financial and operational consulting and a successful track record of founding and scaling her own agency, Meredith brings deep expertise in strategic growth for indie creative and digital agencies.
Her company, Le Chéile, helps agencies scaling toward and beyond 1M+ in revenue to rightsize teams and payroll, increase founder pay, scale offers and packages and more. She helps clients to achieve their goals while clarifying their business strategy and finances.
She is a trusted authority on building mindful, profitable businesses—especially for underserved founders in the women, LGBTQ+, and BIPOC communities.
