7 Frugal Tips For Sole Proprietors

frugal tips sole proprietors save money solopreneurs

Most working people start thinking at a certain point in their careers about going their own way. As you may conclude from the ratio of business owners and employees, only a small portion of them actually make this pivotal decision. 

If you’re at the crossroads where your career of a company employee and that of a business owner intersect, take some time to read this article. It will teach you how to work as a sole proprietor or solopreneur in a frugal and lucrative manner. Also, you’ll learn how to avoid debts and pay your taxes in line with regulations. 

1) Know Your Rights 

When you’re a sole proprietor, your business assets and your personal assets are separated. This can be both beneficial and dangerous for the business owner. 

On the one hand, if your solopreneur venture takes off successfully and you maintain a steady workflow, you’ll be more than happy with this type of registered business. You won’t have to specify how you spend your money as long as you pay your taxes on time and your business account has enough assets. 

On the other hand, sole traders who don’t manage to ensure enough assets for business operations will have to make up for losses with their private assets. In other words, you might have to sell your house in case you get in serious debt. 

That’s why this kind of enterprise is a double-edged sword. Our two cents: it might not be the best choice for inexperienced entrepreneurs. 

2) Invest In Technical Equipment 

Frugality doesn’t only refer to the ability to save money. Wise and far-sighted business owners will invest more at the beginning if they realize that such an investment will yield more benefits in the long term. 

Therefore, sole proprietors should spend a few dollars more when it comes to technical equipment. Some entrepreneurs will have to invest thousands of dollars, while others will make it with a restricted budget, as well. For instance, a software developer working on their own will need to get more expensive computer configuration to be competitive in their niche. The same goes for web designers, photographers, and other professionals relying on high-tech equipment. 

On the other hand, a content writer or accountant working alone won’t have to spend more than a few hundred dollars on their computer and other related devices. 

No matter what category you belong to as a solopreneur, get a proper computer, smartphone, and other devices that will ensure smooth and fast work, generating more assets per unit of time. 

3) Learn Your Deductions 

Paying taxes is a must, no matter what country in the world you live in. Some governments are stricter about taxation, like the USA, while others implement various strategies that enable business owners to pay taxes in a more relaxed way, such as the UK. 

If a rule of thumb is to pay your due taxes – and social security contributions – it goes without saying that you need to learn more about deductions you’re entitled to. As a sole proprietor, you have the right to deductions for work-related mileage/fuel, home office, and other useful deductions. Wherever you live, visit the local tax administration and check how to get those tax benefits. 

4) Go For Co-Working Space 

If you’re planning to rent an office space, please, think twice before you do that. Unless you need storage space or you have absolutely no conditions to work from home, renting an office is a waste of money. 

Even if you don’t have a separate room that could be your home office, go for a place in a co-working space. It’s much cheaper and you don’t have to bother with overhead expenses. The renter of that space will take care of those things. Your task is just to focus on your work tasks. 

In line with that, getting a powerful laptop is a more practical option than a desktop computer. 

On the other hand, some professionals might be able to use some of the existing computers at that coworking space. Think about that option if you don’t need a strong machine and save several hundred dollars. 

5) Avoid Hiring At The Beginning 

People often aren’t sure whether sole traders have the right to hire employees. The answer is: yes, they have. Of course, they need to cover their health care and social insurance contributions, in addition to their salaries. 

When you put all that on paper, you’ll see that you might be giving someone a large share of your income, especially when you don’t have too many projects. 

That’s why it’s recommended to work alone until you form a sufficient budget for hiring. To cut a long story short, accept only projects that you can complete on your own but make plans for recruitment. Along with that, form a fund for hiring so that you’re ready when you decide to make that move. 

6) Calculate The Necessary Income 

When you’re a company worker, there’s a huge mechanism of different project managers, HR- specialists, and team leaders who decide on projects, tasks, and their distribution. 

As a sole trader, you might end up working ten or more hours a day just to make ends meet. 

That’s why it’s important to calculate your necessary payment and savings. Take into account all the business costs you need to cover and make a rough estimate of your living expenses, as well. Once you’ve calculated the desired sum, divide it with the number of working days of the month. Now you’ll get the gross amount of money you need to make per day. All this input data will serve as the basis for the rates at which you’re going to charge for your services. 

7) Advertise Yourself For Free 

If you want to keep new projects coming, you must spread the word about your business. If you used to be a company worker, you might have a plentitude of connections. Contact business owners who you’re collaborated with and tell them that you work alone now. Also, register to social media and advertise your business there. Write blog posts related to your work experience and current services. If you don’t have time for that, hire content writers to do it on a part-time basis. 

Moreover, make your website speak for your business, as suggested by designers from a digital agency in Houston. Keep the on-site content simple but share all the relevant information about your venture to generate leads and new consumers. 

Be Smart And Save As A Sole Proprietor Or Solopreneur

Sole proprietors are lone wolves in the exciting but brutal business race in today's market. However, solopreneurs can skyrocket their enterprises if they keep costs low and properly charge for their services. Our solopreneur tips will help you reach that goal and manage your assets in a frugal and responsible base. As a result, you’ll be able to run a growing and prosperous sole proprietorship. 

Liam Collins is a tech pundit and Web enthusiast working at TuiSpace.com. He spends most of his time reading and writing about the current affairs in the world of information technology. When he isn’t working, he likes going for long bike rides and walks in nature.