When you left your 9-5 job to start your own business, you probably said goodbye to your health coverage, retirement account, life insurance policy, and paid vacations. But, what if I told you that doesn’t have to be the case? With some careful financial planning, you can still have the benefits package you deserve!

7 Steps to Creating Your Own Benefits Package

Get Your Finances in Order

First things first! Make sure your personal finances and your business finances are in good order. You should have a strict budget in place for both your business and your personal expenses, as well as an emergency fund for each. And, what about your taxes? Planning for tax time should be a year-round priority. Bring in a professional outsourced accounting service like TempCFO services to help you plan for tax time so you’re not blindsided with a huge tax bill at the end of the year.

Purchase Individual Health Coverage

Health insurance coverage is a necessity, and it needs to be at the top of your priority list. If your spouse has group benefits, you can sign up under their plan and you’re good to go. If not, it’s time to start shopping around. The good news is, there are programs in place to help you get coverage. If you have children, they may qualify for the Children’s Health Insurance Program or Medicaid. You may also qualify for government subsidies to help offset the cost. Another option is to purchase a plan with a high deductible. If you decide to go this route, you should set up a Health Savings Account that will allow you to use the money in the account, tax-free, to pay for a variety of qualified medical expenses.

Set Up a Health Savings Account (HSA)

If you decide to purchase a high-deductible health insurance policy to save money on your monthly premiums, you should set up a Health Savings Account to use along with it. Going this route can make good sense if you’re relatively young and in good health. Livelyme is a great resource for this.

Contributions made to an HSA are tax-deductible and they can be invested for potential growth or earn interest in your account. When you make a withdrawal to pay for a qualified medical expense, your contributions are tax-free. However, spending the money on non-qualified expenses will cost you a 20% tax penalty.

Buy a Term Life Insurance Policy

If you had life insurance through your employer, you most likely lost it when you left your 9-5 to start your own business. If you have dependents, you’re going to want a good life insurance policy so that you know your loved ones will be ok financially if anything ever happens to you. Thankfully, finding affordable life insurance is fairly easy and affordable, as long as you are in good health. When you start shopping around, look for coverage that’s about 10 times your yearly salary through one or more policies. While it’s true that you won’t personally reap the benefits from your policy, it should still be a priority in your financial plan so that your family and assets are protected.

Protect Yourself with Disability Insurance

Your disability insurance was probably canceled when you left your traditional job, too. Many self-employed folks don’t think of getting disability coverage, but it’s extremely important that you do so. In the event of a long-term disability from a serious illness or injury, the average loss of work is 2 ½ years. I’m sure I don’t need to tell you what a tragedy that would be without disability coverage. Don’t count on your health insurance for this type of coverage, either, because health insurance only pays a portion of your medical bills, not your living expenses. And don’t rely on Social Security either because it takes a year for that to kick in, and you only qualify if you’re completely disabled. A disability policy is crucial because it will pay you a percentage of your gross income, usually around 60 or 70%.

Contribute to a Tax-Advantage Retirement Account

This is another benefit you will need to provide for yourself when you become self-employed. Here are some options to consider:

A Traditional Individual Retirement Arrangement (IRA)– You are eligible if you have earned income and you are under the age of 70 ½. Contributions to your IRA are tax deductible, but if you take money out of your traditional IRA before you turn 59 ½, you will have to pay income tax on that money and you will be subject to a 10% penalty for early withdrawal.

A Roth IRA– With a Roth IRA, your contributions are taxed upfront, but withdrawals made during your retirement are tax-free. You can also withdraw contributions before you retire without triggering taxes or penalties.

A Solo 401k– You are eligible for a solo 401k if you have no employees. As both employer and employee, you can make contributions of both types to a one-participant 401k.

Save Up for a Paid Vacation Each Year

Yes, you can have paid vacations when you’re self-employed, you just have to plan for them. When you’re just starting out, add up the approximate cost of the vacation you want to take plus the cost of a week’s income. Take that total, divide it by 12 months, and put that amount aside in a separate account each month. At the end of the year, you will have enough money set aside for a one-week paid vacation. Don’t forget to factor in fixed business expenses, like rent, if you will be closing up shop while you’re away. As your business grows, you might even be able to plan for more paid time off each year.

You don’t have to work a 9-5 to have a great benefits package. Even better, when you create your own self-employed benefits package, you can set it up to suit your needs and shop around for the best prices. Don’t let benefits be the roadblock that stops you from opening your dream business!

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