How to Create a Benefits Package if You’re Self-Employed

Workplace Benefits

How to Create a Benefits Package if You’re Self-Employed

2 min read
Mar 16, 2021

If you’re a small business owner or you’re self-employed, you may not have access to the same benefits package that you would have with more traditional full-time employment. As a result, it’s up to you to create your own benefits package. Here’s what you will need:

Health insurance

One of the best perks of working for someone else: Employer-subsidized health insurance. If you have a partner, you may be able to obtain some coverage through his or her employer-sponsored program. If that’s not an option, you’ll need to shop around for individual coverage. A great place to start is by looking at existing group health plans to get an idea of what you might need when it comes to health coverage, including dental and vision plans.

You can then use your state’s health exchange or the federal health exchange to find a variety of plans at different price levels. Many health insurance providers also offer different plan options. You might consider combining a high-deductible plan with a Health Savings Account to reduce your premium costs and save up for out-of-pocket expenses.

Life insurance

Many employers offer life insurance coverage for little to no cost. When you’re self-employed, you are responsible for finding the life insurance coverage you need. Consider purchasing a low-cost term life policy from a reputable company to ensure that your family is taken care of, if you pass away unexpectedly.

Disability insurance

Disability insurance coverage is often overlooked by the self-employed. However, it is important, since your inability to work due to illness or injury could mean financial problems for your family. Shop around for disability coverage that meets your needs and fits your price range. Just because you don’t have a traditional employer paying for your disability coverage doesn’t mean you shouldn’t have it.

Retirement savings

Many employers provide access to a retirement account and may even provide a matching contribution. If you’re a small business owner or self-employed, you may not have that luxury—but it’s equally important for you to save for your future.

There are tax-advantaged retirement accounts available that you can contribute to, even if you aren’t working a traditional job, including:

  • Individual Retirement Accounts (IRAs)
    Use these accounts to hold investments of your choice for retirement. Options are usually flexible, including the ability to hold assets like certain precious metals and real estate, as well as businesses, with tax advantages.
  • SEP-IRAs
    This account can be used to provide benefits for your employees as well as set up a plan for you as a business owner. They are a type of IRA, but with the benefit of helping your employees as well as providing for your retirement.
  • Solo 401ks
    If you are self-employed and want access to the contribution limit of a 401k, you can open a solo account with many financial institutions. This provides you the benefits of a “regular” 401k, but you won’t have the employer match. Research these options to see which account makes the most sense for your situation. You won’t be able to get a match from an employer, but at least you’ll be taking the right steps to save for your future.

Vacation days

Paid time off is another main component of a full-time employment benefits package. However, if you’re self-employed, it can be hard to find time for vacation. This means you need to build vacation time into your schedule. Save up money, so that you can afford to take time off. Create a vacation fund and automatically transfer money into the account each month. You can aim to save up a specific amount, or you can decide to save up for a set period and plan a vacation around what you’re able to accumulate. Make it a priority so that you can prioritize some much-needed relaxation.

You don’t need to work in a traditional job setting to enjoy a benefits package. In fact, when you create your own benefits package, you can arrange the details to your liking. You might need to do a little extra planning, but the result can mean greater customization and flexibility in your small business or self-employed benefits.

Nothing in these materials is intended to be advice for a particular situation or individual. These materials are for general information purposes only.