As I get ready to become a full time blogger, I’m finding more and more accounts and potential gotchas that I need to take care of before it’s too late. I’ve hence come up with a checklist to remind myself to find a solution to everything still outstanding so my finances won’t be affected unexpectedly.
401k
The obvious account that I need to take care of is my 401k. I’ve decided to roll everything into a traditional IRA. Since I’m going to be self employed, I can also combine the traditional IRA into my SEP IRA (if I open one). For more options, read what to do with my 401k after I quit.
Checking Account
I bank with Wells Fargo and the reason why I have a no fee checking account from them is because of direct deposit. Once I don’t get a regular paycheck, I won’t get any automatic direct deposits going to my checking account. I spoke with a representative at the branch and they say that the monthly fee will be $8! There is a workaround though, which is to open a savings account and have an automatic transfer of at least $25 from checking to savings every month.
I haven’t really decided on what I should do. I can either close my checking account or just open the savings account and leave it alone for a while. What do you suggest?
Benefits and Insurance
Luckily for us, my wife will be able to add me to her plan for health, dental and vision benefits. Otherwise, I will need to get my own which could potentially cost me hundreds of dollars a month.
Last Paycheck
This might not be on most people’s checklist, but my wife’s last company filed for bankruptcy and she happened to be one of the last people that got all her salary paid in full! Since I’m a salesperson and my commission won’t be until 3-4 weeks after I quit, I need to make sure that my address is correct so the check can be mailed to the right place.
So far, this is all I have remaining. Is there anything I should really look out for? I’d love to hear from you!
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{ 21 comments… read them below or add one }
Good list but is that all that’s remaining? Remember to think a little harder on all the open items because one missed item might cost so much money and headache down the road!
You can get direct deposits from affiliate companies and Google Adsense, I would think those qualify as DDs.
Joe: I definitely will as I’m sure one misstep will cost me thousands if not more!
Jim: I asked them and they said no for some reason. I should try to get a second opinion. Thanks for the tip.
Hi david,
how does someone contact you from the contact me page? I tried ie, opera and chrome and it says to enter code above for confirmation above send button, but there is no code to enter. Just need to get you opinion on something. thanks.
Jose: Yikes. Thanks for letting me know that my contact page is nonfunctional! I just sent you an email and will be happy to help.
My bank does treat google revenues which are deposited in my account as a direct deposit. The clerk that you asked probably didn’t have a clue what you were talking about.
Can’t you open a no fee checking account instead? Or open a new one to get an account opening bonus?
One last thing to do is to get the detail information on all the people you have worked for and with in your previous company ( bosses, co-workers, clients). You never know when/if you are going to need them.
In other news, do you have a specific designated space in your house for your office? It would be nice to have one, which might be easier to prove at tax time that you are indeed a legitimate business with legitimate deductions.
I suggest dropping Wells Fargo and opting for something that is free without jumping through any hoops.
Wow, good luck! That’s awesome that you can go full time. Hope it all goes well.
Get a schwab bank account. Its completely free, so much so I have to discuss this at length with friends to get them to consider it.
2.0% Interest (was 4.0%) ,free checks, free bill pay, no catches, visa check card, etc….
All good stuff
Hi David,
I ran into the same problem with Wells Fargo. Their savings account pays a measly 0.5% and is not worth it. I switched from WF to WaMu and am quite happy.
If you don’t want to switch to WaMu, check out Schwab’s investor checking account. Ramit from I Will Teach You To Be Rich recommended it to me. Currently, WaMu has higher savings rates and an excellent online interface, plus their branches are closer, so I use them. If they end up closing the close branches, I will switch over to Schwab.
-Erica
Wow Congrats!! I hope to be there next year
Great thoughts on the workspace. Make sure all internet, phone, fax, email is running smoothly. They will be your life-blood.
Also consider a local credit union. They are often part of large branch ATM networks and tend to have better deals than many banks for the checking accounts.
Make sure you have a schedule. When working for yourself, distractions come way too easy.
I’m also on the side of getting free checking somewhere else.
If you can, ask for general letters of recommendation. These are always good to have. They are good to show people who may want you as a consultant or if you find that you’ll need to supplement with a temporary part-time job.
A few odd things to consider, from someone who has been self-employed (massage therapist) and working from home for over 5 years…
1) Not sure how tech savvy you are or what your current set-up is, but consider having two computers. It’s just plain paralyzing to your business when a trojan locks you out or the motherboard goes up in flames.
2) Make sure you work some social time into your daily schedule (coffee or jogging with friends, that sort of thing). Working from home is very isolating, and you might find yourself talking your wife’s ear off the moment she comes home from work because you haven’t had human contact all day. It can also lead to depression if you have those tendencies (I have two friends who day-trade, this is huge for them).
- Katie
Dividend Growth Investor: I can open another one as others have suggested but it won’t be with Wells Fargo. I will go back there and ask for a better explanation of the whole process since the Adsense direct deposits should count for sure!
I do have a specific space but it’s part of the living room so I don’t think I can get any deduction. It is also a very small space so I’m not sure if it’s worth the potential hassle of audits etc etc.
Zac: I will look into Schwab. I might get an ING online checking account since I already have a savings with them, or even an etrade one since they are all similar (less branches, more interest).
Erica: Thanks for another vote for schwab! I am not really comfortable with opening a WaMu savings account with all the talk of bankruptcy so I will probably go with other options.
Jumbo: It’s funny you mention workspace because my internet is acting weird lately!!!
I will be sure to think of a good schedule. I know what you mean about distractions
Ms: How do people use the letters of recommendations? In the past when I’ve asked, I was told to essentially write it up myself
Do those work and how do they use it?
Katie: I’m okay with computers and yes I do have a backup computer if things really turn south for a couple days.
Socializing will be tough and I plan to run in the morning and to start off. Hopefully I will find a way to keep myself sane! I play golf also so I plan to go once a week to a golf course so at least I’m interacting and doing something other than typing but that might become pricey.
Nice timing,
Next month is your blog 2 yr anniversary.
Wish you all the best!
Wow, you’re quiting your job! Is blogging really paying you off better than your current job? I am sure it should, otherwise I don’t see why someone like you would take the risk.
I hope to reach that some day! Best of luck.
I see no mention of setting up as a business. Unless you do so, the IRS is likely to consider this a hobby. Here are some things to consider:
1. Your bank account should be a business account if you create a corp (LLC or S-Corp), otherwise it can be a DBA (doing business as). All in and out funds need to go through this account.
2. Consider getting a business CC with cash back for typical biz expenses.
3. Set up a separate accounting program on your office computer to track cash flow.
4. You may need to run a fictitious name ad in the local paper to use your MoneyNing name as a legitmate business.
5. Your county and/or city may require a business license to have a home office. And some will require you to get the permission of your neighbors, and/or certify that you will not have foot traffic to your home.
6. Your state may require a sales tax certificate to collect and submit taxes collected on any sales. Each state has different requirements on what needs to be reported. Even though you are internet based, there may still be things you need to collect tax on; be sure you are clear on this.
7. Good advice about the home office, but keep in mind it must be used exclusively for the biz; no personal activities in there. That goes for the computer, phone, files, fax, etc. You may want a separate phone for biz only, cell or landline.
8. Get a separate PO Box for biz mail.
9. Register with the IRS to pay your quarterly income taxes, Fed, SocSec, Medicare. If you are DBA, you can use your SSN, and if low income they likely will set you up for annual reporting.
10. Create an expense log to track all biz related activities, like travel, meetings, mileage on car for biz use, etc. Check to see what can be used for tax deductions.
Best of luck, but be sure to cover all the bases.
People actually make real money blogging? I understand the Google ads can bring in some revenue, but you can actually quit your job on it? Wow.
Rendell: Thank you so much for knowing!
I will work hard at the blog and hopefully good things will happen!
Int’l Freebies: It’s not as high paying as my current job but I’m determined to make it provide a comfortable living one day!
DJ: Wow great advices. I especially need to look into the tax situation. Thanks for reminding me again.
Congrats on the big move. Its a very and exciting time to move into realm of the 1099 from W-2. I just became self employed last December and having my year end meeting with my CPA next week (that leads me to my first tip).
1. Get a good CPA. My CPA has been instrumental in the planning process. He has also became a business partner. He or she will be a valuable resource in telling you what you can and cannot write off through the year.
2. Consider seperate accounts. When you are in charge of paying your quarterly tax it made a whole lot more sense to have a seperate tax account in addition to a checking and savings. Currently we set aside 35% each check to make sure we have enough. I’m curious to see next week how we’ve done this year.
3. Save your receipts and keep logs. We save everything and put in a tax file. Also, I keep a mileage log of everywhere I go that is business related.
That’s just a few. I’ll be soon writing a post on everything I learned in my first year. Good luck!