How about professional insurance, for the industry you’re in? Often the same as Liability but sometimes different.

I’ve also found a hidden costs of aesthetic and environmental arrangment. In other words, I used to focus on functionality in my office, but spending more and more time there, I find it necessary (for my own sanity) to spruce up the desk, ie. keep it organized and clean, and make the office environment mentally soothing.

That’s not to miss the point that self-employment requires that your revenue be higher than your previous take-home salary (duh).

Having a job costs money too, the biggest being your commute. Figure $.50/mile, even a 5 mile each way commute (which is pretty short in California), is $5/day = $100/mth. The costs of workplace clothes, work lunches, etc. also add up. I remember reading an article that said that if a mom decides to work outside the home, something like the first $25,000 of her salary goes to taxes, commute, clothes, daycare, and dining out before she puts any money towards family expenses.

That’s probably on the high end, but the point is you lose some expenses working from home.

As far as employer’s portion of self-employment tax….your employer might write the check, but trust me, YOU are paying for it in the form of reduced salary.

If you really are so valuable to the company, you ought to be able to make more on your own assuming you can handle the business aspect. On the other hand, if you happen to be some of the deadwood at the company, then when you leave, you’ll soon discover how unprofitable you really were! Better hope that you’ve been underappreciated rather than overappreciated at work.

However, “If you count 40 hrs a work week, thats 160 hours a month.” Billable hours?!? ROTFL. Oh please.

1) Confusing ‘revenue’ with ‘profit’ or ‘net pay’
2) Not thinking about the self-employment taxes and other expenses you listed (at least 30% of revenue)
3) Still in school, living with their parents
4) Is still single or is married with no kids and a working spouse who is the primary breadwinner

I live in Oklahoma with a stay at home wife and 1 kid. While I could probably manage to “live” on $30k/year, I certainly could not on $21k/year, which is $30k – 30% for expenses. That’s poverty-line level, folks.

check it out.
http://www.icsharpcode.net/OpenSource/SD/Default.aspx

Amen brother.

+1

I agree that on the surface, the $2500 sounds like a lot of money. Many people just don’t have a grasp of what they actually need financially in order to support themselves. I have also noticed a lack of a sense of scale when it comes to money with many people. That’s why you have to be careful when hiring people who may be looking at your Quickbooks file as part of their job. Someone making $20K per year could think you were getting rich when they see more money than their annual salary in the company checking account. Of course they don’t know about Rob’s list and the $3k in Google you’re paying out every month.

If you’re in a specialized profession, you better count continuing education and professional associations. And don’t forget about the costs of networking (coffee and lunch meetings add up).

I quit my day job in order to start my business and it was a big adjustment for my family. Be sure you have a contingency plan for the slow months.

Though, I’ve found you don’t really need half of these or more. Anytime anyone tells you something is a necessary expense, I’d recommend questioning it. Mostly this is people not taking the time to do a bit of legwork themselves.

But solid resource to start people thinking…