Things To Consider Before Quitting Your Corporate Job
Once I had fully committed to switching careers and pursuing my baking business full-time (you can learn more about why and how I made that decision here), I started to think about everything I needed to consider before quitting my corporate job.
I had so much to figure out. My immediate concerns around starting my business were:
- How was I going to have health insurance if I was self-employed?
- How was I going to save for retirement without a company-matched 401k?
- How much would I need to save to be able to pay my taxes at the end of the year?
- Should I establish an LLC?
- What would my cash flow look like each month?
Health Insurance
Health insurance is a tricky topic when you’re a freelancer of self-employed, but there are a few routes you can go:
- The easiest by far is to simply be married and be added to your significant other’s insurance.
- If you aren’t married, but in a serious relationship, you can request to be added to your significant other’s insurance as a domestic partner (must be in a relationship and have lived together for 6 months in the state of NY).
- If you are single, you can get insurance through the Affordable Care Act as an individual (you can enroll here). In 2018, the average cost per month for an individual was $440.
None of these options are cheap (all are at least $400/month for standard health care options), but health insurance is an absolute must in my opinion.
Continuing to Save for Retirement
Saving for retirement as an entrepreneur is another concern. Assuming your business is successful and profitable, you’re going to want to continue to save for the future.
While you may not have a 401k or company match anymore, there are plenty of tax-advantaged saving options.
There are different rules and caps on how many pre-tax dollars you can contribute based on whichever option you pick, so I highly recommend reading through them. I plan to set up a SEP IRA next year.
Tax Planning
Another super important part of being self-employed is withholding taxes from your earnings to be sure you can pay your taxes each April.
This may sound crazy but living in NYC and being taxed by both the city and state, my tax rate is over 40%. If I didn’t set aside money from each partnership or plan accordingly to have significant savings to pay my taxes, I would be totally screwed.
It’s also something to keep in mind when negotiating rates or setting prices; know that you will only get to keep 60% (or whatever your tax rate may be) of your earnings.
How to Legally Establish Your Business
Then I began thinking about the legal implications of running my own business.
I had previously established Chelsweets as a sole proprietorship. It was tiny, I wasn’t making a ton of money, and I wasn’t worried about any liabilities I might face down the road.
I spoke with my Dad (who is the best accountant I know) and he recommended establishing a single member LLC, to limit my liability if something ever goes wrong with my business.
The requirements and price to establish an LLC vary by state, but for most it takes less than hour to do and the average costs is around $150.
Understanding Your Cash Flow and Managing Your Expenses
And then my final concern… MONEY! I have recurring monthly expenses and income as a freelancer/entrepreneur is anything but steady.
While I knew partnerships would come in waves, I wanted to make sure I had enough money coming in every month to pay for rent, health insurance, phone bill, groceries, etc.
I literally made a table of cash inflows and outflows in excel – you’d almost think I was an accountant… ?
The most important thing to having steady income is to have diversified revenue streams. Each month, I make revenue from:
- Advertising on my blog
- Ads on Facebook (you can monetize videos with ad breaks if they are 3+ minutes long)
- Advertising on YouTube
- Contract with the Food Network (creating content for their social channels)
- Paid brand partnerships
- Teaching private cake lessons
Being able to earn money in different ways gives me peace of mind. That way, even if my YouTube earnings are tanking one month, my blog might be getting a ton of traffic!
There are a lot of things that I can’t control about income with what I’m doing, but the more ways I can make money, the more secure I feel.
This is just scratching the surface, but I think these are some of the most important things to think through.
Taking a Leap of Faith
Making a career change and becoming self-employed is definitely scary, but the idea of it is much more manageable when you feel like you’ve thought it through and have a game plan.
If any of you have made a similar switch to becoming a freelancer/entrepreneur, or are thinking about it, I’d love to hear your experience or thoughts! I’d also love to know if you have any concerns I didn’t touch on 🙂
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I love your positivity!!! Wishing you all the best!!!
Thanks Sarah!! 🙂
I’m so proud of you for chasing this career! How scary and exciting at the same time. Quick note though: your description at the end of your posts still says you work in finance by day 😉
Thanks Diana! haha I def need to update that! And the about section of like all my platforms!!! Hoping to have that done with the end of the week 😛
The one thing I can think of that you haven’t mention is a branding partnership for merchandise.
That’s a great point!! I just don’t really have experience with that and haven’t tried it out, so I’m not counting on it! But def an option for the future 🙂
This post is the best advice I’ve ever seen on a blog; they are critical items that people don’t necessarily think about when starting their own company! I also think you’re the first food blogger to mention the phrase “withholding taxes” 😉 So happy for you to be able to focus on your passion full time and thank you for sharing a valuable perspective on the business side of self-employment!
hahahahhaha that’s the accountant in me showing!! 😛 And I’m so happy to hear that, at first I thought this post might be too nerdy, but then I was like no, this stuff is important!!!
This are great tips! Thank you! I hope to run my business fulltime one day as well! Best of luck to you!
Aw thanks, and best of luck to you too!!!
I’m so excited for you I would love on day to have the guts to do what you have done your an inspiration to me I use to make cakes in high school and stopped and I love making cakes now so much and honestly I wanna say thanks to you and all ur information and videos has helped me get back at it again wishing you nothing but the best in all that you do and your business
Thank you Dianna! That is really so nice to hear, and I’m so happy you’re making cakes again!! 🙂
Did you create a business plan before your transition?
I didn’t! But I kind of already had one implemented, which established itself over the past few years as I built chelsweets up to where it is now <3
Hi Chelsy!! Love your stuff! I have a quick question- how do you monetize on your facebooks videos and also how did you get the paid contract with food network? Thanks so much in advance and love your content! I’m so happy you’re taking this big risk! Excited for you!!!
I’ve been working with the Food Network for a couple years now, and I still don’t know how they initially found me! They just reached out one day about a live stream, and it all unfolded from there. You can monetize videos on FB if they’re 3 minutes or longer! But you have to post several before FB will let you monetize them. Hope that helps <3
Hi, all the best for your move. I left corporate 2 years ago (I’m a qualified attorney). I’m now running a business selling furniture and loving it. My passion however is baking. I have an incredible opportunity to host an eggless baking show here in South Africa, but I need funding. Please can you share tips on how could I get funding and sponsorships? Thank you and all the best
Thanks! That’s super interesting! usually funding and sponsorships are managed by the network that will be hosting the TV Show! I’ve never really had to secure funding for something before, so sadly I don’t have much advice for that :/
This is super helpful for anyone considering going freelance in most professions. Great tips!
Thanks Kelly 🙂
Ah! This is so exciting! This sounds like a lot to manage on top of all of the baking (i.e. social platforms, content creation, blogging, responding to questions and comments, creating/maintaining contracts and professional relationships). Do you have any advice on how to deal with it all? Have you hired any help? Thank you and best of luck!!
Haha thanks Shay! it really is a lot to manage, and it’s definitely not easy! I am still a one woman show, but am considering taking on some help down the road.
I try to just do a little of each everyday, to help mix things up, and not let any area get too out of control. If I don’t respond to comments for more than a week, I totally dread trying to catch up on them!
In general though, I just try to get done my most urgent tasks each day, and always remember that there’s tomorrow. I’m definitely still figuring it all out though 😛
Hi! I love your cake videos.. I’ve been baking at home for a while now. I’ve decided I want to try to start making cakes to sell, but I work full time so I was just going to do it on the side. I just have some questions. Like how did you get Chelsweets started? Did you get a business license or have to have a home inspection? Sorry it’s so long I’ve just been trying to figure out what to do and I thought I’d reach out to a fellow baker!
Hi Heather! Those are all great and important questions! I walk through them all in a YouTube video I shared on starting a baking business from home! here’s the link:
https://www.youtube.com/watch?v=iuCJXbO1k30
This is so helpful! I’m changing careers to start my own baking business and had all the same thoughts. Thank you so much for easing my mind and the great tips!
I’m so happy this resonated with you!! Changing careers is definitely scary, but if you’re already thinking about all these things, I think you’re going to be just fine!!! 🙂 Best of luck with your venture!!
Thank you so much for being so detailed and explicit. I myself am struggling on the decision of pursuing my dream of becoming a full time baker or continuing with my office job. The problem/ blessing is that I have a 2 year old and a newborn! Well actually my matertiny leave will be over in 3 weeks. I definitely want to be with my girls as much as I can and I think I can make it happen. I also saved enough to survive should I attempted to try. But I’m really scared. My husband does have his full time job but it wouldn’t be enough. I’m sorry, I’m venting and it feels like I’m telling my story to the therapist lol. Anyway, thank you again for the insights and I hope to look back at some point and realize you gave me some kind of hope and inspiration. God will guide me in it all. Congratulations by the way on all you have achieved!! And you make amazingly beautiful cakes!!
It’s definitely a hard decision to make! But it does come down to more than money when there are other intangible factors like your kids <3 I’m not sure how far along your business is, but I’d say if it’s at a good place try to take the leap, or if it’s not, try to ramp it up in the next couple years and see where it takes you 🙂 You’ll know when it feels right. Being scared isn’t a bad thing, but if it feels wrong, then don’t do it yet. Hope that helps, best of luck with everything Laura!!
Thank you for such a concise post that touches on some of the very real concerns we have about making the shift from a stable, high-paying day job to pursue the “potential” of a passion gig. I’m currently in the process of making Borderlands Bakery a more revenue-generating business — I started out doing custom cookie orders, but also ended up on Netflix and winning a Food Network challenge, which has helped my Instagram grow a ton. In the last 6 months, I’ve moved way more toward teaching, blogging, videos, etc instead of doing, and am starting to revamp my website to optimize it for ads, etc. Eventually, I want Borderlands to be my full time gig, and your posts (about WHY you quit your corporate gig & this one) are some of the best practical advice I’ve ever read for folks like us to desire security/peace of mind but also want to pursue the things we love and can share with others. I have a running list of things I wish to accomplish and definitely need to make some tradeoffs, but for the first time, I’m starting to see how I can potentially make it on my own, so thank you!
I’m so happy to hear this resonated with you Lisa! Congrats on winning a Food Network challenge and being on Netflix, that is incredible!
I’ve actually started teaching more too! It’s a great way to connect with people, and have an additional source of income. It also gives you the freedom to get creative when you do bake (rather than doing just orders)! It sounds like you’ve definitely thought it all through, and I wish you the best of luck with Borderlands 🙂
I love watching your videos!!!! You create some beautiful cakes!
aw thank you Nikki!! <3
Hi Cheesy! It’s great to see how far you’ve gone in your business! That’s amazing! Our backgrounds are similarXD, I’m an accountant and recently have been thinking about my side business idea. I was originally thinking about if I should quit my job and try out for 6months or 1 year or should I work full time and bake part time. My current job doesn’t really make me have energy to do it at night or on weekends. But after reading your post, I feel it’s too risky to just quit my job since I don’t even have anything going yet. I have the baking skills, but I still need to rent kitchens, get permits and stuff.
One question tho, did you register as a sole proprietorship when you started and then change to LLC later?
Again, thank you very much for sharing your post as I feel the same that it’s a scary change and it’s not a career path to most people but do want to do something I like! Thank you!
Taylor
I’m so sorry Chelsey. I typed your name wrong! I’m not sure if it’s Chelsy or Chelsey.
Wow! This is interesting. So I’ve been thinking of starting my own cake business. Homemade cake though, I believe I still need to gather more experience and perfect my work before venturing into it.
I am currently a year 2 teacher and salary here in Nigeria is quite low. The fear of being unemployed and getting clientele as a home baker is eating me up. I intend to start fully next year January but the prices of groceries here skyrocket daily. Will still give it a good thought factoring all this tips in.
Thank you for sharing this tips and cake pricing tips too. you are a lifesaver. God bless.
Hi Omolara,
Wishing you all the best with your future cake business! It can definitely be challenging, especially with rising prices. Lots to think about, I’m sure you’ll make the right decision for you <3
Love the positivity ?
Seeing your view on all this is pushing me to go on with being self employed
???
Thanks Mashuko!! It can definitely be a hard journey but I think it’s worth it! 🙂
Wow Chels that was 2019 n I am just reading it now!!
It’s 2023….
Love your story !! Truly a leap of faith…
I quit my job to do the same but I am drained ?
Hi Nellie,
Haha thank you!! It really is a leap of faith. The transition is definitely the hardest part, but it gets easier as time goes on, I promise!
Help (please):
I am making a large/tall version of your lemon curd cake for my granddaughter’s baby shower (first baby) next weekend (2/24/24). My daughter wants me to make either 12″ or 14″ layers (I told her 12″ is easier).
Can I use one full batch of your recipe for each large layer; also, how long baking. You site used to have more info (I think).
Please, please let me know. Thank you so much!
Suzanne
Hi Suzanne,
That is one giant cake!! How many people are you trying to feed? It might make sense to make a quarter or half sheet cake instead!! That’s what I did for my baby shower and it worked great and was so much easier to cut. One batch of my lemon curd cake makes about 10 cups of cake batter, and you can figure out how many batches of cake batter you need to a 12″ or 14″ layer cake using my cake batter calculator: https://chelsweets.com/how-much-cake-batter-per-pan/
One batch of batter would be enough for one layer for a quarter sheet cake, and you’d want 1.5 or 2 batches of cake batter to make one half sheet cake layer. Hope that helps, and that you granddaughter’s baby shower cake turns out great!