SME Chamber

ĠEMMA: Self-employed? How do you manage your money management challenges?


Being self-employed definitely has its advantages – for one, you are your own boss. Yes you are also likely to face money management challenges. Here are some practical tips you may wish to consider:

  • Start saving early and get into the habit of saving consistently over time. As a self-employed there will be times where you will have irregular income. Consider the following:

– Save more during years with good income and less during leaner years.
– Avoid if you can withdrawing from your savings – particularly retirement savings – during lean years.
– If you have an extraordinary profitable year set aside a portion of income windfalls for retirement.


  • Look at the Personal Pension Savings scheme introduced by Government. You are entitled to a tax credit of 25% on contributions – to a maximum of €2,000 annual. If you invest the maximum contributions in you pension you will obtain a tax credit of €500.


  • Create a financial plan for yourself and your business that includes a Plan B. A well-developed strategy should address current and future income needs, savings, and investment in the business. It should also include scenario testing and contingency planning in case an event occurs that prevents you from being able to continue working before your planned retirement. It is also important that you are realistic about future income and expenditure needs and revisit business and retirement plans regularly.


  • After you’ve been in business for a few months or a year, you have a better idea at what your recurring expenses are. Some these payment amounts do not change. VAT will be paid on your sales, and income tax on your profits. Instead of stressing out about covering the cost plan for these expenses. Open a savings account purposely for your depositing money to cover these business expenses. Keep in mind that the 18% VAT you charge when providing a service is not yours. Do not spend it. Immediately on receiving the money take away the 18% and place them in this account. If you spend them you may find yourself in a position where you cannot pay the VAT when you come to do so.


  • Think about your future and retirement. Pay the 15% social security contribution. This contribution is not a tax. It is what you pay for having an insurance coverage – sick leave, annual government bonuses, invalidity pension, pension for your wife or partner if you pass away both before and during retirement.


  • You may think that it is best to skimp on appointing an accountant because you studied accounts and can do it yourself. ĠEMMA strongly recommends that you do not go down this road. Laws change and you will never know enough about the latest standing of the VAT or income tax laws. It is very easy to get caught out – and the interest on any financial mistakes you make are significant enough to be scary. Keep in mind, your Account is likely to be more aware of tax management opportunities and hence will help you to manage your finances more tax efficient.

For more information visit Ġemma website.

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