Self-employed

What does it mean to be self-employed?

Being self-employed means you work for yourself rather than being employed by someone else and receiving a consistent salary or wage. Self-employed individuals often operate as independent contractors, sole proprietors, freelancers, or business owners who earn an income by contracting directly with businesses or offering their services to clients.

Self-employed individuals have the flexibility to set their own schedules and decide who they work with. Depending on where they operate, they may also have unique tax-filing requirements and responsibilities.

Self-employed vs. independent contractor: What’s the difference?

Although there are many similarities and overlaps, these two terms are not used interchangeably due to differences in laws between states, differences between industries and even an individual’s own mindset. Think of it like this: All independent contractors are self-employed, but not all self-employed individuals are independent contractors.

Generally speaking:

• Self-employed: A broad category of individuals who operate their own businesses or work independently.
• Independent contractors: A subset of self-employed individuals hired by another entity to perform specific tasks, projects or services under a contract but aren’t considered employees.

Types of insurance coverage for self-employed individuals

Self-employed individuals often wear multiple hats, and comprehensive insurance coverage is a cornerstone of their financial security. Here are some of the essential insurance coverages for self-employed workers:

• Health insurance is paramount for personal well-being. Options include private health or marketplace plans under the Affordable Care Act (ACA).
• General Liability insurance helps cover legal expenses if a third party claims injury or property damage due to your business activities.
• Professional Liability insurance shields against claims of negligence or errors in your work and is especially crucial for service-based professionals.
• Workers’ Compensation covers work-related injuries or illnesses if you have employees.
• Commercial Auto insurance covers work-related car accidents.
• Commercial Umbrella insurance provides additional liability coverage beyond the limits of your primary policies.

Navigate self-employment with NEXT

At NEXT, we’re 100% dedicated to small businesses. With 24/7 access to your plans and policies, you’ll be prepared for whatever comes your way. Just apply online and follow the prompts to access your custom instant quote in under 10 minutes.

Start a free instant quote with NEXT.