Should You Become Self-Employed in 2023?

Here's how to make that call.

The start of a new year is often a good time to make professional changes. And in your case, that could mean going from a salaried position to becoming self-employed.

There are many benefits to working for yourself. For one thing, you won't have to answer to a single boss (though you may have different demanding clients to work with), and you may get the flexibility to set your own hours and work a more reasonable schedule.

Also, many people actually find that their income increases once they take the leap into self-employment. That's because they get the option to negotiate their rates and work more hours if they'd like to.

But is now a good time to start working for yourself? Run through these questions to find out.

1. Do I have a nice amount of savings?

Even if you're great at what you do, it could take some time for you to start earning a steady stream of income. Plus, when you're self-employed, you don't always get paid for the work you do right away. Some clients might sit on invoices for weeks before sending the money they owe. So if you're thinking about self-employment, you'll absolutely need to make sure your savings account balance is solid.

At a minimum, you'll really want enough money in savings to pay for half a year's worth of expenses. And if you can go in with enough cash to pay for a full year of bills, even better.

2. Do I have a game plan for drumming up business?

Maybe you have a lot of contacts in your industry and some clients who are already interested in hiring you. And maybe you have a sound marketing plan that will help you get more business. If so, you're in a good position to start working for yourself. But if you're going in cold with no prospects and no idea how you'll find work, then you may want to stick to your salaried job a while longer while you figure things out.

3. How worried am I about a recession?

For months now, there's been talk about the U.S. economy taking a turn for the worse at some point in 2023. We can't say with certainty that a recession is definitely in the cards this year -- but it could happen. And if a downturn comes to be, you may find it more difficult to get work.

You'll need to make sure you understand that risk and have a backup plan. A robust savings account balance could be part of your plan, as could staying in touch with people at your company and leaving on very good terms so that if the self-employment route doesn't work out, there's the potential to ask for a salaried job again. But do know that there is a chance the economy will take a turn this year, and that it could impact your income.

Self-employment can be a truly wonderful thing. And it may be the right choice for you this year. Just make sure you've considered all of these factors before making that call.