5 tips for self-employed clients

The introduction of new technology has led to a significant increase in the number of self-employed workers.

In 2010, the numbers were double what they were 30 years ago in Quebec alone. From 2002 to 2009, their numbers increased 21%, compared to salaried persons whose numbers only increased by 10%.

Read: Self-employment booming in Canada

When it comes to RRSPs and retirement planning, you can offer self-employed biz owners the following information and tips:

• They need to select and manage your own retirement plans, so help them choose the one that helps them reach their goals most effectively.

• In Quebec specifically, they also contribute to the Quebec Pension Plan. Contrary to salaried workers, though, they pay what is normally the employer’s portion and therefore pay double the eligible contributions required to receive QPP’s fixed annuity.

Read: CPP and life expectancy

• Self-employed individuals have to purchase personal insurance. If they become sick or disabled, they risk losing customers without coverage. So, they should create contingency and succession plans, and advisors add their financial planning must be more strategic and forward thinking than other clients.

Read: Disability’s an important sale

• The company is generally the self-employed individual’s main asset, so they need to choose investments that are less volatile and more liquid to complement it.

• Choosing the right time to incorporate is crucial; taking this step is another way to gain more flexibility in a financial plan, and changing to a corporate status also allows self-employed workers to defer their taxes. However, this move should only be made when your client earns sufficient income to be able to absorb the costs of incorporation.

Read: Small business dilemma: Save or invest?