The views presented here do not necessarily represent those of Advisor Perspectives.
Longtime entrepreneurs have a noticeably different set of financial needs than clients who are simply looking to add new streams of income to supplement their 9 to 5 salaries. Individuals who haven’t yet taken the plunge into full-time entrepreneurial pursuits are often surprised by the onslaught of new costs they’ll be responsible for when making the transition from W-2 salaried employee to self-employed, one advisor shares.
Boston-based Catherine Valega, founder of Green Bee Advisory, a wealth management and tax strategy firm, works predominantly with women clients, many of whom are entrepreneurs.
“One of the biggest things I talk about as both a CFP and enrolled (tax) agent, is wealth optimization and tax minimization,” Valega said. “For business owners, our tax system is pay-as-you-earn, and this is a big shocker for new entrepreneurs. They are used to taxes withheld from their income. When you’re self-employed, you need to pay estimated taxes each quarter, and when you don’t, that’s when you arrive at April 15th,” with an IRS tax bill, including penalties, she said.
“You also need — beyond a bookkeeper, who may just report on your transactions or you billing someone — a tax advisor. Work with a tax professional who can help you understand how to pay those taxes quarterly so you don’t find yourself in a big bind come April,” Valega said.
Have a Resources Set Aside
Individuals who want to turn their side hustles, or other streams of income, into a full-time business have a lot to consider, according to Valega.
“Everyone knows how to do their specialty, but they don’t know how to run a business,” Valega said.
“I’m all for side hustles, but I also think before entirely quitting your day job, you have to either have a really healthy emergency savings to draw from, or test the waters in your new field,” she noted.
“I tend to be conservative and like my clients to have 12 to 18 months of expenses saved. And that’s depending on what type of economy we’re in. Right now, things are a little nutty. I think we have a lot of unknowns. It’s a volatile environment we are living in. From one day to the next, you don’t really know what the current administration’s policies are, and that makes entrepreneurship difficult to navigate,” Valega shared.
“I know business owners who saw income streams dry up because of tariffs. They couldn’t access the product they needed to sell their other product. Don’t quit your day job before you are ready to fully launch and take that risk,” she added.
Valega’s thoughts are timely as a growing number of Americans are interested in finding new streams of income.
In fact, a 2025 survey by IPX1031 found that 88% of Americans believe they need passive income to be financially secure. Investment Property Exchange Services Inc. (IPX1031) is a 1031 exchange company, which conducted a survey in August 2025 of 854 people in the U.S. and their investing habits.
Some 83% of the survey respondents said that having multiple income streams was “essential for financial security,” the survey found.
“While 92% of Americans think investing is the key to building wealth, 39% have made changes to their investments in the last 12 months due to the economy,” the report said. “The top changes Americans have made include shifting to safer investments (high-yield savings, bonds, etc.), increasing how much they save, and adding new income streams.”
On The Hook For Insurance
Even for clients who “have the best (business) idea ever,” Valega still recommends they plan for a two-year runway to replace the income of their current day job.
One of the biggest costs for their consideration will be benefits — primarily health insurance, life insurance and liability insurance for their business.
“Get ready to kiss those (employer-sponsored) medical benefits goodbye,” Valega said. “And medical benefits are getting even more expensive. How are you going to maintain your insurance?”
“If you are a member of a particular field, sometimes via group membership, you can get access to group health plans. I was quoting $25,000 a year for health insurance costs to my clients, but that number is now higher,” Valega said.
“I also believe in having life insurance and disability income insurance. These are things that no one pays attention to as far as that benefits package, until they leave that W-2 job. Also, you’ll want to get liability insurance for your business.”
In addition to managing multiple streams of income, the tax implications and insurance needs, individuals will also need to invest their time and energy into building stronger networks, Valega added.
“Think about networks of people in the same industry whom you can access. It’s important when you’re not in the corporate world to network. When you are on your own, how are you going to find that? Do you have a network to reach out to? I think that’s really important,” she shared.
Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.
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The views presented here do not necessarily represent those of Advisor Perspectives.
