If you started a small business on-the-side, while working a full-time day job, congratulations. You are one of more than 28 million small businesses in the United States, and part of a community of innovative and passionate entrepreneurs who make up roughly 50% of the American population.

Since venture capital (VC) funding is pretty rare for your average small business owner, taking cautious steps to grow your business in tandem with your day-job has probably meant working close to 80 hours per week for some time. When entrepreneurs are feeling confident about their business, they make the leap from part-time supplemental income, to committing fully in their business, for better or worse. And if you are at the juncture right now, we have five tips to help you make a successful financial leap.

1. Invest in Accounting Software

Tracking business expenses, managing, sending and archiving customer invoices, maintaining inventory, depreciation records for equipment; managing the books accurately for your small business is a critical skill. All it takes is one experience of disorganization at tax time to teach every new business owner how important it is to keep records organized.

There are a number of software options that work well for self-employed individuals, but one of the most highly recommended is QuickBooks Self-Employed, from Intuit. The software also integrates seamlessly with the TurboTax (Self-Employed) bundle, allowing small business owners to file their own annual income taxes online.

2. Calculate Earning Trends

If you have been a running your side-gig for some time, you are probably pretty good at calculating incoming business and earnings. But before you make the leap, it is important to track and evaluate the peaks and troughs of your earnings for at least a year. Knowing when business may slow down, or when income is the highest, will help you to financially plan more accurately.

Every successful small business has a savings account. Self-employed professionals are often very good at living within their means, and also proficient at saving money to offset slower income periods. Figure out your cost of living for two to three months, and set that amount aside in a savings account.

3. Determine Your Taxation Rate

Into every freelance and self-employed professional’s life, some taxes will fall. There are essentially two ways of managing your tax obligation. The first is to set aside the right amount of money monthly and submit bi-annually or quarterly to the Internal Revenue Service (IRS). This keeps you on track, and feeling confident about your business. The second is to retain all your earnings, and face the taxman, who will hand you a bill for roughly 15% to 25% of your gross earnings (ouch).

Remember that the IRS offers low interest monthly payments for income tax, with a small administration fee. This is an option many self-employed professionals take advantage of annually, and it works as long as you are not intimidated by being handed a very large bill, once per year.

4. Compulsive Receipt Collecting

Think of personal tax exemptions as a game between you, and the Internal Revenue Service (IRS). The better you leverage your legal deductions, the more hard-earned money you will be able to keep. (Now you understand why people are willing to go into the convenience store to get the receipt that didn’t print at the gas pump).

The IRS has two very simple requirements, when it comes to expenses that can be written-off:

1.Was the expenditure legitimately for your business?
2.Does the expense qualify for tax deduction purposes?

Some of the most common small business Schedule C tax deductions for self-employed individuals who work from home are:

  • Meals
  • Vehicle expenses
  • Business software
  • Equipment purchases
  • Office supplies
  • Postage, courier and mail expenses
  • Legal or accounting services
  • Landline or cellphone expenses
  • Private health insurance
  • Dental health insurance
  • Medical expenses (if more than 10% of your gross earnings)
  • Travel (transportation, parking, and hotel accommodations)
  • Financial charges (banking fees, credit card service charges)
  • Mortgage and loan interest
  • Home and auto insurance
  • Continuing education (including conference or event attendance)
  • Charitable contributions
  • Advertising and marketing expenses
  • Memberships to professional associations

Small businesses and self-employed entrepreneurs have a generous number of tax deductions that are allowed, but many fail to claim the expenses, as they do not have proof of purchase, or a receipt to document the payment. If you are a homeowner, check out some additional tips on writing off home related expenses on the real estate blogs.

5. Reduce Personal Spending

As you implement your exit plan from your full-time job, to being your own boss, it’s important to understand that your finances may take a bit of a dive. If you have enjoyed the comfort and security of salaried pay and quality health benefits, becoming one of the truly self-employed can be a disaster, if you aren’t ready to cut back and go lean on your personal finances.

While predicting income trajectory and forecasting provide some good planning tools, future earnings do not pay the bills. And when you first step off the ledge from predictable bi-monthly earnings to a freelance or subcontract income, it will be in most cases, two extremes; feast or famine. Clients or customers can pay late (or not at all), your cost of doing business may increase, or your proficiency to market your services may take some time.

Make a list of your monthly personal expenses, and cut back on anything that ranks low on your priority list. Luxury products or services, subscriptions and other non-essentials can be canceled to create more breathing room in your budget, making you less stressed, and better able to handle the income high’s and low’s of self-employment.

Virtually everyone has fantasized about “being their own boss”, and according to the U.S. Census Bureau, 543,000 small businesses are started in the United States every month; you can be one of the success stories. By doing some advanced planning and preparation, the transition from salaried employee to one of the self-employed will be successful.

Author Bio: Mansi is an established Content Marketing Specialist at E2M, a Digital Marketing agency, and PR Account Manager at PRmention, a Digital PR agency. She is well-versed in concepts related to Content Marketing, Communications Strategy and Branding. Reach out to her on her Twitter handle: @mansidhorda.

The above information is compiled using inputs from Mansi and experts at Arivify.