Self-employment can be risky, especially from a financial standpoint. Managing your money is especially important given the potential ups and downs that come with being your own boss. Being smart with your money is critical to longevity in your career as an entrepreneur.

Build a substantial safety net before taking the leap. If you’re still employed and know you want to move to self-employment in the future, start stashing some money away now. Save up as much as you can to make the transition easier. This savings can supplement your income, if necessary, while you’re building your business. You can save up more money by reducing your expenses as much as possible and putting the extra money in a savings account.

Know what you need to make to survive. You need to make at least enough money to cover the basics. If you’ve been budgeting all along, use past budgets to identify your normal monthly expenses and places where you can cut back to make it easier to live on your self-employment income. Or, create one from scratch based on your bank statements or cancelled checks. Use your budget to set your self-employment income goal.

Set aside money for taxes. One of the biggest differences between self-employment and working for someone else is that an employer withholds taxes from your income for you. As a self-employed worker, you’re responsible for withholding and paying your own taxes. To make it more difficult, self-employment tax is higher.

Work with an accountant to figure out what you owe in taxes (it’s a percentage of your income not a set dollar amount) and set aside that amount of money each month. Then, make your quarterly tax payments to the IRS to avoid penalties. Don’t brush off your quarterly taxes because catching up on a tax bill that’s several thousand or more is extremely difficult.

Expect fluctuations in income. Self-employment income may not always be flat. You may have a few months that your income is soaring and other months that income is low. Set aside the surplus in months that you make a lot of money to supplement during the months you don’t make as much. As time passes, you’ll better understand what causes fluctuations in your income and learn ways to shield your businesses against these changes.

Read up on deductible business expenses. You can reduce the amount of taxes you owe by spending more money on your business. Take time to learn tax-deductible business expenses so you can make better spending choices.

Try not to live from one payment to the next. It’s hard to manage your money well when you’re waiting on a specific client payment to cover your mortgage or other monthly expenses. So instead, try to work at least one month ahead. For example this month, you’d pay your bills with the payments you received last month (or even better the month before that). Likewise, the payments you receive this month you can use to cover next month’s bills. It takes some of the financial pressure off.

Health insurance can take up a big chuck of your money. Health insurance options for self-employed workers aren’t very attractive. You can get an individual plan through a private insurance company, but you generally have to be in good health to qualify. Otherwise, if you have a pre-existing health condition, you may have to get a more expensive health insurance plan that will cover your condition. Seek out your options early so you’ll know whether you can afford it.

If you can be covered under a spouse or parent’s health insurance plan, it’s probably cheaper than getting your own health insurance.

Don’t forget about retirement. With self-employment, you lose the option of employer-sponsored retirement plans, matching incentives, and other retirement benefits. But, saving for retirement is still important. Don’t put off retirement savings until you make enough money. Instead, calculate what you should be saving for retirement and build it into your monthly expenses. Then, work to make your income match.

Being self-employed, there are certain aspects of your finances you can’t take for granted. Give these areas extra attention to ensure your success.