Benefits Game

Question: Working as a freelance translator has been a good experience so far. However, I'm having trouble securing individual health insurance, setting aside retirement funds (since my income fluctuates), and taking a vacation--I can't afford the drop in income and possible loss of clients while I'm away. Any advice?

Susana Haake, Goleta, California, haakers@rain.org

Answer: You're not alone in worrying about how to provide for benefits like vacations, health care and retirement. These concerns are among the most critical issues facing those of us who are or want to be self-employed.

The key is developing a new attitude about these responsibilities. The costs of benefits are simply part of the costs of doing business. You must build them into your fee structure and set aside the funds needed to cover them. That said, let's look at some options for getting past the hurdles.

Obtaining affordable health insurance is a national crisis, especially for the self-employed. Professional associations are able to negotiate "open enrollment" periods with the insurance company they choose for their members. Also, California has a mandatory small-business health insurance provision: If you have two people working in your company, which can include your spouse, you can get private health insurance. Contact a local insurance agent to find out if such a provision exists in your state.

You might also try joining an HMO. Shop around for rates before submitting a full application, however, because some insurers ask if you have been turned down elsewhere. And you should never misrepresent your situation on an insurance application.

As for retirement needs, the real solution lies in Congress passing legislation allowing us to invest half the Social Security tax we pay (the self-employed pay both the employer and employee share) into a private retirement account. For now, try to take 10 percent off the top of all income and put it into a SEP-IRA or other retirement account.

Finally, schedule vacations during your slowest times, and arrange for other translators to cover for you in exchange for doing the same for them. Or schedule several mini-vacations over long weekends instead of vacationing over extended periods of time. If affording them is still difficult, you may not be charging enough, or you need to form a marketing plan to bring in more business.

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Small-business experts Paul and Sarah Edwards recently released their second edition of Getting Business To Come To You (Tarcher). If you have a question regarding a start-up business issue, contact them at http://www.paulandsarah.com or send it in care of Entrepreneur.

Start Smart

I want to build a collections agency--but how?

Question: I'm interested in starting my own collections agency, but I'm unclear about the rules and regulations I must follow and the types of software I'll need.

Jason Carter, Kirkland, Washington, jasonc@seanet.com

Answer: We dropped "collections agency" from our new edition of Best Home Businesses (Tarcher) due to the hostility of the American Collectors Association (the industry trade association, http://www.collector.com) toward homebased collection agencies, and because all the homebased agencies we'd previously interviewed were no longer in business. One of the most successful specialties in the past, collecting court-ordered child support has been pre-empted by state governments which, as a result of federal legislation, can now garnish the bank accounts of delinquent parents.

Become familiar with the Fair Debt Collection Practices Act, available at http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm. You can also find good collections software programs such as Debtmaster from Comtronic Systems (http://www.comtronicsys.com). Call (509) 674-7000 for more information.