Online savings accounts for the self-employed

More than 10 million Americans are self-employed, according to the Bureau of Labor Statistics. Freelancers, entertainers, contractors and other self-employed workers also take on more personal fiscal responsibility than employees.

As most people know, employers shoulder certain burdens of money management for their workers. By contrast, self-employed professionals take on the duties of both employer and employee, managing money at both ends of the supply chain. Although this arrangement comes with additional responsibility, it also offers some useful opportunities to help their money grow.

Online savings accounts ideal for self-employed

Online savings accounts help banks eliminate some of their overhead expense, notably in the area of paper correspondence, so banks offer elevated interest rates and other incentives to encourage online savings. Contract and freelance workers often receive a majority of their income with no taxes withheld. Many choose to set up a dedicated savings account to set aside a percentage of each paycheck for income tax purposes.

Successful contract workers might end up with many thousands of dollars in their tax account. Professionals should shop around to find the right high-yield or online savings account with an interest rate as high as 2 to 5 percent. For example, if you put $5,000 in an account paying 3 percent interest, you'd earn $150 in interest after a year.

Why online bank rates are often higher

Often, the banks that offer the best online savings account interest rates also put certain requirements in place for account holders. One common requirement is a high minimum initial deposit, up to $10,000 in some cases. The bank does this to ensure they have a decent volume of high-balance deposits.

Banks are able to offer such favorable rates on high APY savings accounts because of lending demand, transaction volume, and other drivers of a bank's revenue. Get as much data as you can before making a commitment to one particular online bank.

A few hundred dollars extra per year may not seem like a big deal, but anyone who's had that kind of money around when a need arises will tell you differently. If you're self-employed and plan to maintain a "don't touch" savings account to keep track of tax money or other business expenses, there isn't any reason to settle for a run-of-the-mill APY. You've found a way to work for yourself and, with the right online savings account, you can find a way for your money to work for you, too.

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