The Advantages and Disadvantages of Being Self-Employed
There are several advantages that come with being self-employed. You get to be the boss, dictating what you do, when you do it, and even where you do it from. There are, however, also a variety of drawbacks to being self-employed. Understanding the pros and cons of self-employment, can help you to determine whether you are ready to strike out on your own or not.
When you’re self-employed you are the one in charge. For most people that may sound like a huge advantage, but it can actually be a drawback, depending on your personality. While you get to determine what you do each day, that doesn’t mean you’ll always make a wise decision. Having a boss helps keep you focused on the business objective by ensuring there is someone monitoring your progress, with an expectation of results.
Being your own boss also means that all of the answers to any given problem or situation have to come from you. While it is possible to consult with friends and colleagues for professional advice, the final decision is always going to be yours, which can be a lot of pressure. At the same time it forces you to wear many different hats, learning whatever skills or disciplines are necessary to complete a specific job. Some people love learning, and consider that to be one of the big advantages of being self-employed, but for others it can be somewhat overwhelming.
While being self-employed means there is no boss directly over you, it does not mean that you don’t have to answer to anyone. Whether you are selling a product or service, the individual paying you is the one that you will have to please. With a manager you have a single person that you have to learn how to handle, but with customers you’ll have multiple people, each with their own personality, that you’ll have to work with on a regular basis.
One of the major disadvantages of being self-employed is it can make doing your tax return more complicated. As an employee you may do your own tax return or pay a small fee for a tax professional to prepare it. As a business owner you will need to hire a Certified Public Accountant, and or a bookkeeper to handle salary requirements and obligations to the state and IRS. If you are unable to pay a professional to handle these compliance matters, you’ll have to educate yourself on the proper forms to file, the amount of money that has to be withheld from each paycheck, and when to pay your taxes. Failure to understand these issues can get you into a lot of legal and financial trouble.
There are a number of advantages and disadvantages associated with being your own boss. While it does afford you the freedom to determine your own destiny, it can also make your life much more complicated and stressful. That is why many people start slow, working part time in the evenings and weekends on their business, to get a feel for their own ability to handle challenges as they occur, before making the decision to move to full time self-employment.
Picture by Michael Ast