There are so many pros and cons of self employment. Some benefits and drawbacks might seem obvious, but some I discovered after I started working for myself. Depending on your lifestyle and personality, self employment could be a beautiful or disastrous thing.
It’s essential to be honest with yourself and make a decision that’s best for you. What works for one doesn’t necessarily work for all. Some people value the security of a 9-5 job, and some people value the freedom of self employment. There is no right or wrong answer here.
Pro: You can work from home.
Working from home is much different than working in an office, and it can be a difficult adjustment. Once you get used to working from home, you might find that it’s 100% better than being stuck in a poorly air-conditioned office. You can work in pajamas if you want (though I don’t recommend it).
Con: Working from home is distracting.
Some people cannot get used to working from home. They could have too many distractions like children or a mountain of laundry, or they might not be able to get into a work mindset in their current household.
That doesn’t mean that self employment is off the table. Many self employed individuals rent out office space or work in coffee shops or coworking spaces. You might decide you want to open a retail store or do a job that doesn’t require a full-time office, like house painting.
Pro: You can set your hours.
The 8-5 or 9-5 grind can be taxing, especially if you’re introverted, creative, or prefer to take a siesta after lunch. Other careers might demand even longer shifts like nurses or factory workers. If you sense you’re getting burned out with your job, long hours could be the culprit. If you could make the same amount of money (or more) but work only when you’re feeling inspired, self employment might be an ideal option for you.
Con: You might find yourself working too much or too little.
If long hours are an issue for you, many progressive companies offer unlimited vacation time and sick bank. These benefits can be priceless and far outweigh self employment for some individuals.
When you’re self employed, you need to do two things: work and then find more work. That is a hustle, and some entrepreneurs might find themselves working way more than 40 hours a week to get things going. When you’re a workaholic and self employed, there’s no one there to encourage you to slow down a little. To some, this might be a good thing, but it could be a significant con, too.
On the other side of that coin, some people might lack the motivation to work enough to make ends meet. Their self employment might turn into being a couch surfer, whereas a job with a boss would provide some more accountability and encouragement to stay on task.
Pro: You could make more money when you’re self-employed.
Of all the pros and cons of self employment, this one might be the one that gets the most people to make the switch. If you are talented in your field and realize you could make more money doing it yourself and have more freedom, then why not try it out for a while? You could have big ideas that could pay off in the long run and provide you more fulfillment than staying in a job with limited upward mobility. As a bonus, you’ll easily be able to afford the added expenses that come with self employment like taxes and healthcare.
Con: You’ll pay more in taxes.
Sometimes it seems like you’re making more as a self employed person when you’re not. Remember, your taxes aren’t being deducted from your checks. I recommend that any newly self employed individual open a separate bank account and deposit 30% of your earnings in that account. This step will help you pay your quarterly income taxes, which will undoubtedly be higher than if you were working a desk job with the same income.
For a quick and non-expert look at taxes, you’ll likely pay more because you’ll need to pay self employment tax in addition to other taxes. You could open an LLC or a corporation to lighten your tax liability. Be sure to consult a tax advisor, so you’re able to set aside enough in taxes and know which option is best for your business.
Pro: You can take a vacation whenever you want.
Yes, when you’re self employed, you can take a vacation whenever you want. You can go during the offseason. You can venture off on any random Tuesday. Depending on your job, you could even bring your work with you.
Con: There are no built-in benefits or paid time off.
In some cases, you might have to work while you’re vacationing. Unless you have a team of employees and a business with benefits, chances are you gave those benefits up when you became self employed. You might pay more for healthcare, have to set up your own IRA, and have no paid vacation time. This is a tradeoff many people make when they decide to work for themselves.
Now that you’ve read some pros and cons of self employment, does the good outweigh the bad? Only you know for sure.