Benefits and Drawbacks of Being Self Employed

The Benefits and Drawbacks of Being Self Employed

Posted on March 14, 2008
Filed Under Income, frugal living |

There are days when I love being self employed. I really do. I don’t have answer to anyone. I can make my own decisions about the business. And then there are times when it sucks!

Whether your business is a blog, a service or a store, these are a few of the benefits and drawbacks. You will note that most of the benefits can turn into drawbacks.

Benefits and Drawbacks Of Being Self Employed

Taxes

It can be a great tax shelter. I am not truly very good at this but I am getting better. There are a lot of things that can be tax deductions if you keep good records such as computers, clothing, gas, business lunches, conferences.

Self Employment Tax. I don’t know if you realize it but if you are employed, your employer pays portion of your taxes. If you are self employed, you pay the whole kit and kaboodle. This can add up to a healthy chunk of change.

Hours

You have control over your hours. The business is open when you say it’s open and when you want to take off, you can. You can take vacations when you want.

The reality of this is that you usually end up working more hours for less money for the first few years. There are no paid vacations, sick leave, personal leave, etc. You will quickly learn that if you don’t work, you don’t earn.

Income

You have the ability to earn unlimited income. This is very true. You don’t have to share your income with anyone except Uncle Sam. What you earn is yours to keep or spend.

There are no paychecks. You don’t get paid at the end of the week. Sometimes you don’t get paid at the end of the month. You get what’s left over after you pay the bills and your employees. Some months I think I am only working for them.

All of these drawbacks will change with time and success. The reason that most businesses fail in the first year or so is because people start them and expect to make a profit in their first year. Most planners will tell you that it takes at least a year and sometimes several years to make a profit from your business. You need to plan on supporting yourself and your business for the first two years.

I thought mine would be different as it was already an established business but I am learning the hard way that it still is challenging the first year.

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