Some people toy with the idea of leaving their jobs to start their own business. Being self-employed has it's advantages and disadvantages. And before taking this step, it's wise to consider every aspect of being self-employed, and then decide if this life is right for you.
As a self-employed person, you make the decisions for your business. You can work from a location outside of your home or run the business from inside of your home. You can begin your workday early in the morning or closer to the afternoon. You can also decide when you're going to work. For example, you can take a weekday off and possibly work one day on the weekend; or work longer hours three days a week and have the remaining four days off.
When working outside the home, employers decide your salary and they make the decision to give you a raise. As a self-employed individual, you can control your income and the opportunity for growth is limitless. If you need a temporary or permanent income increase, you can choose to work longer hours or find new clients to generate additional revenue.
Less Hours, More Income
Because employers have more overhead and they pay several employees, they often can't afford to pay out huge salaries. Being self-employed presents the opportunity to earn more money while working less hours. For example, a local newspaper may pay a staff writer £9 an hour to create content for the newspaper. However, a freelance writer can possibly make double or triple this amount in an hour working as a contractor for print publications, local businesses and websites.
Taxes and Insurance
Being self-employed involves planning ahead financially. There's no company health insurance or retirement plan, and there's no employer deducting taxes from your paycheck. Self-employed individuals pay for their own health insurance, which can present a huge financial burden. And they have the responsibility of speaking with a financial adviser and planning for their own retirement by starting an IRA (individuals retirement account). There's also the tendency to spend all income earned during the year, wherein there's nothing left for paying income taxes.
While some self-employed individuals can work fewer hours and increase their income, others risk burnout by working long hours. Running a successful business requires dedication; and if operating a business from home, it's often hard to separate business from work. Without balance, some self-employed people run into the problem of working around the clock and on the weekends.
Businesses can fail without a steady stream of clients or work. As a self-employed person, you're entirely responsible for the success of your business, and you have to generate business to earn money. Lack of motivation, discouragement and physical factors such as illness or injury can jeopardise the success of your business.