Advantages & disadvantages of being employed rather than self-employed

Written by jay motes
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Advantages & disadvantages of being employed rather than self-employed
Making the decision to become self-employed is not an easy one. (Jupiterimages/Brand X Pictures/Getty Images)

Though many people dream of becoming self-employed, there are a number of advantages to working for an employer. In many ways, it is simpler and much less stressful to have a job working for an employer than it is to be self-employed. However, there are also disadvantages to working for an employer. Before making the decision to be an employee or self-employed, a person should carefully consider the differences to determine which is best for her personal situation.

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The primary reason that most people work is to gain an income. When employed, most people earn a steady income. However, for the self-employed, income may be unpredictable, varying greatly from one month to the next. Though it is possible to make a lot of money being self-employed, at times many self-employed people find it difficult to locate work. When employed, the employer finds the work for the employee. Another benefit of working for an employer is unemployment benefits, as self-employed people are typically not eligible for unemployment benefits.

Time Management

When working for an employer, the employer sets the employee's schedule and determines what work the employee is to do. For the self-employed, the person must determine when to work and on what. While this sounds like an advantage of self-employment, many people find it difficult to manage to their own time. When starting out, many self-employed people find themselves working more than 40 hours per week and often working odd hours to finish work on time.


There are two large advantages for those working for an employer in regard to taxes. The employer takes care of a making a tax withholding for an employee through payroll deductions. A self-employed person must make quarterly tax payments. An employer also pays a percentage of the employee's Social Security tax, while a self-employed person pays all of it himself. For example, in 2011 the Social Security tax rate is 10.4 per cent, with the employer paying 6.2 per cent and the employee paying 4.2 per cent of the employee's income. A self-employed person must pay the entire 10.4 per cent.


People who work for an employer typically receive benefits. Employers often cover a portion of health, dental and vision insurance and contribute to a retirement plan. For those who are self-employed, they are responsible for paying all of the costs of insurance and saving for retirement. Most employers offer vacation and sick leave. While a self-employed person can take time off, there are no paid days off. Self-employed people must plan for taking time off, which includes saving money to cover this time away from work.

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