Oliver Markus Malloy, in his book Inside the Mind of an Introvert, said “Being a self-employed means you work 12 hours a day for yourself so that you don’t have to work 8 hours a day for someone else.” If we take this on a lighter note, other than working hours there are many advantages of self-employment. Let us explore the advantages and disadvantages of self employment in this blog.
What is Self Employment?
A self-employed individual is someone who generates income based on the expertise they have to offer. The prime benefit of going self-employed is that one becomes their own boss. The range of services offered could begin from financial consultancy, technology-based services, recruitment services, and many more.
A self-employed person engages in the day-to-day operations of their own company. A self-employed individual owns the business and is also responsible solely for its day-to-day operations. A self-employed person may not be referred to as a business owner. A business owner generally hires employees. A business owner may not necessarily be involved in the day-to-day activities of the company.
In the consequent sections, we will see what are some advantages and disadvantages of self-employment.
Importance of Self Employment
According to Investopedia, 16.3 million individuals are self-employed in the USA in March 2022. This number is only going to be on the rise in the future. There has been a significant rise in self-employment after digitization. Also, self-employment is a vast area and people include cab drivers to image consultants, and dog walkers to business consultants. What matters here is what are the advantages and disadvantages of self-employment in the longer run.
It is imperative to consider one’s long-term goal before committing to self-employment. A self-employed individual does not mean being a business owner. A business owner may take up more employees to be able to run the business smoothly. The benefits of going self-employment can be worth the plunge provided you are well primed. Here are a few pointers that will throw light on the importance of being self-employed.
- Having confidence that your skills are bankable
- Appreciative of the value of money
- Higher the risks, the higher the rewards will be
- Ability to plan retirement
The benefits of going self employed are ample. It gives you the freedom to chalk out your work schedule and create a work life balance. But when you look at the disadvantages of self employment then one main concern is erratic pay schedules, lack of control over work flow.
When one is working as an employee, they know they have to get up and got to work every day. They are answerable. But being self employed means you have to be consistent and self motivated.
A few non-negotiable traits for being self-employed are:
- Self-motivated – Self-belief and being self-motivated is a plus when you are self-employed. There has to be a determination to deliver.
- Have a vision – This means you have to think outside the box many a time. Finding creative solutions to problems is an added skill.
- Keen eye to sift out opportunities – Market knowledge is a must to be able to gauge the right market opportunities. One need not be an expert but needs a fair bit of knowledge to succeed.
- Intent to put in consistent efforts – Working as a self-employed person means, one might have more than one client on hand at a time. They have to be consistent in putting out efforts to juggle and maintain the clients.
- Business Management Skills– A self-employed individual also means they do not have an organization looking after all the aspects of the business. So one needs effective business management skills.
These traits will ensure that self-employment is the beneficial choice in the longer run.
Advantages and Disadvantages of Self Employment
It is more than ever now that people across the globe think it is the right time to be self-employed. There is a drive to rise above the mundane grind of daily work life.
Every day there are stories of start-ups. The atmosphere is rife with the entrepreneurial spirit. People now more than ever have confidence in their abilities to be on their own. But on the flip side, many consider choosing self-employment over a stable job as a gamble. And to arrive at a rational decision one has to weigh the pros and cons of self employment before taking the plunge.
To put a smooth sailing career in harm’s way is not the right approach. The best place to begin is to conduct a cost-benefit analysis. Analysis can be exhausting sometimes. It clouds the ability to arrive at a decision. It is wise to explore what are some advantages and disadvantages of self-employment.
Advantages of Self Employment
Self-employment requires some sure-shot set of skills to prevent failure. One of them is the ability to calculate the risk-reward ratio and the ability to plan. One of the prime benefits of going self-employed is enjoying complete autonomy and flexibility to work at one’s own pace. It can prove to be a valuable career choice. Advantage of self-employment is that one reaps the benefits of the hard work they put in. Let’s look at the top skills one needs to excel as being self-employed
You do not have a boss anymore A lot of people have a difficult working relationship with their bosses. This is a cause of mental stress. It also takes away the joy of working. Also, a lot of people have their style of working. When one is working for another employer, there is a pre-decided pattern that has to be followed. Many times there is no room for autonomy or creativity.
In this kind of scenario if one has an opportunity to branch out to a self-employment opportunity then they should take it.
Flexible Work Hours
Of all the pros and cons of self-employment, one pro is that you get to choose the working hours. Every individual is productive at different times of the day. It is best to try to accomplish the most challenging tasks at the hours one is most productive. One is also at liberty to take breaks as they wish to.
The benefits of going self employed are that one has time on hand to attend PTA meetings, pick up children from school, and get the car serviced, the list could be endless. This cannot come at a cost of missing deadlines. One has to strike the balance between being laid back and completing work.
Opportunities to generate more income
Self-employment widens the scope of making more money. As a salaried person, there are deductions made, which is not the case when you are self-employed. You can begin work by charging reasonably. It is best to start charging more once you start getting positive reviews. Here the focus has to deliver what was promised and maintain client relationships.
This is a good way to increase income gradually. There is also an opportunity to take up more work if one has the bandwidth.
Save time on Commute
The advantages of self-employment are that you can choose where to set up shop. You can work from home. Or work from an office space that is close to your home. This way you save time on commuting. Generally, offices have a standard timing, and hence a lot of people spend a lot of time commuting or stuck in rush hour traffic.
Getting stuck in traffic is mentally exhausting after working the entire day. This headache can be prevented if one is self-employed.
Variety of projects to execute
When we consider the advantages and disadvantages of being self-employed, the ability to unleash your creativity is an advantage. In a corporate job, one has a set role and responsibility. There is no room for creativity. When one is self-employed, they can take up a variety of projects depending on their skill set. It is an opportunity to generate income from one’s passions.
There is scope to take up more than one type of project when one is working independently. One can pick and choose the work. This way there is scope to identify one’s niche.
Job satisfaction
When there is autonomy there is scope for resourcefulness. It becomes easy to give the best shot when one has the freedom to perform. Setting and achieving goals, with one’s hard work is gratifying. One reaps all the benefits of the hard work one has done. This makes working for self a satisfying process. It is one of the prime benefits of going self-employed.
Drama free environment
A self-employed person is devoid of workplace politics. Workplace politics are mentally exhausting. Working in a team is not everyone’s cup of tea. Sometimes it is an added pressure. Some people function better in isolation.
Workspace flexibility
When we consider the pros and cons of self-employment, getting to design your workplace is a big pro. You can put as many photographs of your loved ones, motivational quotes, and even items of personal faith that you may not be comfortable keeping otherwise.
Certain people are comfortable using dual monitors which is sometimes not possible at the workplace. You can create your own personal space without being judged.
Every day is a casual Friday
When one is self-employed, there is no formal dress code that one has to follow. One can wear anything they please to. It is especially a boon for the people who are not very comfortable in formals. Being self-employed gives one the freedom to wear what one pleases.
You work with people of your choice
As someone who is self-employed, one has the liberty to choose the type of people they want to work it. A crucial advantage of self-employment is that one can decide the type of colleagues one wants to work with.
This gives one the liberty to choose the type of clients one wants to work with. When you and your clients’ views don’t match, you have the freedom to decide if you want to work with that particular client or not.
Not to worry about the leaves
Many a time managing leaves becomes a hassle. When we think of all the advantages of self-employment, having the liberty to take leaves as and when required is a benefit. There are days when you are ill or are not in the frame of mind to work. Here being self-employed becomes a boon.
A self-employed person is not answerable to any superiors or HR as to why they had to take the leave. Also when it comes to health insurance, one has the freedom to decide what one needs. They are not dependent on the decision the employer takes for them.
Tax Savings
One might wonder what are the tax advantages of being self-employed. Who does not love tax deductions? As a self-employed person, one is eligible to tax deductions. A lot of costs incurred can be classified as business expenses, which can be claimed on tax. These expenses may range from marketing, IT, insurance, a new car, and even equipment.
It is always advisable to consult a registered tax consultant to guide you on the pros and cons of self-employment tax.
Disadvantages of Self Employment
Every individual has a different life goal and purpose. The means to attain these goals are also different. As lucrative as self-employment sounds, there are disadvantages of self-employment. Before taking the final plunge it is wise to assess the pros and cons of self-employment.
Let’s look at the possible disadvantages of self-employment.
Irregular Monetary Flow
The initial stages of self-employment can be challenging. Every time things may not go as per plan. Every wise individual makes a plan beforehand, but things may not turn out as expected.
There is no initial guarantee of a stable income. Even in the future, there can be a possibility that the income may be erratic or even not enough.
A thin line between work and personal life
One of the disadvantages of self-employment is that a few of them cannot maintain a work-life balance. Especially when one is working from home, there is a possibility that few people cannot draw boundaries between work and play.
Loneliness
When we think of all the advantages and disadvantages of being self-employed, isolation is something that comes to the fore. The recent pandemic has thrown light on how working in isolation can cause mental disturbances. Initially, it might be thrilling not having people around but then many times loneliness creeps in and affects productivity. This in the end affects the business as a whole.
Client retention
A self-employed person may or may not have the bandwidth to handle a big client. Also, many a time a newbie self-employed person does not have the expertise to handle the complete client requirement. It can be overwhelming for some. All this negatively affects the quality of work and in turn, leads to a long-term loss.
Multitasking
Not everyone is a pro at multitasking. For such individuals, this is a disadvantage of self employment. One has to take the responsibility of bagging a project and executing it within the promised guidelines. This process has many steps and is not as simple as it sounds. If this is not ones strong suit then one should not consider self-employment.
Longer working hours
A 9-5 job most of the time has fixed working hours. One has the option to shut shop and go home for the day. As a self-employed person initially one has to put in long hours to set the ball rolling and generate enough revenue. This may be disheartening for some as sometimes the results take time to show up.
Conclusion
We, at Multiplier, work to help you in planning your self-employment journey. You take care of your company and its employees while we take care of your HR wing. At Multiplier, we understand that there is a difference between being an Independent Contractor Vs. Self Employed. Being a self-employed person means taking care of details like onboarding employees, hiring freelancers, handle payrolls and many be managing the self-employed pay stub.
We act as your local HR team and provide complete assistance in going global. We provide EOR services with local legal experts to aid you in setting up the best teams from across the borders. As PEOs, we understand the repercussions of noncompliance. Hence we, help you stay compliant with local labor laws and regulations. At Multiplier, we also set in order your global payroll and global employee benefits.
If you are looking to outsource your HR, we sincerely hope your search ends with us.
Contact us to learn more.
