Here is an interesting article I found today while studying. I hope that you all will read it and start a discussion. Its pretty long and, the last time I posted one so long, I got a lot of negative replies from people who did not want to read it (that's fine too). I'll break it down into three parts so that it doesn't seem so daunting. Here is 1-10.
23 Disadvantages of Self-Employment self employment
February 22, 2008
By Shannon Christman
Countless employees dream of leaving behind a demanding boss, working from home, and earning a limitless income. Self-employment, however, is not the same as a life of leisure. As was already pointed out a few months ago, much of the mythos surrounding self-employment is simply mythical. Businesses that promote work from home “opportunities” thrive on our desires to be our own boss or have more time to ourselves. These companies emphasize the benefits of self-employment, but downplay or simply fail to mention the downside of working for yourself. Before you quit your day job, take into consideration these twenty-three disadvantages of self-employment:
1. Small business owners pay more taxes than employees. Even if you keep your business small, employing only yourself, you will find your tax bill increasing. In addition to regular income taxes, you will have to pay both the employee and the employer portions of the social security taxes and extra local business/mercantile taxes (some in the form of licenses). You will likely be paying quarterly estimated taxes, and if you sell something, you are responsible to file sales tax forms. Those last two requirements might not add up to more money, but they will add up to more time spent calculating earnings and filling out forms.
2. When you work for someone else, not only does your employer cover half of social security, but the company might also offer other financial benefits, such as a company match for a 401(k) plan or opportunities to purchase company stock at a discount. When you work for yourself, you lose these opportunities to increase your salary. Any money saved for retirement plans or invested in the stock market comes directly from your own earnings.
3. The self-employed also miss out on paid days off. When you wake up with the flu, you lose out on the earnings for that day. Not only do you have no paid sick days, you also have no paid vacations – and you may miss out on vacations entirely. As Amy pointed out, running a small business is hard work. To make enough money to live on, you will have to put in many, many hours, especially when you first start.
4. Also on the line of benefits, you will have to pay for your own health insurance. Many would-be entrepreneurs continue to work for someone else simply because they can’t afford to buy health insurance and they don’t want to risk debilitating medical bills.
5. Not only do you go without certain personal benefits, you also miss out on some of the benefits longstanding businesses enjoy. For instance, you will not have an established inventory or client list. Even if you bring some clients with you from your previous employment, you will have to spend time and money building assets and a customer base.
6. Unless your business is a franchise, you will have little or no name recognition when you start, and you will have to work hard to build the company’s reputation as you build a customer base.
7. While building your business reputation, you will likely be competing with bigger, more established businesses. These big businesses have more resources and are better able to offer a greater variety of services and/or better prices than you will be.
8. If you cannot afford to hire others right away, you will need to do multiple jobs. In addition to doing the work that actually makes you money, you will spend time in marketing, accounting, and billing among other things.
9. Long hours, already mentioned in #3 above, come along with these extra jobs and the effort of building a business. You may have expected to spend more time with your family, but that benefit of self-employment usually occurs several years past the start of the business — if ever. People employed in nine-to-five jobs often have more time for their families than full-time self-employed people.
10. You have to dedicate time to a new business, but you also have to dedicate money. Some self-employment opportunities (such as freelance writing) have very low start-up costs, but others (retail stores, restaurants) require entrepreneurs to commit a lot of upfront money to the business. Depending on the structure of the business, entrepreneurs may need to risk their existing assets to gain the advantages of self-employment.
23 Disadvantages of Self-Employment self employment
February 22, 2008
By Shannon Christman
Countless employees dream of leaving behind a demanding boss, working from home, and earning a limitless income. Self-employment, however, is not the same as a life of leisure. As was already pointed out a few months ago, much of the mythos surrounding self-employment is simply mythical. Businesses that promote work from home “opportunities” thrive on our desires to be our own boss or have more time to ourselves. These companies emphasize the benefits of self-employment, but downplay or simply fail to mention the downside of working for yourself. Before you quit your day job, take into consideration these twenty-three disadvantages of self-employment:
1. Small business owners pay more taxes than employees. Even if you keep your business small, employing only yourself, you will find your tax bill increasing. In addition to regular income taxes, you will have to pay both the employee and the employer portions of the social security taxes and extra local business/mercantile taxes (some in the form of licenses). You will likely be paying quarterly estimated taxes, and if you sell something, you are responsible to file sales tax forms. Those last two requirements might not add up to more money, but they will add up to more time spent calculating earnings and filling out forms.
2. When you work for someone else, not only does your employer cover half of social security, but the company might also offer other financial benefits, such as a company match for a 401(k) plan or opportunities to purchase company stock at a discount. When you work for yourself, you lose these opportunities to increase your salary. Any money saved for retirement plans or invested in the stock market comes directly from your own earnings.
3. The self-employed also miss out on paid days off. When you wake up with the flu, you lose out on the earnings for that day. Not only do you have no paid sick days, you also have no paid vacations – and you may miss out on vacations entirely. As Amy pointed out, running a small business is hard work. To make enough money to live on, you will have to put in many, many hours, especially when you first start.
4. Also on the line of benefits, you will have to pay for your own health insurance. Many would-be entrepreneurs continue to work for someone else simply because they can’t afford to buy health insurance and they don’t want to risk debilitating medical bills.
5. Not only do you go without certain personal benefits, you also miss out on some of the benefits longstanding businesses enjoy. For instance, you will not have an established inventory or client list. Even if you bring some clients with you from your previous employment, you will have to spend time and money building assets and a customer base.
6. Unless your business is a franchise, you will have little or no name recognition when you start, and you will have to work hard to build the company’s reputation as you build a customer base.
7. While building your business reputation, you will likely be competing with bigger, more established businesses. These big businesses have more resources and are better able to offer a greater variety of services and/or better prices than you will be.
8. If you cannot afford to hire others right away, you will need to do multiple jobs. In addition to doing the work that actually makes you money, you will spend time in marketing, accounting, and billing among other things.
9. Long hours, already mentioned in #3 above, come along with these extra jobs and the effort of building a business. You may have expected to spend more time with your family, but that benefit of self-employment usually occurs several years past the start of the business — if ever. People employed in nine-to-five jobs often have more time for their families than full-time self-employed people.
10. You have to dedicate time to a new business, but you also have to dedicate money. Some self-employment opportunities (such as freelance writing) have very low start-up costs, but others (retail stores, restaurants) require entrepreneurs to commit a lot of upfront money to the business. Depending on the structure of the business, entrepreneurs may need to risk their existing assets to gain the advantages of self-employment.
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I thought so too.
