Advantages and Disadvantages of Self Employment
Advantages and Disadvantages of Self Employment
Advantages and Disadvantages of Self Employment
Adam Dworkin
CPA
188 Whiting Street
Suite 10
Hingham, MA 02043
781-556-5554
[email protected]
Are you someone who likes a nine-to-five routine and collecting a regular paycheck? When you're self-employed,
you must be willing to make sacrifices for the sake of the job. You're going to work long hours, which means that you
won't have as much time as you used to for family or leisure activities. And if the cash flow becomes a trickle, you're
going to be the last one to get paid.
Can you get along well with all types of people? Being self-employed is all about managing relationships--with your
clients or customers, your suppliers, perhaps with your employees, certainly with your family, and probably with your
banker, lawyer, and accountant, too. If you're the type who wants to be alone to do the few things that you're good
at, then you should do that--for someone else.
Are you a disciplined self-starter? Being self-employed means that you're your own boss. There may be days when
you'll have to make yourself sit at your desk instead of going for a long lunch, or (especially if you work out of your
home) place those business calls instead of reading the newspaper.
Finally, do you enjoy wearing many hats? Depending on your line of work, you may be involved in handling
marketing and sales duties, financial planning and accounting responsibilities, administrative and personnel
management chores--or all of the above.
Being your own boss means that you'll be in control of all of the decisions affecting your working life. You'll decide
on your business plan, your quality assurance procedures, your pricing and marketing strategies--everything. You'll
have job security; you can't be fired for doing things your way. As you perform a variety of tasks related to your work,
you'll learn new skills and broaden your abilities.
You'll even have the flexibility to decide your own hours of operation, working conditions, and business location. If
you're working out of your home, your start-up costs may be reduced. You'll also experience lower operating costs;
after all, you'll be paying for the rent and utilities anyway. If the location of your work isn't important (perhaps you're a
freelance writer or a consultant), you can live wherever you want. At any rate, if you work at home, you'll greatly
reduce your daily commuting time and expense.
If all goes well and you're making money, chances are you can make more than you did working for someone else.
And since you're working for yourself, you may not have to share the proceeds with anyone else. The fruits of your
labor will be all yours, because you own the vineyard.
Remember that you're not making any money if you're not working. You don't have any employer benefit package,
which means that it's going to be hard for you to go on vacation, take a day off, or even stay home sick without
losing income. It also means that you'll have to provide your own health insurance and retirement plan. Remember,
too, that you can choose your clients or customers, but you can't control their expectations or actions. If you don't
come through for them, or if you do something that offends them, you might not get paid for your work.
Because you're working for yourself, you're going to have to take care of everything yourself, from figuring your
taxes to watering the office plants. You'll probably need some new skills, such as bookkeeping and filing quarterly
taxes. You can learn to do these things yourself--many software programs are designed just for this market--or you
can hire others (e.g., an accountant) to take care of them for you. If you're not careful, however, you may find that
you're spending more time on the business of being in business for yourself than you are on the work that attracted
you to self-employment in the first place.
To the extent that this material concerns tax matters, it is not intended or
written to be used, and cannot be used, by a taxpayer for the purpose of
avoiding penalties that may be imposed by law. Each taxpayer should
seek independent advice from a tax professional based on his or her
individual circumstances.
These materials are provided for general information and educational AKD Consultants
purposes based upon publicly available information from sources believed Adam Dworkin
to be reliable—we cannot assure the accuracy or completeness of these CPA
materials. The information in these materials may change at any time and 188 Whiting Street
without notice. Suite 10
Hingham, MA 02043
781-556-5554
[email protected]
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October 01, 2013
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013