Pros and Cons of Working For Yourself
You’re not sure when the idea entered your head. Maybe it was the negative coworker who bothered you all afternoon while your boss dodged your pleas for help. Maybe it was the 100-some-odd resumes you sent without a single response. Or maybe it was the hour-long meeting to discuss the company’s new ink-toner management protocol. But the idea is in your head now, and it’s not going away: You should go to work for yourself.
There are a lot of advantages to self-employment, chief among them no meetings extolling the virtues of ink-toner management. But there are many disadvantages, too. Before you go all in, you need to weigh these benefits and downsides to see if self-employment is right for you. To help you out, we’re breaking down the most common pros and cons of working for yourself.
Pro: You’re The boss
Working for yourself means you set the course and build your own brand. You’ll decide what projects to take on and which ones to pass on. You’ll also choose how expansive you want the business to be. You can work toward a six-figure income or pursue part-time opportunities for some extra income. You’re the boss, boss.
Con: You’re The Boss … Kinda
But you’ll need clients. You’ll have your ideas, and the clients will have theirs. Since clients pay for the work, they have a say in the final product. This fact makes every client a type of partner. As we mentioned, you can decide a project isn’t for you, but say no too often, and you won’t have enough income to support your new business.
As the boss, you won’t be able to focus exclusively on your work. You’ll need to create systems for budgeting, networking, and advertising to find clients to work with.
Pro: Setting Your Price
Businesses hire independent contractors because they either aren’t equipped to perform a certain task or the one-time expense doesn’t warrant taking on a full-time employee. This means you can negotiate for more than you’d typically get at an hourly wage. If you do quality work, you’ll gain long-term relationships and good word of mouth, netting you more work down the line.
Con: Haggling Over Price
But while you can set the price you want, that doesn’t mean you’ll get it. When working for yourself, you aren’t guaranteed a fair wage (or even minimum wage). Clients want the best product for the lowest price. If your services aren’t in demand or there is fierce competition in your area, you may have to settle for less or run the risk of pricing yourself out of the market.
Pro: You Manage the Money
When you work for yourself, you hold the keys to the coffers. If you complete a project for $1,000, then you get $1,000. The money won’t be dispersed through company middlemen, and you have carte blanche in how to invest it. You can, for example, choose the insurance and retirement plans that best suit you and won’t be stuck with whatever benefits your employer offers.
Con: You Manage all the Money
But your checks won’t come reliably every other week, and collecting your income will be your problem. You’ll need to invoice clients and keep track of who has paid what and when. If a client reneges on a contract, you have to decide whether to pursue the matter or write it off. When the expenses of running a business are yours to bear, suddenly you’re the one worrying over ink.
Pro: The Boons of Tax Season
Come tax season, you’ll be able to deduct much more of your income. What to deduct and how to deduct it is a whole other article—several articles, actually—and will depend on your business. Some standard examples include portions of your utilities, your rent/mortgage, and equipment purchased for business use.
Con: And the Burdens of Tax Season
But you will no longer have an employer setting aside your taxes. Instead, you’ll have to file estimated federal, state, and local taxes every quarter. You should also prepare for higher taxes, more paperwork, and additional expenses for things like a business license.
Sure, you can hire an accountant, but then you’ll have another expense to manage. If you’re the kind of person who loathes dealing with taxes, this con may be a deal breaker.
Pro: Make Your Own Schedule
Start the day at 3 in the morning, or sleep in, and get to work at noon. It’ll be your choice. Also, your days will no longer be centered on an eight-hour chunk of time dictated by someone else. Your schedule can be shaped around activities that are important to you, such as reading, working out, or spending time with friends and family.
Con: Scheduling Around Deadlines
But chances are you’ll need to secure work from several clients at once. This will mean scheduling enough time to meet multiple deadlines. If you don’t allot enough time to complete all your projects, your work will be late and subpar, which will ruin your relationships with those clients.
For the self-disciplined, making your own schedule can be the key to work-life balance, but for those who lack self-discipline, it is a source of late nights and stressful days.
As you may have noticed, for every pro there is a con. You may like your take-home pay, but setting aside quarterly taxes is a pain. Making your own schedule is the best, but when you have bad days, there's no salary to fall back on. Ultimately, your decision won’t be determined by whether there are more pros than cons, but whether the pros are beneficial enough for you to live happily with the cons.