The Downsides to Being Self-Employed
For many people, working for yourself seems like a dream, but it actually comes with many challenges that can be difficult for people to overcome on their path to success. Before you move to self-employment, it is important that you understand the potential issues you might face in your new work life. With that knowledge you can decide whether working for yourself is a good fit for your needs or if the traditional work life is something that is a better choice for you.
Higher Taxes
When you work for yourself, you face different tax amounts than you have to pay if you are working for another employer. You are also responsible for keeping track of those taxes yourself, which can be really challenging, especially when you first start out. It is important that you understand the taxes you will face as someone who is self-employed. As you establish your business, you can structure it in different ways that can impact your tax responsibilities as well. Managing taxes can be stressful and frustrating for many self-employed people across industries.
You Pay for Your Own Insurance
Another issue with running your own business or working as a contractor is that you are responsible for your own insurance costs. This isn’t just the insurance you need for your company, but also your personal insurance. When you are working for a company, they provide health insurance among other benefits at a reduced rate (or completely cover those costs) that you don’t have access to if you are working for yourself. Going through an insurance broker can reduce your health insurance costs.
Financial Difficulties
Working for yourself can also lead to some unforeseen financial difficulties, especially if you have never done it before. Sometimes your pay may be less regular when you are working for yourself than if you were able to work for another company. You are also responsible for taking care of your own accounting needs, or paying someone else to do it, which can be a challenge in itself. For some people the financial side of running a business is one of the most difficult elements.
Whether you decide you want to pursue opportunities of self-employment or not is up to you and your preferences. As long as you understand the unpleasant elements, you can make a decision that will work for your life and needs. And then you can focus on the work you decide to pursue.
Read this next: Great Reasons to Quit Your Job and Start Your Own Business
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