what are the disadvantages of self-employment?

Question

what are the disadvantages of being a self-employed?

Answer 1

Health Insurance, other insurance, paying the employers part of social security and medicare taxes, all the tax forms, licenses, and local taxes. Worrying about where the money is going to come from to pay the bills (cash flow) during the first few years, spending 12-14 hours a day at work. Some people are cut out for self employment, others can't handle all the stress. You really have to experience it to understand. I never learned a lot of the headaches from any book.

Answer 2

The advantage is being your own boss. The disadvantage is being your own boss. It really is true. Self-employment really depends on the person. What type of self-employment? Are you just working for yourself or will you have employees? You have to possess the right mind-set. You will have no one to push you. You have to motivate yourself to wake up each morning, hit goals, day after day. Yes, you’ll have freedom sometimes to set your own hours. But- realize that you’ll need additional time for paperwork. You need a business license. That license has to be renewed annually. You need to report and pay monthly sales tax if you collect sales tax. You need to report employers’ federal forms every quarter- and may have to pay monthly if the amount is greater than a set amount. You need to check into liability and insurance. Then, there are the regular tax deadlines for W-2s and your earnings report. Also, think about health insurance. The larger corporations offer the best/lowest cost health insurance. It’s a risk. Yes, it can have many rewards- but weigh all the risks first- and make sure that you got savings to tide you over.

Answer 3

You have to pay "self-employment" tax in addition to whatever is taxed on your take home salary. You have to predict your income and pay quarterly taxes throughout the year. It is difficult to buy medical insurance or any disability benefits policy. If you can, the prices will be very high. Other expenses: liability insurance and / or bonding costs.
Then again, if you will be taking in a generous income as a result of this business, it should still add up to having more money in YOUR bank than if you were employed by someone else.

Answer 4

We are familiar with self employment in the building industry. My husband had always worked for someone else as a concrete finisher. Although it was hard pysical labor, at the end of the day her could go home and forget about it. Now as owners of our own finishing company thoses days are over. There are no office hours. We take calls 7 days a week at all hours. (although he hates that it has to be done in order to get the wok. He is responsible for not only doing the work but now driving all over giving estimates at the end of the day or on the weekend after he has spent the entire day pouring concrete. Advertising, tawes, financial obligations he once didnt have to deal with are now our responsibility. We have no benefits because they are outrageous. But it is not all bad. The money can be really good. He makes his own hours. Can take off to be with family at anytime. So dont let me discourage you. These are just some things to take into consideration. Best of luck to you!!!!

Answer 5

Higher risk but potentially higher reward. If you are risk adverse, this is a disadvantage. The way you frame your question, tells me you are a "glass is half empty rather than a half full personality". Self employment is probably not such a good idea.

Answer 6

As one who is self-employed, let me say the few disadvantages are:
no health coverage, you must buy your own,
you have to make sure you get paid, no guaranteed payday.
this could be good or bad, "you have to pay your own taxes, but if you are home based, you have tons of write-offs!" Good luck.
check out nolo.com

Answer 7

For me it was the sales pipeline - I was in consulting and could not find the time to win new projects and deliver what I had won at the same time. As a result my income was up and down too much.

Answer 8

I don't know the exact percentage these days, but the statistic is generally, "60% of all new businesses do not last more than 3 years". So, MOST new businesses are not around in their 4th year.

There are several books on the subject...perhaps thousands in fact, but I like to listen to "books on tape" to educate myself; I can drive in my car and just listen to the tape instead and learn all I can. One of the tapes that I recommend is "Visionary Business" by Marc Allen. He explains all of the trials and triumphs that he had in starting his own business.

Just see if you can find the tapes to borrow from your local library and listen to them in your car. You will be glad you did!

http://www.audible.com/adbl/store/CJProduct.jsp?productID=BK_NEWL_000009

Answer 9

You can't give your boss the finger and walk off the job.

It's no fun to steal office supplies.

Sleeping with the boss won't get you ahead.

Answer 10

Unless you are paying your voluntary monthly contributions (ie. insurance and other medical benefits), you will not be entitled to all of this. No pensions.