For most people, the idea of working for yourself may seem like a fantasy, but as it turns out, it’s far more possible than most people think. With the major advantages that we have had in the past few decades, creating an at home business is easier than ever. Though many people still wonder what the benefits of being self employed are. If you are at all curious as to what this is like, then you’re in luck, because I’m going to break it down for you.
Though, you should know that not everything is all sunshine and daisies. There are some significant downsides to being your own boss as well, and you need to know what they are if you’re planning to give it a shot.
The Benefits of Being Self Employed
You Don’t Have a Limited Income potential
This is possibly the greatest advantage to being fully self employed. When you work for yourself, the only limits that are on your income potential are how hard you are willing to work for it. Well that’s not entirely true. If you are in a very limited market, then there isn’t a whole lot you can do, except that with the internet, you can often find new means of getting income.
So what I said still stands true, it’s just that you may have to reach outside your current realm of influence to add more value to other people’s lives.
With that said though, being able to work on what you want, when you want, makes a huge difference in the way that you get paid. Not only does it mean that you don’t have to worry about whether or not you can get overtime pay , but you also know that not all work is created equal. So you can put more time into the things which are more lucrative.
You Set Your Own Hours
This kind of depends on your business, a lawyer probably isn’t going to do too well practicing at midnight, however for a lot of jobs, you can essentially pick whatever hours you want. And that is priceless.
Imaging not having to get up at 6:00 just to have breakfast, and get to work by 8:00. No instead you can wake up when you feel like it, and get to work when you are at your best.
Although a lot of self employed people tend to prefer to stick to schedule, this is especially true when they have to work with the public. Still, you can decide what your regular hours are going to be, which is nice if you have family obligations.
I don’t think that working for yourself just so you can get tax deductions is the brightest idea, but I would be remised if I didn’t include them on this list. When you are self employed you can write off so much of what you spend that it’s unreal.
Though, a lot of people misinterpret what writing off these deductions means, because there is the constant thought running around that if you write it off, then it’s free, and that just isn’t the case.
The way it works is a bit more like getting a rebate. When you write off a deduction you don’t have to pay the income tax on the money that you spent to buy the item. The difference here is that you still have to pay for it, there just aren’t as much taxes on the purchase.
With that being said, the stuff that you can write off is awesome.
• Entertainment: Do you need to woo a client by taking them out for a game of golf? Well great news then, because that is something that you can write off. You don’t get the full value though, only 50% can be deducted, but that doesn’t mean that it isn’t nice come tax season.
• Meals: 50% as well for business meals can be taken out of your income tax. But you do of course have to save the receipt, and it has to be related to business. Which means that you either have to be talking with a client, or if it is a related business travel expense.
• Transportation: You can get quite a hefty tax break by just keeping track of your miles. So if you use your personal vehicle for business then keep track of them. The standard mileage discount is the simplest way to go about this. Do remember though, that you can only use the miles that were related to business use. If you start trying to fudge the numbers you may well end up getting audited, or worse.
• Travel: If you have to travel a lot for work, then the good news is that you can deduct a lot of those expenses. Your plane ticket, your room, and rental cars can all be write offs. Although, you are going to have to make sure that this is a business trip. So keep records proving what business you did, and if you are using it as a bit of a vacation at the same time, the make sure to keep those expenses separate.
Related article: How to Save Money On Flights
• Home Offices: You can claim any room in your house that is dedicated solely to business purposes as a tax deduction. Although to get the maximum out of this is rather complicated. The easiest and safest way to go about this deduction may not save you the maximum, but it might be worth it for the time that you have to spend getting the extra back.
• Internet and Phone Services: Yes, even the phone and internet that you use for you business can be written off come tax season. Which can add up to a lot of money over the course of a year. Think about this a business phone can easily cost 60 bucks a month. Well that would be $720 year in write offs, and that’s just for one thing!
• Health Insurance: You might be thinking that becoming self employed means that you have to live without health insurance, but that just isn’t the case. It’s true that you have to pay for this cost yourself, but you can write off your premiums come tax time. And since the rates for self employed individuals are much higher, it can add up to one ridiculously big tax break.
• Work Equipment: Anything you actually need to work can be deducted. So if you are on the market for a new computer, then realize that so long as it is used for work, you can easily get a nice amount of cash off the price when the end of the year roll around.
There’s No One to Tell You No
I think this is one of the best benefits of being self employed. There isn’t anyone to stop you from making a business decision. There’s no group that you need to go to, you don’t need the boss’s approval, you just do what you think needs to be done.
There are downsides to this of course, if you make a bad decision it’s on you. There is no place to put the blame than squarely on your shoulders. But it still makes things go a lot quicker.
You Can Save a Lot of Money
It’s not just on taxes that you can save money either. If you run your business from home, then chances are that you aren’t going have to pay a dime for transportation. Think about all of the money on gas and car maintenance you can save just because you don’t actually have to go anywhere to get to work.
And then there is the saving on clothes too. You don’t need to own a suit if you are just going to be sitting in front of a computer on you couch. Granted, there may still be times that you need to look professional, but that’s still a lot less wear and tear on expensive clothing that you would otherwise be spending.
Food is another thing that you would probably overlook. If you are truly working from home, then there is a good chance that you aren’t going to go anywhere for lunch, and that 10 bucks a day can add up to quite a bit over the course of your career.
Related article: How to Save Money
You Can Outsource Your Work
I don’t know how many times I heard the story about the guy who outsourced his own programming job to China, but I can remember thinking “I wish I could outsource my job.”
Whether or not he was in the right to do what he did, the facts remain. Not everything is worth your time, but it might be worth someone else’s. There are certain tasks that need to be done, like bookkeeping, but when you work for yourself, you can hire someone to take over the parts that you don’t want to do.
The best part about this is that it frees you up to focus on the things that truly matter. You should be spending you time doing what makes your personal brand grow the quickest, and if that is getting new clients, then maybe it’s time to hire someone else to take care of cleaning the bathrooms.
You Can Fix Problems
One of the biggest issues when working for someone else, is that you can’t always just fix a simple problem. If you are using a program to manage your spreadsheets and you know there is a better one that would save you hours of work, then you have to convince your boss that the upgrade is worth it. And then if they say no, well that’s all there is to it. You can keep pestering them, but that’s also a good way to lose your job.
But when you are in command, it’s a different story. If you have a problem, then you can fix it. Don’t like what computer you are using, change it out. What about your banking and payroll systems? No problem, just find a new one. Everything that is a major hassle can be taken care of without having to consult a single other person. Which can make work significantly easier on you.
It’s More Flexible
If you work 100% online then the flexibility is amazing. Not only do you not have to go to the office, but if you need a day off, then it’s yours. There’s no one to talk to, and no such thing as sick days, just take what you need when you need it. The downside to this of course is that you don’t get paid for the days that you don’t work. So it’s kind of a double edged sword.
Your work environment is up to you as well. Even if you don’t want to just stay home all the time, that doesn’t mean that you have to drive downtown and sit in a cubicle. No, you can go to a local coffee shop, and get to work. Or even better, you can work while you go travel the world. It’s pretty hard to beat that.
The government in the U.S. offers some pretty enticing retirement plans for those who decide to become self employed. With Simple IRA and Solo 401(k) plans you can set up a fat retirement.
When you work for a company, most retirement packages will give you a matching option. In which the employer sets aside some money, equal to the amount of money that you put into your retirement fund. Because of this however, there are limits to what can be put in.
Now that’s not to say there aren’t limits when you are going solo, but one of the benefits of being self employed is that the limits are much higher.
It’s Not All Sunshine and Rainbows
With all that said, it’s also important to note that working for yourself is not always going to feel like you’re on easy street. There are a bunch of issues that don’t even cross your mind until you give it a go.
With all the freedom that comes with working for yourself, it’s all too easy to forget the nice parts of working with an already established organization. And keeping yourself motivated is a big issue. It’s one thing to know that if you don’t go into work you are going to get fired. But on the other hand, it’s far too easy to fall into bad habit working alone.
If you can take time off whenever you need it, it’s very easy to get to the point where you stop thinking of work as a priority. If you let it slide too much, you’ll find yourself putting off work for every menial task that sounds more bearable than sitting down and getting to work.
So it’s important to keep yourself motivated, and stay focused on getting the job done. Just remember, that’s all up to you. No one else is going to tell you “You need to get to work now.”
Making the Most of Your Time
There are 10,001 little things that come along with starting your own business. the File this document, check your email, fix your computer, call this client back. It just keeps piling up, it never ends. So one of the biggest issues is learning how to make most of your time.
You need to learn exactly what is worth doing, and make sure that you put a priority on that. Because although there are many benefits to being self employed, having a set list of tasks to do isn’t one of them.
If you go around resolving every little problem that gets in your way, then you are never going to get the big stuff done.
You Have to Fix Everything
The other side of the equation is that when there is a problem, it’s all on you. If you find out your email list is broken, then guess who needs to take care of it. You do. That’s the cold hard truth. Every single problem that pops up will eventually need to be taken care of, and it’s not somebody else’s job, it’s yours.
Here’s where normal jobs get it right (at least most normal jobs). You have to have balance between your work and personal life. If you go to an office, most places won’t let you work 12 hour days every day, but if you work for yourself, then that’s easy to slip into.
On the other hand, you can slack off too much without anyone noticing. So finding the balance between work and the rest of your life becomes your responsibility. In the end it’s just another thing that you have to manage.
Learning to Say No
I need that paperwork. “Yes boss.” Make some calls. “Yes boss.” Get me some coffee. “Ok boss…” Working for a company means you do what they say. And that’s part of the reason that being self employed is so awesome, you don’t have to be a yes man. But all too often people who work for themselves are still stuck in the habit of saying “Yes!” to everything that comes their way.
The reality is that doesn’t work. There are going to be times where you have to say “No.” You can’t do everything, there’s just not enough time. Yes a new client may sound promising, but if they want you to put in 30 more hours a week taking care of their needs, then chances are you just can’t do that. Plus doing this makes you look bad. If you want to be successful, then you need to be the best at what you do, not mediocre at everything. Don’t offer services which you can’t tackle effectively, even if that means you have to say “No.” once in a while.
You Don’t Have Guidance
I don’t like having a boss. But I do like being able to ask someone how to do something if I have no experience in that field. And that, is one of the biggest drawbacks to working alone. When you are with a company, they tend to only hire people with experience for the jobs they need to fill. As a result, you can often find all of the information you need just by walking over to another desk.
However, if you are self employed, then you will find this a lot harder. Yes you can go online and look up some tutorials, or even make a few phone calls, but it’s still a lot harder than turning your head and asking the question.
Is It Worth It?
So that is the question on your mind, is it truly worth it? And I would have to say yes! Working for yourself is one of the most rewarding experiences that you can have. Though you do have to weigh out the benefits of being self employed vs. the downsides. It’s not an easy choice to make, and I could see why a lot of people would want to steer toward a more traditional career path. But would I go back? No way. I love working this way, and if you are sufficiently self motivated and disciplined, the rewards far outweigh the disadvantages.
If you are just getting started on your journey to become self employed, then take a look at this article: How to Make Money Online for Free