The Reality of Being Self-Employed

Being self-employed has a certain appeal to people who have never done it. Many people assume that being self-employed means setting your own hours, knocking off early if you have an appointment or just want to play outside and never having to report to a boss again. These are all real possibilities, but being self-employed comes with a dark side, too. If you’re thinking of working for yourself or wondering why being self-employed isn’t everything you thought it would be, consider these reality checks for the self-employed.

Self-Employed Means Long Hours
Yes, when you’re self-employed, you can typically set your own schedule. However, what many people don’t realize is that the schedule you set is usually far more than 40 hours. Self-employed individuals must complete their work, but they also have to market themselves, do their own accounting, settle bills, generate contracts and deal with a thousand other administrative tasks. When you’re self-employed, your income is directly proportional to the amount of work you put in – which means that you may be working 60 to 80 hour weeks when you get started just to make ends meet. Over time, you get more efficient and build systems that help you deal with the administrative details faster, but many self-employed individuals work far more than 40 hours per week.

Marketing is a Never-Ending Task
When you’re self-employed, you are responsible for generating your business. If you’re not spending time marketing, you’re not getting work, which means you’re not making money. When you’re self-employed, marketing is a never-ending task that takes countless hours every week. Self-employed people must be prepared to advertise their skills or services whenever possible, which means carrying business cards everywhere you go and utilizing any opportunity to demonstrate skills and find business.

Being Self-Employed Involves Higher Taxes and Expenses
Self-employed individuals typically pay twice as much in taxes than someone who works in a traditional job. When you work for an employer, your employer pays a portion of your Social Security and Medicare payments. Self-employed individuals must pay the entire amount themselves, resulting in higher taxes than traditional employment. Self-employed persons also don’t have the benefit of employer-sponsored health care, which means we have to pay for our own health insurance; which typically starts at around $400 per month for individuals.

Self-Employed People Don’t Get Paid Vacations
When you’re self-employed, you only get paid when you’re working. That means you don’t get paid sick days or paid vacations. If a self-employed individual is too sick to work, he or she doesn’t get paid. Likewise, if a self-employed person wants to take a week or two off for vacation, he or she must earn extra money before leaving – or go without that income.

The Client is the Boss
Being your own boss can be fun, but most self-employed individuals work for clients and the client essentially becomes the boss. As a self-employed professional, you can usually dictate how you do a job, but you must provide the product or services to the client’s specifications or suffer the client’s wrath. In many self-employed professions, clients convey very tight timeframes, which may require extra work or shuffling other projects to get things done. Being your own boss is fun until you have a problem with a client; then you wish you had a boss to step in.

Don’t get me wrong – I love being self-employed. I’ve had very few problems with clients, and have been able to resolve all of those amicably. I love being able to work from the park, or Starbucks or the office, and I love being able to take the afternoon off if I get my work completed early. But being self-employed isn’t as glamorous as many people think it is, and people who are thinking of working for themselves should be prepared to make sacrifices and deal with the nitty-gritty of being self-employed.