Have you been thinking of moving to the self-employment sector? Would it be a good fit for you? Are you ready to sacrifice a steady income and paid vacations for flexibility? Today, we are going to weigh the pros and cons of employment vs self-employment to help you make an informed decision.
When you look at it, self-employment has lots of benefits – never having to request a vacation, doing what you want to do, and the opportunities that come with flexibility. The reality is, self-employment isn’t a walk in the park. Being your own boss means sacrificing security for freedom. There have been lots of debate on this subject. In most cases, your choice will depend on your circumstances. Faith in your ability, attitude towards risk, your family situation, and personal relationships.
Shifting to self-employment
There are numerous ways to be self-employed. You can work as a freelancer or start your business to provide services to different clients across the world. You can also do all these things while you are employed by someone else. Being self-employed part-time will help you test the waters and figure out if it’s the best alternative for you.
Advantages and disadvantages of self-employment
Becoming self-employed means having fun in some areas while sacrificing other amazing things. Here are some important factors that you should consider before making your decision.
Will you be earning less, more, or equivalent to what you are earning right now as an employee? Most professional essay writers across the world earn an average of $50000 a year – but this figure is not conclusive since it includes workers from different industries at different levels from junior developers to senior consultants. In general, you’ll earn more by working for yourself than your employee. The one thing that you’ll lose out on is security. As a contractor or freelancer, you’ll inevitably have periods when there is no work, low profits, or worse, negative profits. You might also find yourself chasing work and being under pressure.
Most employees pay their taxes automatically through PAYE. Therefore, you don’t need anything unless you have other sources of taxable income. Being self-employed means being responsible for paying your taxes. You’ll need to keep records of your annual earnings and all expenses related to your business and fill out a tax return form. If you own a limited company, the company will be required to pay tax. If you own a limited company that offers freelancing services, you should consider how you can do away with the IR35 tax legislation which is expected to be implemented this year. Handling your tax affairs can be tiring and time-consuming.
3. Paid holiday, paternity/maternity, and sick leave
Being an employee has lots of advantages that can be taken for granted such as paid sick leave, paid holiday, and paternity and maternity leave. If you want to enjoy these benefits in the self-employment world, you’ll need to arrange most of them on your own. Employees are usually entitled to 39 weeks of paid maternity leave if they’ve worked with the organization for a long time. When you want to have a child, you should know the adjustments that you’ll need to make to live comfortably. As for sick pay and paid holiday, you’ll need to arrange for them if you are self-employed by saving funds that you’ll use for these purposes. You’ll need to be self-disciplined to enjoy these benefits in the long run.
4. Workplace pension
Another advantage of being employed is having a pension. Today, it’s a requirement in most nations for employers to enroll their workforce onto a pension scheme automatically. You and your employer need to contribute to it to make your future life comfortable. If you are self-employed, you’ll need to create a private pension. This is one of the most important aspects of financial planning in the self-employment world. Remember, you won’t work forever even if you want. Other investments like property don’t offer advantages like a pension. You should prioritize creating a personal pension. You can also consider increasing your contributions to match the employer’s amount.
5. Work-life balance
The greatest advantage of working for yourself is flexibility. You can take time off whenever you want or work anywhere you want so long as work is available. This will allow you to manage your career growth around personal and family goals. You’ll need to be careful that you don’t jeopardize your earning ability. Taking too much time off can make you lose lots of clients. Most self-employed people take less time off compared to their employed counterparts. If you want security together with flexibility, you’ll need to speak to your boss. You can work at different times of the day for the same hours. Or you can work remotely too. Remote work has been accepted by most employers.
6. Long term prospects
One of the most important goals of an employee is career development. It is known that you’ll eventually want progress. And your employer should help you achieve this. Working for yourself is quite different. Career development will depend on your experience and how you use it for instance seeking bigger long-term clients or taking ambitious contracts. You’ll be responsible for marketing yourself and making the most out of your experiences. In short, you are entirely responsible for promoting yourself. There are lots of ways that will help you develop your career such as targeting potential clients, building a strong portfolio, and developing new skills.
Securing a mortgage is one of the challenges of self-employment. You’ll have to show that you can pay using your paycheck copies and self-assessment tax forms. You might get a poor deal if there are existing gaps in your earnings.
How secure will your job be as a self-employed person or as an employee? You are the one who’ll ultimately decide which side you’ll play on based on your circumstances, attitude, and goals. If you are an employee who wants to get into the self-employment world, you’ll need to take baby steps. Remember, anything worthwhile takes time.