Most people are well aware of the benefits of being self-employed. You generally get to remain at home, make money, and you’re virtually your own boss. Nevertheless, it is important to remember that it is not all fun and games. There are some serious disadvantages associated with being self-employed as well. Before you make the transition from conventional employment to self-employment, it is pertinent to better familiarize yourself with these disadvantages. They’ll be explored in greater depth below.
First and foremost, you should understand that your taxes will become much higher as a self-employed individual. The sad truth is that consumers that classify themselves as self-employed are required to take on additional tax burdens. For instance, you’ll be required to pay the employer and employee portions of your social security taxes. Simultaneously, it is highly unlikely that you’ll pay in taxes from paycheck to paycheck. Therefore, your annual tax bill will be substantial.
Loss of Other Financial Benefits
It is also important to realize that you’re going to lose out on other financial benefits. Do you like your 401k? Do you enjoy being able to buy your company’s stock at a discount? As someone, who is self-employed, you’ll no longer have access to these benefits. Once you’ve decided to become your own boss, you’ll become solely responsible for your 401k and will not receive a matching contribution from an employer. If you want to buy stock, you’ll have to do so at the full price and with the money you’ve earned from your work.
No More Insurance
Unfortunately, life is totally unpredictable. You never know when you’re going to suffer from a slip and all or a hit and run. As someone that is classified as self-employed, the burden involved will be yours and yours alone. You’ll be required to get your own insurance. This can be another hefty expense that drains your earnings very quickly. Since life is so unpredictable, insurance is truly a necessity. With this in mind, you should suck it up and get covered. Sadly, the self-employed will have no assistance in this area.
While many people do not realize it, the self-employed are far less likely to get days off. When you’ve signed on to become self-employed, you’ve signed on to work twenty-four hours a day and 365 days a year. You’ll never know when someone is going to ring you in the middle of the night asking for help. To ensure your business is still making money, you’ll have no choice, but to take the call. Plus, you’ll have no co-workers to depend on. Therefore, the responsibility is solely yours.
Prepare For Unsteady Pay
When you’re working a conventional job, you generally know how much money you’re going to make from month to month. This will all change once you’ve become self-employed. Self-employment works more like a business. Your monthly income will depend on your workload and your expenses. Therefore, the pay can be a bit unsteady and erratic at times. You’ll never really know how much you’re going to make and this can make a lot of people nervous.