7 Things To Remember About Being Self-Employed
Do you run a blog and make money from it? Are you a freelancer working from home? In either case, you fall under the category of ‘self-employed,’ meaning you have a very different life from other people. Don’t get me wrong, there are lots of advantages of being self-employed, but there are equally as many drawbacks.
A lot of people assume you live a life of freedom, doing whatever you like, whenever you like. Truthfully, this can be the case – but only when you’ve worked hard enough to reach a stage where you can afford to be more relaxed!
Being self-employed is more gratifying and rewarding than working for someone else, but it isn’t easier. In fact, there are many things you should be aware of before you decide if this career is right for you.
With that in mind, I’ve created a list of the top things you should know about being self-employed:
It can be lonely
A huge advantage of working a full-time job is that you’re in a workplace with lots of other people. You’re never alone, which means you never feel lonely. On the contrary, being self-employed does come with some lonely moments. If you live by yourself, most of your days are spent sitting at a desk all alone.
Even if you live with your family or partner, the house is empty while everyone is at work/school. You definitely have more time to yourself, which usually means you start overthinking quite a lot. There’s a lack of camaraderie that comes with being self-employed, so try to focus on undoing that. Do your best to get out and about and talk to others in your free time!
It’s worth mentioning that this isn’t necessarily a problem for all self-employed people. As we move through this list, you’ll notice that a lot of these issues might not relate to some jobs. For instance, if you’re a self-employed plumber, you will be around people all the time. In that sense, it’s quite a sociable job as you meet new people. So, it really depends on what type of work you do.
Nothing is done for you
As a self-employed individual, you are in charge of everything relating to your career. Nobody will step in and do certain things for you. This is something you take for granted when you work for someone else. The best example of this is marketing a business.
When you work for a company, all of that is handled by a marketing team. You can sit back, relax, and focus on your own strengths. When you’re self-employed, you have to handle that as well. Furthermore, you have to manage your accounts, send emails, speak to clients – and much more!
It’s a lot of stress, so keep that in mind if you decide to take the plunge. Also, you may counter this by saying that you could hire people to do things for you. True, and you can pay agencies to take on different tasks. The only thing to say to that is that it will cost money. It eats into your earnings, meaning you might end up spending more than you earn.
You may have long hours all the time
Both an advantage and disadvantage of self-employment is the flexibility your schedule has. You aren’t bound by the confines of a 9-5 daily work routine. This can be helpful as you pick the most productive times to work. However, it can be bad as you don’t ever have an endpoint.
Most people know that their work is done by 5pm. Even if you have stuff to do, it’s not getting done until tomorrow. With self-employment, you pretty much have to work until everything is done. You don’t exactly have an excuse to stop at 5pm, so your days can be very long.
In some cases, you could sit at a desk for 12 hours of the day – which is terrible for your health and posture. Even with active careers, you might spend the day visiting clients but return home at 5pm to do all the admin tasks.
The only argument here is that the extra effort is worth it when you’re self-employed. If you stay behind for an hour at work, you might not get paid for it. If you work longer as a self-employed person, it could mean you start making lots more money by securing new clients. So, as the saying goes, it’s swings and roundabouts!
You don’t always get paid instantly
A common misconception of self-employment is that you get money as soon as the job is finished. Again, this can be the case in some careers, particularly manual labor or contractor jobs. Going back to the plumber example, if you fix someone’s toilet, they might pay in cash right away. Or, a more glamorous example; you work as a hairdresser.
People come to your salon (or you go to their home) and they pay you as soon as you cut their hair. So, it does happen, but the majority of self-employed people still have to wait to be paid.
To make matters worse, you might wait a very long time. A client isn’t obliged to pay immediately, particularly when you haven’t formally sent them a notice of payment. This is where one of the worst things about being self-employed comes into play; invoices. Invoices suck because they’re a pain to make, but they’re essential.
You must learn how to send an invoice as it helps you get paid a lot quicker. The invoice is basically your way of saying: this is my job done, here’s what you owe, pay it ASAP. A little notice like this will encourage most people to send the money your way.
Plus, invoices are also useful as receipts on your end. You can keep a copy as evidence of the money you made – which comes in handy when you have to pay taxes. Speaking of which…
You have to file tax returns
Everyone that earns over a certain amount of money will have to pay tax. You do it as a full-time employee, but it feels much worse when you’re self-employed. The difference is that your wages have already had tax taken off them.
So, you only ever receive money after tax. With self-employment, you get the raw sum of money, then have to tax it! Imagine your boss gives you a paycheck, then at the end of the year, they demand a cut back to pay tax. This is exactly what it feels like when you’re self-employed!
It’s not so much that you have to pay tax, it’s how it’s done. It eats away at you, and you have to start adjusting your prices to include tax – it’s a pain. Also, the act of filing tax returns is super boring and complicated, which doesn’t help.
It can sometimes be really slow
When business is good, you can work for days on end with hardly any rest. Yes, this is stressful, but you see the financial rewards at the end. Unfortunately, self-employment doesn’t come with any guarantees. There can be days – sometimes even weeks or months – where you get hardly any business.
As an example, let’s go back to being a hairdresser. You could have one week where you’re fully-booked every single day. A few weeks later, you may have one or two clients every day, max. It happens sometimes, and there isn’t always a way to stop it.
The best thing to do is establish a loyal base of customers/clients that keep coming back to you. You’ve got repeat business to fall back on during the slow times, ensuring you still have some money. By all means, focus on gaining new clients as well. It just helps to have some loyalists helping out during slower times.
You’re often a small fish in a big pond
Finally, self-employment is tough as you’re usually a small fish competing for scraps in a big pond, filled with much bigger fish. Basically, you have to compete against lots of other people and businesses. Imagine you’re trying to make a living as a blogger.
Now, you have to compete against the thousands of blogs out there that target the same audience as yours. To make matters worse, the other blogs may have massive audiences with hundreds of thousands of people reading every article. In some cases, the blogs you’re up against are owned by huge corporations, so they have more marketing power than you.
You get the point: it’s hard to compete! Still, it isn’t impossible, as lots of bloggers and self-employed people have shown in the past.
This article sounds quite glum, but it’s not meant to make self-employment seem terrible. In truth, I could write an entire article talking about the benefits, and it would probably be longer than this one!
Instead, the main learning point is that there are things to be cautious of when you’re self-employed. Don’t decide to do it because you think it’s easier than working for someone – it isn’t!
