Earlier this week, we took a look at the pros and cons of having a work from home job. Thought-provoking stuff, no? Today we’re going to discuss – you guessed it – the pros and cons of being self-employed. Let’s get started, shall we?
- You are your own boss. And who would make a better boss than you? You get to choose when and where you work (as long as you’re meeting the client’s needs), and if you don’t want to take on a project for any reason, you don’t have to. It’s a great feeling to have all that freedom!
- The sky’s the limit. When you’re self-employed, you have the ultimate say in your income potential. You decide how much you’ll charge for products or services, and you decide how much work you’ll put into your business. If you’re motivated, talented, and creative enough, you can go from making a few bucks on the side to owning a large business that employs others. (Of course, if you want to keep it small, that’s fine as well!)
- You can deduct work-related expenses from your income to lower your tax liability. Taxes are a major concern for those considering self-employment, and rightly so. But take comfort in the fact that you can deduct business expenses from your income before you figure up your tax bill. Depending on your trade, that could include computers, software, cell phone bills, mileage on your vehicle and much more. Even items designated for both business and personal use could entitle you to a partial deduction. See your tax advisor for more details.
- You have to stay motivated. When you are your own boss, it’s easy to take a day off here and a week off there. But if you want to earn a living and grow your business, you’ll have to commit to working on the regular. Even if you don’t have any projects to work on, you’ll need to spend time promoting your business and taking care of all of the behind-the-scenes stuff.
- There will be lean times. Despite your best efforts, there will likely be times when work is slow. It could be due to weather, local events, a poor economy, or any number of factors that are out of your control. You’ll have to put away money when it’s flowing in to offset the times when it’s not.
- Your taxes get pretty complicated. You are responsible for keeping records of your income and expenses for tax purposes, and for paying both the employer and employee portions of state and federal income tax. If you’re brave, it’s possible to prepare your own tax return, but if you want to pay as little as possible while remaining on the good side of the IRS, it’s wise to enlist the services of a tax professional.
Did I miss anything? Let me know in the comments!