The Pleasures and Pitfalls of Being Self-Employed

Besides the obvious joy of not having to worry about office gossip and backstabbing, or a boss that's tough to deal with, working for yourself has a few other perks. You have the freedom to work around whatever schedule you prefer. You can work for a couple hours, then stop to get a snack and watch television for a while before getting back to work. You can skip a day without needing to ask anyone's permission if there's an important event coming up. Or you can find the time to attend college classes or spend time with your family.

Another benefit is the unlimited salary cap. With the exception of a few jobs that allow overtime, most limit the amount of hours you can work due to labor laws, and therefore limit the amount of money that can be attained. Freelancers are not bound by the same laws, and can make as much money as they are willing to put in the effort. If you want to put in a few extra hours to make more money with a project at home, you have the freedom to do so. It also feels good to see your bank account reflect real work, rather than a fixed amount of money that you got from sitting in a cubicle for a certain number of hours a day.

There's another major benefit, and it's a relief to anyone that's ever lived in fear of being fired or laid off. When you work for yourself, you cannot lose your job. Depending on the situation, the most you might have to worry about would be keeping individual clients loyal to your business. Even in that case, it's much easier for a freelancer to find new customers than a laid off worker to find a new job. The sense of job security in our current economic crisis is enough reason on it's own to make many people look into working for themselves.

Along with these joys, there are quite a few pitfalls. Here are a few of the main problems most self-employed people face.

Perhaps the biggest problem is the lack of access to health insurance. Most people get easy access to an insurance policy thorugh their jobs, but it's not as easy for the self-employed, who generally must buy it out of pocket. Insurance is not cheap; a good plan for your family can set you back thousands of dollars per year. Without it, routine and emergency doctor's visits can reach the same. Out of pocket prescription costs for some medications may reach hundreds of dollars per month. Emergency room visits can put you in debt for years.

There are a lot of freelancers that make enough to pay the bills and save a little, but definitely not enough to cover an insurance policy. If you have children, this is a vital consideration. One alternative would be an emergency plan, which often costs only a fraction of full insurance. Depending on how much money you make, your kids that are under 18 might be able to qualify for state or federal run insurance programs.

Another serious problem faced by the self-employed would be the issue of taxes. Everyone must pay the IRS, and those who work for themselves are no exception. In fact, they often face tougher scrutiny and frequent audits, as the government suspects self-employed people (especially those paid in cash) to be most likely of trying to cheat on their taxes.

This must be countered by careful records and organization. Instead of having taxes automatically taken out of weekly paychecks, it's up to the individual in this case to do the math and submit their tax payments quarterly. It's best not to hide payments from the IRS, as this can all too easily come back and haunt you. There are ways of tracing the most secretive of cash transactions, and you will not regret being honest. Keeping detailed records and receipts in a safe place, as well as avoiding excessive deductions, can make the auditing process less painful. Many people hire professionals to do their taxes and face the auditors.

The other major problem is the lack of steady income. Can you imagine making it through several months without bringing in money? The self-employed often go through rough periods like this, especially in a poor economy. If you have a service or product to sell, there will be times in which people will be less inclined to spend their money on it. You will also occasionally go through the stress of losing loyals and working hard to find new customers, all while not bringing in any money.

One of the keys to success when working for yourself is to develop ways of surviving harder times like these. People that work for themselves are used to living very modestly and saving money continuously. If eating at home, avoiding pricey entertainment, and shopping at second-hand stores doesn't appeal to you, then working for yoursef might not be the best option. Some people definitely prefer the safety of a steady paycheck.

These are just a few of the positive and negative aspects of working for yourself. Situations and people vary so much that it really takes personal experience to figure out what's right for you.

The good news is that you can experiment safely to an extent. If you already have a job but would like to transition into something else, consider starting a few freelance projects on your own time and keeping your job until they build up to a substantial point.

If you've lost your job due to the economic crisis, this is a perfect time to consider self-employment. You can explore options and devote time to getting something started while looking for another job or collecting unemployment benefits.

Almost everyone has at least a few niche skills that can be transformed into a full-time job once applied and marketed properly. Common freelance jobs involve web programming, technical writing, or selling items on Ebay. Others use talents in areas such as art, photography, or jewelry making. Some people get certified though simple courses, such as massage therapy or personal training, and then work out of home. The key is to take advantage of as many different skills as you can at once to start multiple projects. You can then devote time to the one that shows the most success over time.

Times are tough, but that doesn't have to ruin your dreams. People have found success in all economic situations, including the Great Depression. If you have a dream to work for yourself, then it might just be time to make it a reality.