Being your own boss is one of the biggest temptations that entrepreneurship poses to anyone who’s getting tired of answering to someone else. Most venture into business to escape from the stress of having to deal with the daily drama in the workplace, endless traffic jams on every commute to the office and the often meager and disheartening pay.
However, there are actually some benefits to being an employee which you can never get when you are self-employed. And many don’t know it, especially if they haven’ ventured into business yet.
Quitting your job and engaging in business doesn’t mean all the stresses would go away. Thing’s won’t get better in an instant. In fact, there are some disadvantages to entrepreneurship – some may even cause you to think twice about your looming decision to quit your 9-5 job. We’ll explore what these disadvantages are in this article.
Employment or Entrepreneurship: Is it Right for You?
Jumping from being employed to being self-employed is a decision that’s not that hard to make. In fact, you could be working in the office today, quit tomorrow and start with your journey towards entrepreneurship tomorrow.
That sounds easy right but you need some skill set in order to move forward in your new venture. You need to formulate a plan, work on its fruition and if it’s something that people should know about, you need to begin with the advertising and networking.
If you are confident with these then you’re now set for the journey towards being your own boss. Many don’t realize that this decision requires a lot of work especially when the business takes off from the ground and starts growing. It can be tedious in the long run.
So before quitting your job, here are some points that you need to consider especially if it’s self-employment that you’re hoping to land into.
Employees just like what you are right now don’t need to worry about their pay. Payroll is on schedule and money comes on time when you expect it. And there are strict laws that exist to protect the right of every employee in terms of pay and benefits.
Freelance workers and entrepreneurs don’t have any of these cushions. You can find yourself dealing with clients who fail to send payments or even bailing out. That’s a big downside to entrepreneurship but there are ways of ensuring that you’re getting paid as an entrepreneur such as:
- Online payment processing services offering online invoicing (ie. Due.com, Venmo, and Paypal). If you are an online freelancer then you can use these services
- For long-haul truckers, TBS Factoring can help especially on those much-needed invoices
- Income property holders can help in settling the debt especially for small businesses.
Unforeseen circumstances or even holidays can delay your pay so if you easily get stressed on delayed payments or you’re not that good in saving for the lean months then entrepreneurship is not a field for you to venture into.
Hours of Work
Starting a business require much time and effort. You can find yourself working more than a normal employee would. For instance, a normal 40 hours per week work for a regular employee can easily extend to 70 up to 120 hours a week when you jump into building-up a business from scratch.
This adds a huge amount of stress not just to you but even to your relationships. You end up spending more time on the business and less time on your family for rest, relaxation and recreation. You could be spending all those long hours of work without an assurance of the business making it to success.
On the other hand, if you are an employee, your work is based on a fixed and structured schedule. Even if the manager swaps schedules, the total hours you’ll be required to work remains the same. There are fixed cut-offs in working hours as well and if you work more than 40 hours, you’ll be paid for the overtime since it is legally required for companies and businesses to do so.
The Much Dreaded Taxes
Income tax isn’t too kind on entrepreneurs either. If you account for self-employment tax, it means that you’ll get an average of 10-15% to pay for your income tax.
Taxes can turn into a painful blow to entrepreneurs who fail to do good in budgeting. Business is not just about the money that’s coming in but also controlling what’s going out. If you’re not doing good with this then taxes would come like a thief and you end up having little to no savings at all- it would have been better if you worked as an employee.
You can prevent these things from happening though by doing the following:
- Start donating to different charities to earn write-off from your taxes
- Set aside at least 20-30% of the overall income to serve as a “tax buffer”
- Keep track of all the loses and expenses so they can be used as write-offs from your taxes
There exist many tools that can help you keep track of things that will eventually be used at the time of filing taxes. Quickbooks is one that can be very handy for small businesses and TurboTax by Inuit is something that you can jump to as your business grows and you add more and more employees.
Jumping to entrepreneurship can be worth it if you have the skill set and you possess a good amount of personal commitment towards doing all the work by yourself. Remember that it will require many hours especially if you’re just starting.
At some point, you will experience payment gaps and deal with other problems that you wouldn’t have to experience if you are an employee.
So it is best to not only focus on the freedom of time and doing the things you love that it promises but also with the amount of work it would require if you really want it to be beneficial in the long run. If you really want to venture into entrepreneurship then here’s what you can do to ensure a smooth transition to it from your regular work.
- Have a clear plan in mind and be ready to commit to working on it until it grows
- Earn and save enough as you transition from full-time to a part-time job and be prepared to start working on the business as planned
- Work hard while being smart to make the business succeed as a startup and preserve the momentum for you to work on as you quit your part-time job and start your new career as a full-time entrepreneur/business owner
There are plenty of advantages and drawbacks in being your own boss so before making the leap towards this new territory, make sure that you know every one of its pitfalls and only then you can be sure if it really is worth it or not.