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The Dark Side of Being Self-Employed

Many people have dreams of working for themselves. And, as someone who is self-employed, I can agree that it isn’t a bad gig. For the most part, I set my own hours, and I can work in my pajamas from my home. Even if you work outside of the home as your own boss, it can be refreshing to be responsible only to you. However, being self-employed isn’t always sunshine and rainbows. I was reminded of this yesterday after reading J. Money’s post at Budgets are $exy on paying quarterly taxes.

I’m pretty used to paying quarterly taxes by now, since I’ve been self-employed for more than six years. However, when I first started, it was a little bit of a bummer. (Of course, paying taxes is never fun.) J. Money’s post got me thinking about some of the other items that constitute the dark side of being self-employed:

Paying Both Sides of the Payroll Tax

One of the biggest bummers related to being self-employed is that you have to pay both sides of the payroll tax. When you work for someone else, your employer pays half your payroll tax. However, when you work for yourself, you are both employer and employee. So you get socked with paying both portions. It can be a real eye-opener. Paying quarterly lessens the blow a bit, especially if you budget it in, but it’s still painful.

Vacations Aren’t What They Used To Be

When you are self-employed, you can’t always just take a vacation. I’m a freelance writer, so I can shift some of my assignments around, but I rarely go a day without doing something related to my business. The only exceptions are Sundays and my yearly three-day camping trip. Usually, even when I’m away from home, I’m on the laptop for at least two hours day. Sometimes that means getting up way before everyone else so that I can get my stuff done before the activities of the day.

And, even when I go camping, I usually have to put in extra work to get everything done ahead of time. Deadlines don’t go on vacation just because I want to take a break, although I am lucky to have flexible clients who let me skip when I am under the weather or have a family emergency. Of course, there is no paid vacation or paid leave when you work for yourself.

Sometimes You Have to Work Even More

Entrepreneurs, especially when starting out, sometimes have to work a lot more. Sometimes, your schedule really isn’t your own, and you don’t actually feel like your own boss. If something needs to be done right now, you’re the one who has to do it. Sometimes, being self-employed means working more than you did when you worked for someone else. And you never really leave the work at work. Many people with 9-5 jobs get done, go home, and forget about work until the next day. When you’re self-employed, this rarely happens. Drawing the line between work life and home life is especially hard if you work from home.

It’s All On You

When you’re self-employed, your success or failure is all on you. Was I stupid enough to take on a major project without half in advance? Sure was. Yeah, it’s the guy’s fault for not paying me. But I’m also partly to blame for doing $2,000 worth of work without first seeing some sort of guarantee in the form of cash money. Decisions about your business can’t be blamed on someone else, and when things aren’t going well, you can’t blame your situation on being fired unfairly. And you can’t even collect unemployment if you hit a dry spot in your business.

I really do like being self-employed, and feeling as though I am in charge of my financial destiny. However, there are days when I think it would be nice to just clock out and go home — and maybe be paid for a vacation day or two.

20 Responses to The Dark Side of Being Self-Employed

  1. Haha yes! Vacations ARE a lot different now ๐Ÿ˜‰ Glad I helped spark some reminders my friend. Thx for all the advice too, you’re awesome.

  2. Excellent post, Miranda. People need to go into business for themselves with their eyes wide open.

    Just for the record, I’ve made many many mistakes. Well, you live and learn.


    • I think we’ve all made mistakes as we do this. ๐Ÿ˜‰ It’s all about overcoming them and keeping with it, I think.

  3. Great post, Miranda! You are absolutely right about your time not always being your own. Knowing up front that if you don’t manage your time well, it will manage you helps to put some key processes in place before things get out of control.

  4. Good thoughts Miranda and thanks for speaking to the less sexy part of self-employment. I was just chatting with the co-creator of Boogie Wipes that that’s something she thought was so important when advising entrepreneurs. Cheers

  5. I found your blog through The Consumerist. I have to say that your post is an excellent one. I’ve been there. I had my own business for several years in the late 1980s and early 1990s. It worked well for the first few years, but when the economy started a downswing I saw my services go with it. After keeping afloat for a while I gave it up. It was terribly painful; my self-worth took a (temporary) nosedive.

    However, since around 2000 I have been employed as a staff member at a community college in California. And I have come to appreciate this job in this last year as never before. The pay is not noteworthy, but the benefits are outstanding. What I like best–and what is so different from my experience with self-employment–is that I no longer have to think about income. My pay comes regularly every month. The benefits are outstanding (and I pay for only a relatively small portion of their costs), and I don’t have to remind anyone about them in order to get them.

    It’s security. There is a price, the freedom you talk about. I miss that. But as you have a price you pay for your choice, I have a price I pay for mine. Neither is wrong; it’s what’s right for each of us. I wish you the best.

    • You make a great point about there being a trade off. I do love working from home, even though I acknowledge some of the dark sides of it. I don’t think I could back to a more “traditional” job now. My husband is like you; he wants to work at a college. I think college is a great compromise. You actually get some flexibility and freedom due to the nature of working in academia, but you also get the security of a paycheck and benefits. I also like your point that it’s all about what works for you! Working from home isn’t for everyone, and that’s ok. Thanks for sharing your great thoughts on the subject!

  6. I agree with all of the points mentioned, but what about health insurance? It’s a huge monthly expense that many people get taken care of through their jobs.

    • You are right that health insurance can be a huge expense for freelancers. I debated about putting it in, and then ultimately left it out for the following reasons:

      1. Many freelancers (although I’m not one of them) have spouses with insurance benefits. A number of the self-employed that I am acquainted with don’t get their own health insurance, since they are covered through a partner’s work. When my husband finishes school and gets a job, I won’t have to get health insurance anymore.

      2. Those who work in more traditional jobs pay healthcare costs as well. It’s a little bit harder to notice, since it is often automatically taken from a paycheck, but “regular” employees pay premiums as well — even though they get help from employers and the self-employed have to shoulder all their costs. There are options for the self-employed to get group insurance, and save on costs. For example, I have a friend who is employed as an accountant. He has the same size family as I do, and a comparable plan. The employee portion of his health insurance is actually $200 a month MORE than I pay with the group plan I found through So, even amongst the traditionally employed, there are large discrepancies when it comes what sorts of benefits are available.

      3. Self-employed people can deduct their insurance premiums above the line on their taxes. Additionally, if you get a high deductible plan you can save on premiums; combine it with a HSA, and your out of pocket expenses become tax deductible. While this does not always match up completely with the health benefits that regular employees get, freelancers can do a lot toward evening it out.

  7. My experience (three years now) is almost the opposite in some regards.

    My corporate job was never 9-5 (who really only works 9-5?) At a minimum it was 6-6 and daily I worked in the evening (had overseas conference calls at 11pm, etc.). I got paid well, but probably not if measured on an hourly basis.

    Yes, as a consultant the more I work the more I make — and the less I work the less I make. But I no longer feel guilty during vacations or pressured to “check in and help out” when on vacation. I specifically turned down a 2+ year consulting engagement because I didn’t want to negotiate vacation time (or feel that corporate pressure from such a long term assignment).

    Quarterly taxes and other such responsibilities are simple when compared to the overhead of a corporate job (meetings, training, office politics, downsizing threats, etc.). They are almost fun because they are clearly necessary for my business, unlike a lot of what I did on a daily basis in my non-9 to 5 job.

    I work out more often and see my running or gym time as an investment in my biggest money making asset (me). So taking time during the day for such things no longer “conflicts” with work — but is part of work.

    It was scary to make this jump, but I too can’t see me ever going back to a “9 to 5” job.

    • I agree with Bruce, yes there are pitfalls but one thing we did learn these past few years is that there is no such thing as security, not even when you worked hard for many years for the company. One bright thing about freelancing is that most consultancy freelancers make a lot more than they would ever make working for a boss. So being without work for a while does not have to be a bad thing as long as you spend and save your money wisely… So yes think before you make the plunge but dont let it stop you from doing it!

  8. I can vouch for everything you’ve said. One point you didn’t mention specifically is sickness. After 12 years of freelancing as a trainer/translator, I have missed just 3 days of courses/deadlines – when I was hospitalised urgently with appendicitis! Colds, coughs, “bugs”, sleepless nights, …? No “sickie” day for me! It’s business as usual if there are commitments to fulfil and, of course, no pay if I can manage to take it easy and recuperate. Most employees seem to be sick far more (too?) frequently.

  9. Great article, the dark side is a bit dark and yes it would be nice to clock out and ‘go home’..sometimes I get jealous of others who get to do this…but then when they are drudging out of bed at 5am and sitting in traffic for 2 hours a day I realize….I would not trade it for the world!! ๐Ÿ™‚ ‘Watching’ the traffic reports is so much more doable than ‘being on’ the traffic reports!! Thanks again for a great article!

  10. Very interesting article. I have been freelancing for the past 6 years and haven’t looked back. Sure everyone talks about finding your next job, and managing your business, and not having vacation time. True these are all disadvantages to going for business on your own, but IMHO the advantages far outweigh the disadvantages.

    – finding your next job: in over 6 years, I think the most I have been without a job has been two weeks. My main focus on the job is to deliver excellent work to the client. Client referrals and recommendations go a long way in this business.

    – managing your own business: true it is hard work and takes many hours to learn all the intricacies of tax law and the tax requirements. It takes time to understand what is the best way to manage your business and what are some of the shortcuts that you can take. However on the positive side, when you start to grow, you are growing your own company. If you find a job that requires more than you can handle, a happy customer may let you bring on additional help to fulfill the contract. And the more people you have working for you the more you earn.

    – vacation time: sure your vacation is unpaid and it costs more to go on vacation. but one of the major upsides to freelancing is the amount of money you make. So with a little planning you can easily take vacations as I have done every year.

    Besides all that, for me the biggest advantage of freelancing, is that I don’t have to play the company politics!! I don’t need to friend my managers and hope that I get a decent bonus at year-end. I don’t need to be reviewed by a person that has never worked with me and probably doesn’t even know what I do. All the office politics that are part of large corporations is something that I hope to never have to play again.

    But freelancing is not for everyone, so research and research some more and make your decision. There are pros and cons to everything, but I have never regretted becoming a freelance consultant.

  11. I’ve doing mixed freelancing and full time jobs for the last 3 years, and I agree freelancing is not for everyone, but definitely it’s not easy to have and maintain a good full time job too. The responsibility and the amount of work to do can be so overwhelming than been self-employed, if not more!

  12. I have to ask – are there really any 9-5 jobs still out there? As the baseline hours-per-week increases above 40 hours/week, it seems to me the calculus for whether to go solo or not gets easier year by year.

    • JD, you are absolutely right. When I was business consulting, I regularly put in 14-16 hour days and was paid about 15% of the fees that my company billed the clients in salary and benefits with no overtime. This was still a large amount in that line of work, but at some point you start to wonder if you worked this hard for yourself instead of for someone else you could do really well (and afford to have people take care of stuff like accounting and taxes for you).

      There were 9-5 jobs a few years ago, most often in the public sector, but with the budget crunch across the country even these are disappearing. Well paid and easy hours union jobs are not as cushy any more as well.

  13. Great points!

    I guess the biggest difference between being an entrepreneur and working 9-5 is the control – you pretty much have to live the rules what your employer defines, where as when being an entrepreneur, you can define your own rules.

    Anyway, you article was a great reminder, that there is another side to being an entrepreneur too.

  14. A lot people forget that when you write your own paycheck, sometimes you do not get to. If clients don’t pay you, all of the regular expenses are still there and must be paid before the self-employed person receives their income.

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